Weekly Summary: 17th September 2021

DATA: ONS reported annual house price growth of 8% in July

This was lower than the 13.1% reported in the previous month thanks to a seasonally adjusted fall of 4.4% during the month. This fall occurred following the reduction in stamp duty nil rate threshold and all figures are likely to be revised in coming months.

DATA: ONS reported the continued recovery in the UK’s labour market

The number of payrolled employees returned to pre-pandemic levels in August while the unemployment rate fell to 4.6%. The number of job vacancies rose to over one million for the first time and average total pay increased by 8.3% compared to last year.

DATA: FCA published Q2 2021 mortgage lending statistics

The latest release provides lots of interesting insight into trends in the mortgage lending market. You can read more in our Digging Deeper slides and our Chart of the Week below.

DATA: ONS published population estimates by output area

The estimates for local geographies are very useful though may end up being heavily revised when the 2021 Census data is published. The House of Commons Library provides a useful interactive summary of constituency level data.

POLICY: Michael Gove made Secretary of State for HCLG in latest reshuffle

The appointment has been met by mixed reports on the future of the government’s planning reforms with most expecting him to hit pause while the reforms are reviewed.

REPORT: IPPR reported on the case for a proportional property tax

The report sets out “the case to scrap council tax and stamp duty and replace them with a tax proportional to the value of the property itself”. It suggests the report would help address regional inequalities, wealth inequalities, and lead to a stronger economy.

REPORT: Centre for Ageing Better report warned about homes that kill

The report warns that “2 million homes in England pose a serious threat to health or safety” and there’s an urgent need to improve the quality of homes.

REPORT: JRF investigated what’s structural racism in housing

The report warns that the “Inequalities Black, Asian and minority ethnic (BAME) communities face in accessing affordable and secure homes are rooted in structural injustices that are just not right, and must change”. It also highlights that “During the coronavirus storm these structural inequalities played a part in worsening housing insecurity and health issues for BAME communities”.

REPORT: Onward research looked at “How to regenerate Britain’s less prosperous communities by helping them take back control”

They analysed “the record of different regeneration schemes since the 1960s” and found that “the most successful schemes focused on smaller geographic areas such as neighbourhoods, invested in community capacity over the long-term, and helped communities take ownership of local assets”.

REPORT: CPS report on homes for heroes

They suggested creating “a new category of housing, akin to student housing, which provides secure rental and a pathway to low-cost home ownership” for key workers.

Chart of the Week

The MLAR data provides a useful insight into mortgage lending trends and we use the data to create our own estimates of mortgage activity by buyer type. As the chart shows, in the years leading up to the pandemic, the number of mortgaged first time buyers had slowly recovered thanks to interventions in the mortgage market (FLS, H2B) and the increased taxation of investors. Meanwhile, the number of mortgaged home movers had been stuck at low levels since 2010. The boom since the housing market reopened last summer has reversed that trend. First time buyers have increased in number but many prospective buyers have struggled due to the credit crunch and economic climate. However, mortgage movers have made the most of rising house prices, falling mortgage rates, and the stamp duty holiday to increase their numbers by 64% compared to pre-pandemic levels.

Weekly Summary: 10th September 2021

DATA: Halifax reported UK house prices rose 7.1% in the year to August

The annual growth rate fell slightly from the previous month (7.6%) but prices still hit a record high.

DATA: ONS reported monthly GDP rose just 0.1% in July

This data will be revised in the future but the stagnation of GDP, still 2.4% below its January 2020 level, is a concern.

DATA: Bank of England reported record low mortgage rates for low LTVs

See Chart of the Week for more information.

DATA: MHCLG released statutory homelessness statistics for 2020-21

The data for England provides a wealth of information on homelessness though the release notes that “Many of the changes from 2019-20 can be linked to COVID-19, and the government and local authority response”.

DATA: Zoopla reported annual private rental growth of 5% outside London

They reported a “Surge in demand for rental properties in August, especially in cities”. They also reported London rents had fallen 3.8% compared to last year but “Average rents in the 12 boroughs in inner London rose by 2.3% in the three months to July”.

REPORT(pdf): RICS released August residential market survey

They reported the “Flow of fresh listings coming onto the sales market continues to deteriorate” while “Sales slip for a second month running but are expected to stabilise going forward”. It also states that “The lack of available stock on the sales market is frequently mentioned by respondents to be a key factor sustaining strong rates of house price inflation”. This week also saw the release of the independent review into RICS (pdf).

REPORT: National Audit Office released their Green Homes Grant Voucher Scheme report

The report highlights the high cost for programme management and administrative expenses (£1,000+ per home upgraded). It finds that “the rushed delivery and implementation of the scheme has significantly reduced the benefits that might have been achieved, caused frustration for homeowners and installers, and had limited impact on job creation for the longer term”.

REPORT: VoxEU on “Mortgage rates, origination fees, and the transmission of monetary policy”

The research investigated the effects of the Funding for Lending Scheme and found that lenders “actively price-discriminate across borrowers using two-part tariffs which split the origination fee from the interest rate”.

Chart of the Week

This week’s chart looks at the latest Bank of England data on average quoted mortgage rates by loan-to-value ratio and fixed rate period. The data shows quoted rates fell to their lowest ever levels for loan-to-value (LTV) ratios of 75% and less. The gap between two year and five year fixed rate periods has also narrowed with a five year fixed rate mortgage rate of 1.40% compared to 1.23% for a two year fixed rate period at 75% LTV. Average quoted rates on higher LTVs are falling fast but are still higher than prior to the pandemic.

Weekly Summary: 3rd September 2021

DATA: Nationwide reported annual house price growth of 11% in August

A 2.1% monthly rise increased the annual growth rate (10.5% previously) and increased our year-end price change estimate from 6% to 9%.

DATA: Zoopla reported UK house prices rose 6% in the year to July

Their index continues to report lower growth than other measures, possibly reflecting its stock weighted rather than transaction weighted methodology. They also reported “Total stock of homes for sale is 26% down from 2020, and will remain low well into 2022”.

DATA: HMRC reported just 74,000 residential transactions in July

The provisional estimates were 26% lower than the pre-pandemic average and are the inevitable fall following the tapering of the nil rate stamp duty threshold down to £250k.

DATA: BoE reported 75,000 mortgage approvals for house purchase in July

The number of mortgage approvals for house purchase fell 6% compared to the previous month but are still 13% above their 2014-2019 average.

DATA: BoE reported negative net secured lending in July

See our Chart of the Week for more information.

POLICY: MHCLG announced the allocation of £8.6 billion in funding through the Affordable Homes Programme

Homes England also announced their strategic partnerships for the 2021-26 programme.

REPORT: UK Finance released Q2 2021 Household Finance Review

They reported “House purchase lending volumes in June reached the highest monthly level on record, with Q2 2021 house purchase the highest quarterly figures in 13 years”. They also reported average loan-to-income ratios are at record highs but low interest rates have maintained borrower repayment costs at very affordable levels.

REPORT: Resolution Foundation suggests “Stamp duty holiday not the main cause of house price boom”

The report suggests “there appear to have been stronger forces at play within the housing market over the past year such as enforced savings during lockdowns, changing housing preferences and super-low interest rates”. They conclude the “transaction tax holidays have been problematic less because they were inflationary, and more because they have been wasteful”. Their findings reflect our regularly repeated views on the current market.

REPORT: House of Commons Library briefing on calculating housing need

The briefing provides a useful summary of the standard method for calculating housing need in England and provides indicative local level data on housing need.

REPORT: Savills reported on the Build to Rent market

The report provides a summary of the state of the build to rent market and current market yields. However, the report does not cover perhaps the most important challenge facing the build to rent market: the growing backlash from the press and public towards investors “stealing” homes from first time buyers. The sector needs to urgently investigate and highlight the “additionality” it potentially provides in terms of the extra homes that could be built. This is especially the case for the emerging “single-family” market.

PRESS: Rightmove revealed “the new supply shortage hotspots”

The areas with the biggest gap between the percentage rise in sales agreed and percentage fall in new listings over the last year are all found in in the South East and East of England.

Chart of the Week

The total value of mortgage lending collapsed in July following record breaking figures for both gross and net lending in June. The Bank of England had reported record high gross and net mortgage lending in June. However, the latest data for July shows the value of gross lending fell well below normal levels and net lending (gross lending less repayments of debt) turned negative. While these results may raise concern, they’re probably just a short-term reflection of the rush by buyers to beat the tapering of the nil rate stamp duty threshold down from £500,000 to £250,000 and the subsequent lull in activity. This lull might normally be expected to last a couple of months but the end of the stamp duty holiday in September along with continued demand from home buyers, competition from lenders, and falling mortgage rates suggest that activity may pick up sooner. Further data from the Bank of England on mortgage approvals for house purchase suggest this is the case as approvals numbers continue at higher than pre-pandemic levels.

Weekly Summary: 20th August 2021

DATA: Rightmove reported a 5.6% annual rise in asking prices in August

Asking prices fell slightly compared to the previous month (-0.3%) but this reflects normal seasonal trends as the index is not seasonally adjusted. They also reported the average stock per agent (including homes under offer/sold subject to contract) fell to 50 properties, from 55 the previous month and a recent high of 66 in November 2020.

DATA: ONS reported UK house prices rose 13.2% in the year to June

This was the highest annual growth rate since November 2014 with prices rising fastest in the north of England and slowest in London. However, the index continues to be affected by the lag in Land Registry registrations and the initial reading for June is based on around 10% of the transactions that actually occurred in the record breaking month.

DATA: ONS reported GDP rose 1% in the month of June

The annual rate of 15.2% is distorted by comparisons to lockdown last year but GDP is now just 2.5% lower than January 2020. These figures may be revised heavily in the future.

DATA: ONS reported the UK labour market continues to recover

The unemployment rate fell to 4.7%, the number of payrolled employees continued to rise along with total hours worked, and job vacancies were at record levels. However, the employment sector of the job vacancies do not necessarily match the sectors where employees are still furloughed (as per this chart from Pro Bono Economics on Twitter).

DATA: UK Finance reported continued low levels of mortgage arrears in Q2

Mortgage arrears are still close to record lows thanks to the widespread support for borrowers during the pandemic. The release also included the news that the number of outstanding buy-to-let mortgages hit a record high of 2.02 million at the end of June.

DATA: Ministry of Justice reported Mortgage & Landlord Possessions stats

The release shows an increase in the number of claims issued but they remain well below pre-pandemic levels.

DATA: ONS reported record high stamp duty land tax receipts in July

A record high £1,393 million was collected in July, possibly reflecting the rush of completions at the end of June. Next week’s transaction data should provide more clarity. This record high clearly illustrates the large number of transactions still liable for stamp duty despite the holiday including investors and purchases of homes priced over £500,000.

DATA: MHCLG reported record high Help to Buy equity loans in 2020/21

The number of completions using Help to Buy equity loan fell in the first quarter of 2021 but this reflects the highly seasonal new build market and the 55,649 completions in the 2020/21 financial year was a record high for the scheme.

REPORT: ONS explored 50 years of change using the Census

Thanks to the digitisation of the 1961 Census, the ONS have published some fascinating interactive maps exploring how life has changed over 50 years. It includes data on homes without inside toilets, divorce, housing tenure, and population.

REPORT: RICS reported “Activity cools as Stamp Duty break is tapered”

The latest market survey reported “New buyer enquiries and newly agreed sales dip over the month” while the “Volume of fresh listings coming onto the sales market remain in decline”. The release also reported increases in tenant enquiries in London with future rental expectations now positive for the capital.

REPORT: Scottish Land Commission report on the Housing Land Market.

The report suggests “Significant reform is needed to the way land is brought forward for housing and development if Scotland is to build the houses it needs”, The report makes five proposals: establishing a new recyclable fund to support the creation of a network of ‘place pioneers’, empowering local authorities to designate Regeneration Partnership Zones, introducing new approaches to land value capture, creating a new public land agency, and introducing a new transparency obligation for options agreements and conditional contracts.

Chart of the Week

Persimmon announced strong results in their Half Year Results with new home completions 51% higher in H1 2021 compared to the lockdown affected H1 2020. Thanks to this and a rise in the average selling price, their operating profits increased by 65%. Our chart of the week looks at the gross profit and costs for Persimmon on a per plot basis. The total of the bars equates to the average selling price which has risen over the last decade but can be affected by changes in the mix and location of what they are selling. Perhaps more interesting is the stable cost of land and building over the period that has allowed Persimmon to capture almost all the rises in house prices in gross profit. It is only recently that build costs have started to rise, perhaps as they deal with their quality issues but the cost of development land has not been an issue for the company. The cost of land does not appear to be an issue looking forward either. The average cost to revenue ratio for their existing land bank is just 11.9% with new land proceeding to contract at just 11.5%.

Weekly Summary: 6th August 2021

DATA: Halifax reported annual house price growth of 7.6% in July

They reported a monthly increase of 0.4% though the annual growth rate fell from 8.7% the previous month. This reflects changes in house prices as the market reopened last year.

DATA: Nationwide reported annual house price growth of 10.5% in July

This was lower than the 13.4% reported last month which partly reflects the market re-opening last year. Prices are up around 6% in the year to July and prices don’t usually grow by much more. However, the market is not following normal seasonal trends at present.

DATA: Zoopla reported annual house price growth of 5.4% in June

The lower growth rate compared to other indices possibly reflects the stock weighted Zoopla index while others are sales weighted. Only time will tell which is more accurate.

DATA: HMRC reported a record high 200,000 transactions in June

The provisional data is the highest monthly count since the series started in 2005 as buyers rushed to complete before the nil rate SDLT threshold fell from £500k to £250k. This was double the level of transactions regularly seen in the years prior to the pandemic but fairly average when compared to transaction levels in the decades prior to the financial crisis.

DATA: BoE reported 81,000 mortgage approvals for house purchase in June

This was 6.5% lower than the previous month but still 23% higher than the 2014-19 average. This suggests that housing transactions could continue at higher levels following the end of the stamp duty holiday in September.

DATA: BoE reported a record high £44bn in gross mortgage lending in June

This reflected the very high level of transactions and was matched by a record £18bn increase in net mortgage lending.

DATA: BoE reported further falls in average quoted mortgage rates

The data for July shows record lows for two year fixed rate mortgages at 60% and 75% LTVs and, while rates on higher LTVs are falling fast, they’re still higher than pre-pandemic.

DATA: HMRC released Q2 2021 data on Stamp Duty Land Tax receipts

See our Chart of the Week for more on the trends this data highlights.

DATA: MHCLG reported 251,000 new build EPCs in year to Q2 2021

The quarterly Energy Performance Certificate data confirmed the trend already visible in the weekly data: new housing supply has recovered back to pre-pandemic levels.

REPORT: BoE released August Monetary Policy Report

They revised up their inflation forecast to 4% for the end of the year. They also note that alongside the stamp duty holiday, “Factors such as a desire for more space and an increase in household savings, and the continued low interest rate environment, are likely to help explain why housing markets have also been strong in some other advanced economies as well as the UK”.

REPORT(pdf): Kerslake Commission on Homelessness & Rough Sleeping

The interim report examines the lessons from the “public health emergency response to rough sleeping, and to understand how the significant progress made can be embedded in the long term”. It suggests “the Government should adopt Everyone In as the shared ambition for the future and continue to treat rough sleeping as a public health priority”.

REPORT(pdf): Centre for Homelessness Impact report on “Women, Homelessness and violence: what works?”

The report identifies that “There is a strong link between violence and homelessness amongst women, making the Covid-related increase in violence even more concerning” and suggests that “the policy and practice response to women experiencing homelessness falls short in meeting this challenge comprehensively”.

REPORT: Nationwide & Ipsos MORI on Future of Home

The report marks Nationwide’s “creation of four action groups that will look to establish ways of building more suitable homes for all, from the greening of existing properties and improving rental standards to enhancing the speed and process of construction”.

Chart of the Week

This week HMRC released their latest quarterly stamp duty statistics covering Q2 2021. It provides useful breakdowns on the stamp duty liability of the 366,000 transactions that occurred during the quarter across England and Northern Ireland. Unsurprisingly, the single biggest group was those not liable to pay any stamp duty, accounting for 63% of transactions. It is primarily this group that have helped drive the large number of residential transactions in recent months. However, the housing boom is not limited to just those paying no stamp duty. Buyers of homes over £500,000 have also seen a big increase in numbers, similar in trend to those not paying the tax. But they are much smaller in absolute numbers, only accounting for 12% of buyers. Perhaps the most interesting group is those paying the 3% higher rate on additional dwellings (HRAD). Until now, they had only recovered back to pre-pandemic levels but Q2 saw a big increase as investors and second buyers took advantage of the tax savings. It is also possible that this group includes some home movers who will claim back their HRAD payment when they sell their existing home. The data release also provided information on the number of non resident SDLT transactions (2,700) and suggests an average property price of around £350,000.

Weekly Summary: 23rd July 2021

DATA: Rightmove reported UK asking prices rose 5.7% in the year to July

They reported 140,000 more sales agreed and 85,000 fewer new listings in the first half of 2021 than the long-term average. The imbalance was greatest for large homes (4 beds).

DATA: HMRC reported 213,000 residential transactions in June

The non-seasonally adjusted data for the UK was the highest single month since the monthly data was first published in April 2005. The high number of transactions reflects the rush to complete before the nil rate of stamp duty land tax (SDLT) fell from £500,000 to £250,000. While very high for the last decade, this level of transactions was relatively normal in the decades prior to the financial crisis.

DATA: ONS reported stamp duty land tax receipts of £1.3 billion in June

This was the highest level of receipts reported in the month of June and suggests the rush to beat the tapering of the nil rate stamp duty band included a lot of buyers who were still liable for some payment. This may have included those buying above £500,000 and buyers of additional properties (e.g. investors and second homes).

DATA: MHCLG published the Q1 2021 Statutory Homelessness release

The data for England reported “68,250 households were initially assessed as homeless or threatened with homelessness and owed a statutory homelessness duty” and “the number of households in temporary accommodation was 95,450”, a 3.5% rise on last year.

DATA: MHCLG released right to build register monitoring for 2019/20

Since 2015, local planning authorities in England have to keep a register of people looking for plots for custom and self build homes. The latest data shows 47,714 individuals and groups on the register, an increase of 1,967 from the previous year though there were 9,517 entries during the year. The release also reports that there were 7,731 plots granted planning permission for self and custom build during the year (Oct 2019 to Oct 2020).

POLICY: MHCLG set out their “Vision for building beautiful places”

The “Building Beautiful Places plan” include creating the Office for Place, updated national planning policy framework (NPPF), and publication of the National Model Design Code. This Lichfield blog provides a useful summary of the changes to the NPPF and notes that “These are more changes to the existing system, so more of a policy filler before the main planning reform event”.

POLICY: MHCLG proposes end of EWS1 forms for buildings under 18m

Based on advice from the independent expert group that found “there is no systemic risk of fire in blocks of flats under 18 metres”, the government has set out that EWS1 forms should not be requested for buildings under this height. The press release included some positive words from major lenders and the joint press release from UK Finance and BSA welcomed the move but they also “urge them to continue to work with relevant stakeholders to ensure all documents, including the RICS guidance, align with the views of the expert panel”.

REPORT (PDF): HCLG Committee report on Permitted Development Rights

The report recommends “the Government pause any further extensions of permitted development rights for change of use to residential” and “conduct a review of their role within the wider planning system”. They are particularly concerned about the new class MA right for change of use from class E (the new ‘high street’ use class) to residential.

Chart of the Week

This week also saw the publication of Homes England’s annual report for 2020/21 which includes some interesting information of the financial state of Help to Buy equity loan (page 52). It shows that 70,617 loans had been repaid by the end of 2020/21 which equates to 21.5% of all loans issued. The original cost of these repaid loans was £3.3 billion and the repayments resulted in a net gain to Homes England of £312.5 million due to rises in house prices. This was an average of £4,425 per repaid loan. However, the average receipt per loan is very dependent on its age, as shown by the chart opposite. Homes England’s average net receipt per loan was minimal for loans issued recently but rises to over £10,000 for loans issued in 2013/14. Last year’s release had indicated some losses for loans issued in the previous couple of years but recent house price growth appears to have helped turn average receipts per loan positive.

Weekly Summary: 16th July 2021

DATA: ONS reported annual UK house price growth of 10% in May

This was a similar rate to the previous two months but there are significant revisions due to the impact of the lag in registrations. Regional data showed house prices were rising fastest in the North West with annual growth of 15.2% and slowest in London (5.2%).

DATA: ONS reported a continued recovery in the labour market

HMRC data showed another large increase in payrolled employees – to just 0.7% lower than January 2020 – while the unemployment rate is 0.2 percentage points lower than the previous quarter. Wage growth remains high with total wages (incl. bonuses) rising by 8.6% in the year to May 2021, though this partly reflects compositional issues and comparisons to the start of the pandemic. The ONS have also reweighted the Labour Force Survey to account for changes in the UK, EU, and non-EU populations since the pandemic started.

DATA: Bank of England released Credit Conditions Survey for Q2 2021

The survey reported an increase in the availability of secured credit to households which was expected to increase further over the next three months. Lenders reported increased demand for secured lending for house purchase but this is expected to fall next quarter.

DATA: Rightmove reported a record high average rent of £1,000 per month

They reported the average of rents outside London increased 6.2% over the last year with properties taking an average of 21 days to find a tenant and a 36% fall in available rental properties compared to last year. Rents in London recovered in the second quarter but are still 6.8% lower than last year in Inner London and just 0.8% higher in Outer London.

POLICY: Prime Minister’s Levelling Up speech offers little detail

REPORT: Bank of England released July 2021 Financial Stability Report

They report that “The share of households with high debt-servicing burdens has increased slightly during the course of the pandemic but remains significantly below its pre-global financial crisis level”. They note that there are downside risks but suggest “losses are more likely to arise from consumer credit than mortgage debt” and affect the lower end of the income distribution. See Chart of the Week for more on their view of the housing market.

REPORT: Resolution Foundation report on the impact of the pandemic on household wealth

They report that “Total household wealth increased by almost £900 billion during the pandemic” (a 6% increase) with rising asset prices being the primary driver. They note that the increase in wealth has been uneven with “families at the bottom of the income distribution much more likely to have drawn down savings or increased debt than those at the top of the distribution”. As we feared, the pandemic has widened wealth inequalities.

REPORT: Transparency International reports on the importance of political donations from the property industry to the Conservative party

They report that “Property related contributions accounted for more than a fifth of the Conservative Party’s reportable donations” between January 2010 and March 2020. They suggest “The current system for providing transparency over who is lobbying ministers – and why – is woefully inadequate” and make several proposals for improvements.

Chart of the Week

The Bank of England’s Financial Stability Report notes that while “Recent high levels of activity are likely to reflect in part a temporary boost provided by the stamp duty holiday”, there are other structural factors (race for space, increased savings, low interest rates) that are also contributing to current housing market conditions. They note that some indicators suggest “some of that strength in demand may persist beyond the end of the stamp duty holiday in September”. Alongside their view on the market, they also note the changes in availability and use of higher (90% plus) loan-to-value (LTV) mortgages. While the number of mortgage products available at these higher LTVs has increased in recent months, this has not yet been reflected in the share of new mortgages issued. Their data shows just 5.2% of new mortgages were at 90% LTV or above in Q1 2021 compared to 19.4% in Q1 2020. Unsurprisingly, the stock of mortgages at these higher LTVs fell to a new low of 3.1% in 2020, down from a peak of 22% in 2009, though it was probably higher in the late 1980s.

Weekly Summary: 9th July 2021

DATA: Halifax reported house prices rose 8.8% in the year to June 2021

House prices fell slightly compared to the previous month (-0.5%).

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

The average quoted two year fixed rate at 60% loan-to-value fell to a record low of 1.15% in June. Rates on higher loan-to-values are also falling but still higher than pre-pandemic.

DATA: ONS reported a small rise in GDP during May

The latest monthly estimate (which is very likely to be revised) showed a 0.8% rise in GDP compared to the previous month. This left GDP 3.4% lower than January 2020.

DATA: MHCLG released leasehold dwellings estimates for 2019/20

Their latest estimates suggest there are 4.6 million leasehold homes in England (19% of the total housing stock). 68% of these homes are flats while London (34%) and the North West (31%) had the highest proportions of leasehold homes.

REPORT: RICS released the June edition of their Residential Market Survey

They reported “New listings becoming increasingly scarce” with a third monthly fall in new instructions. They also report “Demand and sales metrics remain positive albeit more modestly than before” and there’s no sign of house price inflation easing.

REPORT: MHCLG released English Housing Survey 2019/20 reports

The reports provide a wealth of detail on various parts of the English housing market including: Home ownership, Private rented sector, Social rented sector, Well-being and neighbourhoods, Home Adaptions, Feeling safe from fire, and Energy. Our chart of the week looks at just one of the important issues highlighted by the reports: household savings.

POLICY: MHCLG published the Building Safety Bill

It promises to “set out a clear pathway for the future on how residential buildings should be constructed and maintained” including a Building Safety Regulator to “oversee a new safety regime for high-rise residential homes, taking safety and cost into account and keeping residents safe”. This is essential with the English Housing Survey this week reporting that 21% of households living in high rise flats feel unsafe at home because they fear a fire may break out compared to just 5% of all households. While the Bill should help improve the safety of buildings in the future, it provides little comfort for many of the existing leaseholders facing high costs to fix the buildings that are their home.

Chart of the Week

The English Housing Survey highlighted the precarious nature of household finances with its analysis of household savings in the year before the pandemic hit. Their survey showed that 80% of social renting and 60% of private renting households reported having no savings. While lower, it also showed that 40% of mortgaged owners and 25% of outright owners had no savings. This is concerning at the best of times but especially so given what has happened since the survey was conducted. One possible explanation for the differences across tenures is the age differences in each tenure. However, the data also showed similar trends across the tenures irrespective of the age of the household reference person.

Weekly Summary: 2nd July 2021

DATA: Nationwide reported UK house prices rose 13.4% in the year to June

The high growth rates partly reflect the current housing market boom but also reflect the slowdown in prices reported in June 2020. As such, the total house price growth recorded by the index over two years is exactly the same (13.4%) as over one year.

DATA: Zoopla reported annual growth in UK house prices of 4.7% in May

Zoopla is now consistently reporting lower house price growth than the other major indices. It is possible that this is because it is a stock rather than transaction weighted index.

DATA: BoE reported 87,500 mortgage approvals for house purchase in May

This was a 0.7% increase on last month and was 32% higher than the 2014-19 average.

DATA: MHCLG reported on the continued rebound in housebuilding in Q1

The building control data undercounts actual delivery but is a useful guide to trends in delivery. The data showed a 9.3% increase in starts and 5.4% increase in completions.

DATA: FCA released mortgage Product Sales Data for 2020

The data provides a wealth of detail on mortgage lending trends which we’ve looked at in our latest Digging Deeper slide deck.

REPORT: Registers of Scotland released Property Market Report 2020-21

The report contains information on the various parts of the residential property market in Scotland along with detail on commercial property and the mortgage market.

REPORT: Resolution Foundation released “Stakes and ladders”, a report looking at the costs and benefits for first time buyers over generations. The report finds that while older generations of first time buyers struggled with high costs of ownership in their early years of ownership, current first time buyers must both find more cash for the cost of buying (deposit) and face a marathon in paying off their larger mortgage.

REPORT: Preece et al research on “Urban rhythms in a small home”

The research provides a fascinating look at how people use their daily routines to cope with living in small homes (micro apartments, shared homes, small flats with children etc) and how the pandemic has disrupted those routines and affected their wellbeing.

NEWS: Knight Frank recorded record high transactions in June

They reported “It was a record month individually in every part of the UK, including prime central London, suburban and country house markets”. We will have to wait to see if their data is reflective of transactions in the wider housing market.

Chart of the Week

The latest consumer trends data from the ONS shows that households’ total resources (income from all sources) continued to rise in the first quarter of 2021 but their expenditure fell due to lockdown. The wide gap between resources and expenditure on the chart opposite has resulted in a rise in gross household savings of nearly £75 billion and an increase in households’ bank savings of £50 billion in Q1 2021. This continues a trend seen since the start of the pandemic with total gross household savings of £280 billion and an increase in cash held in banks by £180 billion over the past year. It is almost certainly the case that some of these forced household savings have found their way into the housing market and likely that more will do so in the future.

Weekly Summary: 25th June 2021

DATA: Rightmove reported record high asking prices in all countries and regions of Britain in June

They also reported “The number of sales agreed on properties over £500,000 in May was 49% above the same period in 2019, despite buyers knowing they will miss the maximum stamp duty saving that comes to an end in June“. Sales agreed across the whole market were 17% higher in May 2021 than May 2019, down from 45% in April.

DATA: HMRC reported 115,000 residential transactions in May in the UK

The number of transactions was 4% lower than the previous month but still 16% higher than the average number recorded between 2013 and 2019.

DATA: MHCLG reported a fall in Council Tax collections rates in 2020-21

The amount collected increased by 1.9% but the in-year collection rate fell to 95.7% (down from 96.8% in 2019-20). The release also showed that collection rates fell most in Inner London boroughs (95.6% to 91.9%). They note that government grants and funding will have contributed to the fall but it’s also possible that changes in population were a factor.

DATA: ONS released mid-2020 population estimates

They estimate the UK’s population continued to grow, passing 67million people. However, this marked the slowest growth since 2001 and only reflects the early stages of the pandemic. See Chart of the Week for more information.

DATA: MHCLG reported rise in planning applications received in 2020/21

Although just 1% higher than the previous year, this reflected a strong rebound in the number of applications received by district level planning authorities across England in the second half of the financial year. Accompanying data from Glenigan showed the number of housing units granted permission in the year to Q1 2021 was 295,000, down 6% compared to the same period last year.

DATA: Homes England reported 2020/21 Housing Statistics

Their data showed a 22% fall in the number of homes started on site (37,330) compared to 2019/20 and a 13% fall in the number of homes completed (34,995) over the same period.

DATA: ONS released house price statistics for small areas for 2020

The release provides a useful resource for house price statistics across England. They are currently consulting on whether to make it an annual rather than quarterly release.

REPORT: University of York report on letting practices at the lower end of the private rented sector

The report provides a fascinating insight into the “lower end” of the private rented sector including defining the market(s) and examining landlord activity/intentions.

REPORT: Resolution Foundation report on young adults living with parents

The report found “slightly fewer respondents were living with their parents in June 2021 than before the start of the pandemic” but warned that “those who have had a negative employment shock since the pandemic broke out were more likely to have moved back in with their parents than those who were in work before and during the crisis”. It suggests that “A key reason why we do not find an even larger share of younger respondents moving back to the parental home is that the types of young respondents whose employment was most affected by the pandemic were already living with their parents before it hit”.

REPORT: Savills research on the planning system and the climate crisis

In their research, they “explore the different targets in place across the UK, and whether national ambition is translating to local action”.

REPORT: Credit Suisse released Global Wealth Report 2021

They report that total global wealth increased by 7.4% in 2020 and “The global number of millionaires expanded by 5.2 million to reach 56.1 million”. They note that “The lowering of interest rates by central banks has probably had the greatest impact”.

Chart of the Week

The latest ONS mid-year population estimate reported the slowest growth since 2001 in the year to June 2020. Although the data only covers the early stages of the pandemic, it’s impact on the population is clear with  13% more deaths than the previous year and a continued fall in the number of births. Meanwhile, estimates from other sources for the 2020 calendar year suggest that natural change (deaths minus births) fell negative over the period. The ONS estimate that the net international migration increased slightly in the year to June 2020 but there’s considerable uncertainty around these figures and we will only know the actual size of the UK’s population when the 2021 Census data is released.