Weekly Summary: 18th June 2021

DATA: ONS reported an 8.9% annual rise in UK house prices in April

This marked a slight fall in the rate of annual change (9.9% previously) but ONS warned that there may be larger revisions than normal due to the Land Reg Lag (see Chart of the Week for more). They also reported widening regional variation with house prices rising 16.9% in the North East of England and 3.3% in London in the year to April.

DATA: Signs of recovery in latest ONS Labour Market Overview

They reported an increase of 197,000 payrolled employees in May, though the total number is still 553,000 lower than prior to the pandemic. There was a rise in the employment rate to 75.2% and fall in the unemployment rate to 4.7%. Total hours worked increased, though still lower than pre-pandemic, and the redundancy rate returned to a normal level. Average weekly earnings continue to rise though this is partly due to fewer lower-paid jobs and the annual change now compares to the start of the pandemic, when wages fell sharply.

DATA: ONS released Private Rental Market summary statistics, 2020-21

The release provides private rents for local authorities in England by number of bedrooms and various averages. The data can not be used for comparing changes in rents over time but provides a useful summary of rents at a fixed point. This data will form part of the new private rental index due to be released by ONS later this year.

NEWS: Santander released their study on first time buyers & the pandemic

The study is clearly designed for PR purposes but provides some useful insight and statistics on the challenges faced by first time buyers and how their aspirations have been affected by the pandemic. They report that “The proportion of FTBs who say raising a deposit is the biggest barrier to homeownership has risen from 30% in 2019 to 52% in 2021” and “more than four in ten (44%) first-time buyers (FTBs) delayed their plans to buy a home in 2020”.

NEWS: BSA Property Tracker survey shows “Consumer confidence in the housing market remains strong”

They reported “a growing expectation that house prices will rise” over the next year with 50% of survey respondents expecting price rises, up from 25% in December. They also report 30% of respondents think now is a good time to buy and “For the first time in nine months, raising a deposit returns as the biggest barrier to buying a property” with 59% of people citing it as an issue.

Chart of the Week

There was a lot of attention on the ONS house price index this week as they reported house prices rising slightly less rapidly than last month (8.9% vs. 9.9% previously). However, there was an important warning from the ONS about future revisions due to the continuing challenges created by the larger than normal lag in Land Registry registrations. We’ve written about this previously but the challenge this causes can be seen in the chart below. The chart shows how the annual change in Inner London flat prices has changed with each subsequent publication of the ONS index since September 2020. It shows that the lockdown period has been revised up while the period since last summer (and especially the first November release) has generally been revised downwards in this specific market. This issue will particularly affect areas with small volumes of transactions and it could be several months before we really know what happened to prices at a local level in April.

Weekly Summary: 11th June 2021

DATA: Halifax reported a new record high for UK house prices in May

The annual growth rate increased to 9.5% (previously 8.2%) with a 1.3% monthly rise.

DATA: ONS reported a 2.3% monthly increase in GDP in April

GDP was 6.1% higher than the same month last year but still 4% lower than January 2020.

DATA: Bank of England reported further falls in mortgage rates in May

Quoted rates for 60% LTV, 2 year fixed rates fell to 1.2%, the lowest ever. Rates for higher LTV products are falling but remain higher than before the pandemic.

DATA: ONS reported Construction Output fell 2% in April

Despite the fall, construction output was 0.3% higher than February 2020.

DATA: Bank of England & FCA released Mortgage Lenders & Administrators Return statistics for Q1 2021

The release provides a wealth of information on the mortgage market. See our Digging Deeper and Chart of the Week for more detail.

DATA: MHCLG released Energy Performance of Buildings Open Data

The release provides Energy Performance Certificate data for individual homes in England & Wales up to 31st March 2021.

REPORT: RICS reported “Solid demand and a shortfall of new instructions continues to drive house prices higher” in May

They reported that “New instructions continue to dwindle over the month” while “New buyer enquiries and agreed sales still displaying solid momentum”. They also reported that the rental market in London appears to be recovering “with both the three and twelve month rental growth expectations series moving into positive territory”.

REPORT: HCLG Committee report on The Future of The Planning System

The report looks at the Government’s proposed planning reforms and suggests that they reconsider the case for growth, renewal, and protect zones. It also suggests that people “must still be able to comment and influence upon all individual planning proposals” and they approve of the decision to abandon the proposed formulate for determining housing need. However, they would like clarity on how the “urban uplift” in housing delivery can be met. They also suggest “Government should set a limit of 18 months following discharge of planning conditions for work to commence on site” with permission revoked if work has not progressed and call on government to “lay out the evidential basis for its 300,000 housing units a year target and how it will achieve it, both by tenure and by location”.

REPORT: ONS released report on Rough Sleeping in the UK 2002 to 2021

The report compared statistics from across the UK to investigate trends in rough sleeping.

NEWS: Rightmove reported the “Biggest sales pipeline over past ten years”

They reported “More than 700,000 homes are marked Sold Subject to Contract and going through the sales process” while a survey suggested “only 4% [of buyers] would abandon their plans to buy a property if they missed either the June or September deadline”.

Chart of the Week

There is a wealth of information in the Bank of England and FCA’s MLAR data release but it also allows us to create relatively timely estimates for the number of mortgaged movers and first time buyers. Charting these estimates as a share of total transactions highlights some interesting trends in recent years. As the chart below shows, the proportion of transactions that were first time buyers had been consistently around 22% until the introduction of higher SDLT rates for investors buyers in early 2016 (grey bar). Since then first time buyers had gradually increased their share of transactions, reaching 31% in Q2 2020. However, the combination of the credit crunch, SDLT holidays for all buyers, and renewed demand from home movers have all contributed to reduce first time buyers’ share of transactions down to 25% in Q1 2021. We will have to see if this is just a temporary effect that disappears when the current SDLT holiday ends.

Instant Info – Mortgage Advances by Buyer Type

In the absence of publicly available data from UK Finance and delays in publication of the FCA’s Mortgage Product Sales Data, we have constructed our own estimates of quarterly mortgage activity by first-time buyers and home movers.

It is simply the total value of mortgage advances to each group from the Bank of England’s MLAR data (table 1.33)* then divided by the average mortgage advance to each group from the Regulated Mortgage Survey published by ONS (table 15).

We have tested it against other data sources and it appears to accurately reflect mortgage activity but should only be relied upon at your own risk.

*make sure you use the aggregated data containing both regulated and non-regulated data near the bottom of the sheet.

First Time BuyersMortgaged Movers
Q1 200783,056151,564
Q2 200795,591181,998
Q3 200797,817191,380
Q4 200780,632156,206
Q1 200853,21895,629
Q2 200855,72899,780
Q3 200845,44278,525
Q4 200839,04063,249
Q1 200929,69946,867
Q2 200943,54871,259
Q3 200955,52593,227
Q4 200962,823102,828
Q1 201040,63669,603
Q2 201048,64984,380
Q3 201053,85996,346
Q4 201048,31481,542
Q1 201137,22361,673
Q2 201146,73675,631
Q3 201152,40591,507
Q4 201152,07784,795
Q1 201249,67868,880
Q2 201246,01277,391
Q3 201252,66985,031
Q4 201255,95582,199
Q1 201345,83164,675
Q2 201355,88981,183
Q3 201367,42197,385
Q4 201372,20498,135
Q1 201463,27079,739
Q2 201473,72692,107
Q3 201476,519101,608
Q4 201472,83491,723
Q1 201556,74968,854
Q2 201569,64881,918
Q3 201580,27599,854
Q4 201583,75597,374
Q1 201667,22289,573
Q2 201679,82578,986
Q3 201686,13192,053
Q4 201685,09689,112
Q1 201774,86879,694
Q2 201785,91491,664
Q3 201791,096103,663
Q4 201791,13699,845
Q1 201875,60278,358
Q2 201886,88388,047
Q3 201891,404101,851
Q4 201893,52999,588
Q1 201974,32678,242
Q2 201984,59287,471
Q3 201994,360100,433
Q4 201992,44598,854
Q1 202075,72376,531
Q2 202046,58744,825
Q3 202078,25882,663
Q4 2020102,218121,353
Q1 202196,118137,969