Weekly Summary: 17th November 2023

DATA: Rightmove reported UK asking prices fell 1.3% in year to November

They report the monthly (non-seasonally adjusted) fall of 1.7% was “the largest in five years” for the month of November. They also report “Sales agreed are now 10% below 2019’s more normal market level, improving from 15% below last month” and “The pandemic-driven stock shortage is over, with available properties for sale now just 1% behind 2019”.

DATA: ONS reported UK house prices fell 0.1% in the year to September

The completions based index shows house prices rose 1.6% in the North East but fell 1.6% in the South West in the 12 months to September. ONS also warned about low transaction volumes affecting the index and future revisions could be larger than usual.

DATA: ONS published limited UK labour market statistics

The release is limited by the issues with the Labour Force Survey but did show nominal total earnings rising 7.9% (including bonuses), which was a 1.4% rise in real terms.

DATA: ONS published index of private housing rental prices

The release shows private rents paid by all tenants (not just newly listed or agreed rents) rose 6.1% in the year to October with London rents rising 6.8% over the same period.

DATA: DLUHC published final Help-to-Buy equity loan statistic release

With the final cut off for completions under the scheme set at the 31st May, this release is the final one (for now?). The final stats show 387,195 homes were bought through the scheme thanks to total equity loans of £24.7 billion. We’ll update our Digging Deeper with this final release but it won’t change much given the small numbers in recent months.

POLICY: Lee Rowley appointed Minister for Housing

POLICY: Welsh Government launched consultation on Council Tax reform

They are seeking views on “different approaches for new Council Tax bands”, “regular updates to Council Tax in the future”, “discounts and exemptions”, and “a more transparent system and a more effective appeals process”. They have also asked the VOA to prepare for a revaluation of all domestic properties in Wales.

REPORT: CMA published land banks and planning working papers

As part of the Competition and Markets Authority’s ongoing market study into housebuilding, they have published two working papers.

Their analysis of land banks shows “as of 2022, the 11 largest housebuilders together own or control land equivalent to c.1.17m plots across England, Scotland and Wales. The quantum of land in long-term land banks is equivalent to c.658,000 plots, while the short-term land bank is smaller, at c.522,000 plots”. They also investigated land banking concentrations and have identified 26 local areas to “probe further”.

On planning they “provide evidence noting that the GB housebuilding market has consistently failed to deliver sufficient housing – and sufficient planning approvals to deliver sufficient housing – to meet government targets and other government-endorsed assessments of housing need”. They also set out three key concerns: “Lack of predictability”, “Cost, length and complexity of the planning process”, and “Insufficient clarity of incentives”.

REPORT: Regulator of Social Housing published “Sector risk profile 2023”

The report “sets out the regulator’s view of the most significant sources of risk to providers’ ongoing delivery of the outcomes required by our standards”.

REPORT: NAO published Resilience to flooding report

They warn the capital funding to tackle flooding will protect “far fewer” properties than initially promised and the Environment Agency’s “maintenance of its assets is not optimising value for money” which is putting more than 200,000 properties at increased risk of flooding.

REPORT: LGA reported on bringing empty homes back into use

They report limited council resources mean councils “largely take a reactive approach to dealing with empty homes, tackling issues and complaints as they are received and when resources allow”. The report provides recommendations for how to deal with empty homes.

REPORT: Resolution Foundation published 2023 intergenerational audit

They report “Home ownership rates among younger cohorts have fallen sharply in the UK. Between 1986 and 2021, home ownership rates for households headed by 30-34-year-olds had fallen by over 20 percentage points in the UK” and while “millennials are expected to become a generation of home owners”, this “looks set to take them more than five years longer than it did in their parents’ generation”.

REPORT: IFS reported on housing costs and income inequality

They report “Poorer households spend more of their income on housing than do richer households, and this difference has increased over time”. As a result: “Housing costs have therefore become increasingly important to the calculation of relative poverty rates”.

REPORTS: CaCHE published three reports

The reports cover: “The impact of regulatory reform on the private rented sector”, “Heat Pumps and Domestic Heat Decarbonisation in the UK: A Systems Thinking Analysis of Barriers to Adoption”, and “Assessing the affordability of the private rented sector for LHA recipients in Scotland”.

REPORT(PDF): IMLA published Intermediary Mortgage Market Tracker

The survey covers Q3 2023 and shows that, while confidence continued to decline, the sector’s business flow and conversion ratios improved during the quarter.

REPORT: Savills on housing policy and the development land market

They discuss “What does emerging Conservative and Labour housing policy mean for the development land market in England”.

CORPORATE: Crest Nicholson published trading statement

They report a “Previous 10-week private Sales Per Outlet Week (SPOW) excluding bulk of 0.39, reflecting the continued weakness in the housing market but on an upward trend”. Including bulk sales, the rate was 0.80. They also report they will “Align headcount and resources in existing divisions to the expected level of output in FY24” as they cut costs.

CORPORATE: MJ Gleeson published AGM Trading update

They report “Net reservation rates for the 9 weeks to 3 November 2023 increased to 0.47 per site per week (0.46 excluding bulk reservations), from 0.43 per site per week during the previous 9 weeks to 1 September 2023”.

Chart of the Week

This week’s chart is a strange one because it’s actually two charts and neither are reproduced here! They are both found in this article by Moneyfacts. The first chart shows the number of mortgage products available on the market is the highest it has been since March 2008, at 5,678 deals. This is positive news compared to this time last year but the second chart is an important footnote. It highlights how the average shelf life of a mortgage product has collapsed in recent years. While the latest figure (20 days) is an improvement on recent months, it is around half the time it was prior to the pandemic. The current uncertainty around the prospects for the housing market doesn’t appear to be holding lenders back from offering products to the market but the volatility in interest rates has meant they need to be much more responsive to changes in market conditions. This is likely to continue as interest rates (e.g. swap rates) fall.

Weekly Summary: 10th November 2023

DATA: Halifax reported UK house prices fell 3.2% in year to October 2023

They report(PDF) a 1.1% monthly increase in house prices with the annual rate easing slightly from -4.5% last month. Like Nationwide last week, they also blamed a lack of homes for sale despite other evidence showing an increase in properties listed for sale.

DATA: ONS reported GDP was unchanged in Q3 2023

They estimate monthly GDP increased 0.2% in September, but this was only just sufficient to offset the fall in GDP reported in July, leaving GDP unchanged over the quarter.

DATA: BoE reported falls in average quoted mortgaged rates in October

The average five-year fixed rate at 75% loan-to-value fell to 4.99% (previously 5.23%) while the two-year variable rate fell to 5.57% (previously 5.68%). However, the revert-to-rate increased to 8.01%, the first time it’s been over 8% since December 1998.

DATA: UK Finance reported increases in mortgage arrears in Q3 2023.

Their data shows the number of homeowner mortgages in arrears of over 2.5% of their balance increased 7.4% compared to the previous quarter and accounted for 1.0% of total outstanding loans. The rate of arrears for buy-to-let mortgages was lower at 0.57% but is growing much faster. The total number of BTL mortgages in arrears of over 2.5% of their balance was 29% higher than the previous quarter and double the same quarter last year.

DATA: MoJ published mortgage and landlord possession statistics

The release covers Q3 2023 and shows an increase in both mortgage and landlord possession claims and orders in the County Courts of England and Wales. However, while the number of landlord possessions increased 11% compared to Q3 last year, the number of mortgage possessions fell 18% over the same period.

DATA: DLUHC published Council Taxbase in England: 2023

They report the total number of dwellings increased by 237,000 in the year to 11th September, though the number that were liable for council tax increased by only 187,000 over the same period. This difference is largely due to an increase in the number of dwellings that are exempt as they are occupied by students and dwellings that are exempt because they are left empty by deceased persons. The total number of dwellings that are in this final exemption category increased by 13,800 to 135,700 dwellings.

DATA: NHBC published housebuilding statistics for Q3 2023

They report new home registrations fell by 53% in Q3 2023 when compared to the same period last year and new home completions fell 15% over the same period. Unfortunately, this data is not as representative of the housebuilding market as it once was. As such, it makes it difficult to assess how much of these falls reflect changes in actual market conditions and how much might reflect NHBC’s changing market share.

POLICY: The first King’s Speech in over 70 years

The speech included the Leasehold and Freehold Bill and the Renters Reform Bill. The background briefing notes are available here.

POLICY: DLUHC launched a short consultation on capping ground rents

“This consultation sets out a series of options for how the government could intervene to cap the ground rent leaseholders have to pay”.

POLICY: Welsh Government launched Help to Stay scheme

The scheme will “provide an option for homeowners who are at serious risk of losing their home by offering a partial repayment of an existing mortgage balance via a low-cost equity loan, secured by a second charge (behind first charge lender), reducing revised mortgage repayments to a level the applicant can afford”.

POLICY: Scottish Government‘s Council Tax premium on second homes

“Draft regulations allowing local authorities to charge up to double the full rate of Council Tax on second homes have been laid before the Scottish Parliament”.

REPORT(PDF): RICS published October residential market survey

They report “Demand and sales metrics still in negative territory although slightly less so than before” and “Near-term sales expectations point to activity remaining subdued over the coming months”. They also report “National house prices continue to fall, although the pace of decline appears to be levelling off”.

REPORT: WPI reported on the housebuilding outlook

Their analysis suggests housebuilding starts will “fall from 221,000 to 134,000 next year, and that private sector output will halve from 144,000 to just over 70,000 in 2024”. Unfortunately, it appears the modelling behind this analysis is compromised by using poor quality data that does not accurately reflect either housebuilding activity or transactions.

REPORT: The Housing Forum reported on streamlining planning

The report “sets out a roadmap for how the planning system can be improved”.

REPORT: RTPI published “State of the Profession 2023”

The report looks at the UK planning profession and finds “the number of planners working in the public sector shrunk by a quarter between 2009 and 2020”.

REPORT: Savills reported on the UK Build-to-Rent sector in Q3 2023

The report provides a summary of the investment market and delivery pipeline. It suggests investment remains weak but there are a record number of BTR homes under construction.

NEWS: Savills published latest house price forecasts

They predict house prices to fall 3% next year but to rise by 17.9% over the next five years.

CORPORATE: Persimmon published Q3 trading statement

They report “Average private sales per outlet per week were 0.48 in the period (Q3 2022: 0.63)” and “Over the past 5 weeks private sales rates have improved to 0.59 (2022: 0.45) showing a strong pick up since the start of October. Of this 0.08 relates to investor sales, with a series of small selective deals on targeted sites where appropriate”.

CORPORATE: Taylor Wimpey published trading statement

They report “In the second half to date, our net private sales rate per outlet per week was 0.51 (2022: 0.51) with a cancellation rate of 21% (2022: 24%). Excluding the impact of bulk deals, we achieved a net private sales rate of 0.48 for the second half to date (2022: 0.50)”.

CORPORATE: Redrow published AGM statement

They report “Gross private reservations per outlet per week for the period were 0.49 compared to 0.63 last year (there were no bulk sales in either period)”. Although they have a high proportion of cash buyers (35%), the breakdown of chains has “caused our cancellation rate for the year to date to rise to 25% (2023: 22%) and resulted in a net weekly reservation rate of 0.36”.

Chart of the Week

The latest ONS real-time indicators of economic activity release included data on direct debt failure rates. The chart below shows that, while the failure rate for mortgage payments is well below that of loans and has not seen the same rise in rates as electricity and gas payments, it has risen significantly. The data shows the failure rate fell to a low of 0.16% in June 2020 thanks to widespread support but had risen to 0.50% in October 2023. This was the highest failure rate in the period covered by the data when excluding the month of January (it appears failure rates spike across all payment types in the month following Christmas). The combination of the upwards trend and seasonal patterns provides further evidence that the country could be facing a severe hangover in the new year.

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