Weekly Summary: 15th January 2021

DATA: ONS report 2.6% monthly fall in GDP during November lockdown

The fall in GDP during lockdown was inevitable but wasn’t as large as many had expected. The data will be revised in the future but shows the economy is 8.9% smaller than last year.

DATA: MHCLG report V-shaped recovery in Q3 housebuilding data

The data confirmed the housebuilding recovery already seen in the weekly Energy Performance Certificate data with new build completions just 1.1% lower than Q3 2019. This data is still less comprehensive than other sources so should not be used as an absolute measure of housebuilding activity.

DATA: RICS December Residential Market Survey reports “Sales market activity indicators remain positive albeit momentum continues to ease”

The report showed enquiries, instructions, and sales agreed were all positive though lower than seen in recent months. The London rental market continues to see negative tenant demand and negative rent expectations.

POLICY: FCA proposes extension of repossession ban to end of March

The existing guidance means firms should not enforce a mortgage repossession before the end of January. They now “propose extending this guidance so that firms should not enforce repossessions before 1 April 2021” due to the ongoing pandemic.

REPORT: JRF release UK Poverty 2020/21 annual report

The report “shows too many of us entered the pandemic already at risk of being cast adrift into poverty, while often lacking secure housing, a reliable income or adequate support”. Unfortunately, it also “shows that those of us already struggling to keep our heads above water have often been hit the hardest”.

REPORT: ESCOE on “Estimating the UK population during the pandemic”

The report highlights the challenges faced by ONS when trying to assess the impact of the pandemic on the UK’s population. Using “crude and illustrative” estimates, the report suggests the population may have fallen by 1.3 million people over the year. It also shows the impact has been greatest in London with large falls in non UK-born residents. Many of these people will have lived in the private rented sector and the findings appear consistent with the ongoing collapse in London rental demand and rents (e.g. see RICS above).

REPORT: Lichfields reverse engineer MHCLG’s top 20 cities

The blog looks at how the list of top 20 cities was derived for applying the 35% uplift to the Standard Method of calculating housing need and the issues with this approach.

Chart of the Week

Data from MoneyFacts in the chart below shows the scale of the mortgage credit crunch since the pandemic began. In March 2020 there were 779 fixed and variable rate mortgages available at 90% loan-to-value (LTV). This collapsed to just 70 in July. The latest data shows the number of available 90% LTV products has increased to 160 in 2021 but this is still 79% fewer than prior to the pandemic and the average rate is also much higher.

Weekly Summary: 8th January 2021

DATA: Halifax report house prices rose 6.0% in 2020

The annual growth rate fell slightly from November (7.6%) but still hit a record high.

DATA: Nationwide report house prices rose 7.3% in 2020

This was the highest growth in six years, up from 6.5% in November. They also reported high price growth for detached houses than flats.

DATA: Bank of England report a big rise in mortgage approvals for purchase

The number of mortgage approvals for house purchase in November 2020 was 61% higher than the same month in 2019. See Chart of the Week for more information.

DATA: Bank of England data suggests a peak in high LTV mortgage rates

Average mortgage rates fell slightly across most loan-to-value ratios but remain higher than before the pandemic.

POLICY: MHCLG announces “Government reforms make it easier and cheaper for leaseholders to buy  their homes”

The government announcement suggests that “Millions of leaseholders will be given a new right to extend their lease by 990 years” with no ground rent. They also announced they will be “reducing ground rents to zero for all new retirement properties”.

POLICY: Housing market remains open for business during lockdown

In theory the market remains open but businesses will be under pressure to ensure they are taking appropriate precautions which could prove a limit on activity.

REPORT: The Health Foundation: “Better housing is crucial for our health and the COVID-19 recovery”

The long read highlights the links between poor housing and health, and the need to “ensure that housing starts to make a positive contribution to health for more people”.

NEWS: NRLA: “Ministers need to get a grip of the rent debt crisis”

The joint statement with other campaign groups highlights the challenges faced by both landlords and tenants due to the pandemic. It urges government to help renters pay off arrears and avoid mass evictions when the pandemic ends.

Chart of the Week

The Bank of England reported data for November showing the highest number of mortgage approvals for house purchase since August 2007. This reflects the large number of sales agreed since the summer starting to reach completion and the next few months are likely to see continued high numbers. The data now means mortgage approvals in the year to November were just 2.4% lower than the same period in 2019. It is possible that when the December data is reported, total mortgage approvals over the whole of 2020 were the same or even higher than 2019, despite the shutdown in the housing market.

Weekly Summary: 18th December 2020

DATA: Rightmove report 6.6% annual rise in asking prices in December

As a non-seasonally adjusted index, it reported its usual fall in monthly asking prices but this was smaller than usual so the annual rate increased from last month (6.3%). Rightmove also reported that sales agreed were 44% higher in November when compared to last year.

DATA: ONS report annual house price rise of 5.4% in October

The completion-based index is now reflecting the sales agreed since the summer boom started. However, it is still subject to revision with September’s annual change revised down from 4.7% to 4.3%. This may reflect a delay in completions being registered with HM Land Registry, with very few transactions available to calculate the latest month’s index.

DATA: ONS labour market stats show rising unemployment

They report an average unemployment rate of 4.9% in the three months to October, 1.2 percentage points higher than last year. The more volatile single-month data shows the rate continuing to increase over the three month period, with a reading of 5.2% in October.

REPORT: MHCLG publish English Housing Survey 2019-20 headline report

The report contains a wealth of data and analysis on households’ housing circumstances and the state of the housing stock in England.

REPORT: MHCLG publish Household Resilience Study: Wave 1

The English Housing Survey does not tell us what has happened since the pandemic hit so MHCLG conducted a follow-up survey covering June to July. The survey found increases in mortgage arrears (6% of mortgaged owners compared to less than 1% in 2019-20), and that 27% of all households reported their income had fallen by at least £100 per month. The survey also reports that private renters are being hit hardest by the pandemic and fewer are expecting to buy their own home (49% compared to 59% in 2019-20).

POLICY: Backlash against planning reforms forces MHCLG to make changes to standard method for calculating housing need

The political backlash against the “mutant algorithm” that would’ve required higher housing delivery in some of the most expensive parts of the country has been successful. The new approach will now prioritise brownfield sites and urban areas with the top 20 cities now subject to a 35% increase on top of the existing standard method. The reason for choosing 35% is not clear but it brings London’s housing need remarkably close to the figure suggested by the “mutant algorithm”. As others have suggested (e.g. Lichfields), this new approach makes it unlikely that net housing supply will hit 300,000 per year any time soon.

Chart of the Week

Perhaps the most contentious chart in the 2019-20 English Housing Survey was the one comparing mortgage and rents as a proportion of income. It is repeated below and includes housing benefit. It can be read as suggesting that owning is cheaper than renting but, as others have pointed out, it does not cover all the required costs and benefits to accurately work out the relative cost of owning versus renting. For example, it includes the cost of repaying the mortgage for owners but doesn’t include repairs and refurbishment or the imputed rent (opportunity cost) of owners’ housing equity. However, even once all these factors are accounted for, analysis suggests it is currently cheaper to own than rent, though the calculation is highly dependent on the location and type of property in question.

Setting aside the above debate and questions about whether the two groups can be fairly compared, the chart clearly shows that renters spend a large proportion of their income on rent and this is further reinforced when looking at the distribution of same data. When combined with other findings in the survey, it is clear that private renters have been hardest hit by the pandemic while paying large proportions of their income for poor quality and insecure housing.

Weekly Summary: 11th December 2020

DATA: Halifax report annual house price rise of 7.6% in November

This was only slightly higher than the 7.5% annual rise reported last month but reflected a 1.2% monthly increase.

DATA: ONS report a 0.4% monthly rise in GDP during October

GDP was 8.2% lower than October 2019 and the recovery is far from V-shaped. Next month’s data is likely to be poor as it covers the lockdown period.

DATA: Bank of England report continued rise in higher LTV mortgage rates

The data for November showed the continued rise in average available mortgage rates above 85% loan-to-value (LTV). The average rate at 85% LTV was 3.02% compared to 1.71% last year.

DATA: Bank of England/FCA release Q3 MLAR statistics

The Mortgage Lenders & Administrators Return statistics provide a wealth of information on the state of the mortgage market. See the Chart of the Week for more detail.

DATA: ONS release private rent statistics covering year to Sep 2020

These statistics are based on a sample collect by rent officers at the VOA. The data is far from perfect but still provides a useful summary of rents down to local authority level.

REPORT: RICS reports “Demand continues to rise although the pace of growth appears to be moderating”

The November survey reports “Near term sales expectations turn flat” but “Prices continue to rise sharply across most parts of the UK”. The London rental market is the one clear sign of trouble with continued negative tenant demand and negative rental expectations.

REPORT: Public Accounts Committee reports on Starter Homes

Starter Homes was always a terrible policy and should’ve been formally ended much sooner. The report raises a more important question about how MHCLG intends to achieve its target of 300,000 net new homes. Both these points and the questions about First Homes highlight the tensions created when housing policies are created by Number 10/Treasury and left to MHCLG to deliver with no clear overall guiding strategy for housing.

REPORT: CaCHE report on “The housing design quality conundrum”

The report investigates “why new homes and neighbourhoods are poorly designed” and provides recommendations for how this could be changed. The 12 recommendations can be summarised as “The housebuilding industry must stop receiving a ‘free pass’ on design”, “Good design should be cast as a crucial public good”, and “Future planning reforms must put design at their heart”.

Chart of the Week

The BoE/FCA MLAR data provides a breakdown of mortgage advances by purpose and the chart below looks at this breakdown for those buying homes (rather than remortgaging). It highlights the sharp fall in mortgage advances to home movers and first-time buyers in Q2 2020 followed by a partial recovery in Q3 It is also interesting to note that buy-to-let mortgage advances did not fall quite as sharply as those to other home buyers in Q2.

Weekly Summary: 4th December 2020

DATA: Nationwide report annual rise in house prices of 6.5% in November

This is the highest rate since January 2015 and it looks likely that prices will end up rising 7% or more across the whole of 2020 when next month’s data is released.

DATA: Bank of England reported that mortgage approvals for house purchase in October were 51% higher than a year ago

Approvals for house purchase rose 5.9% compared to the previous month, reflecting the boom in sales agreed moving through the buying process. However, approvals for remortgaging were still 35% lower than the same month last year.

DATA: MHCLG’s Affordable Housing Supply data for 2019-20 reported a 0.8% annual increase across England

The result was underwhelming though not surprising given the limited increase in net supply reported last week. See Chart of the Week for more on supply.

POLICY: Consultation on proposed PDR for the changing of Commercial, Business and Service use (Class E) to residential

The proposed change suggests that “where there is a surplus of retail floorspace, quality residential development will help diversify and support the high street”.

REPORT: UK Finance release 2020 Q3 Household Finance Review

This report is a useful summary of the mortgage market and household finances but it doesn’t make up for UK Finance’s decision to stop making headline data freely available.

NEWS: MoneyFacts report an increase in availability of 90% LTV mortgages

Their data for the end of November shows 81 mortgages available at 90% LTV, an increase of 25 since the beginning of the month. However, this is still 698 fewer than were available at the beginning of March. There have been reports of more lenders returning to this part of the market this week so this could be understating the still slow recovery.

NEWS: Zoopla report Luton is the top “hotspot for first-time buyers”

The rankings are based on applicant leads attributed to first-time buyers between August and October. The top twenty list of locations is a mix of London boroughs, and relatively cheaper parts of the south of England and the West Midlands. The incomes and deposits required to buy with a 15% deposit and loan-to-income ratio of 4.5 are considerable.

Chart of the Week

MHCLG’s release of affordable housing supply data for 2019-20 finally allow us to construct our best estimate for housing delivery by tenure across England. The results of this are shown in the chart below. Perhaps the most striking part of the chart is the importance of Help-to-Buy Equity Loan in driving completions higher since it was introduced in 2013. As the end of the scheme in 2023 draws nearer, the big question is how many of these completions would’ve happened without Help-to-Buy. That then leads on to the question of what can replace it. Will it be First Homes, Shared Ownership, or some other scheme.

Weekly Summary: 27th November 2020

DATA: MHCLG reports net housing supply of 243,770 homes in 2019/20

This data for England is the most comprehensive measure of new supply but only showed a 0.8% increase compared to the previous year. It also provides the best measure of new build completions, which had increased 2.9% to 220,600. Unfortunately, it is not very timely due to the time it takes to collect the data.

DATA: HMRC reports an 8.1% annual rise in transactions during October

The provisional data shows transactions rising above their recent average (2013-19) to 105,620. This marks the start of the boom in sales agreed reaching completion and transactions should rise further in coming months (subject to delays in the sales process).

DATA: Zoopla reports annual house price rise of 3.5% in October

They report demand has fallen but remains 34% higher than last year and sales completed will be just 6% lower in 2020 than 2019. This suggests a large number of transactions in November and December. They also forecast year-end house price growth of 4% at the end of 2020 and 1% for 2021 with limited downside for prices and turnover.

POLICY: MHCLG announce buildings without cladding not subject to EWS1

The announcement suggested that “Owners of flats in buildings without cladding will no longer need an EWS1 form to sell or re-mortgage their property”. However, there was some uncertainty about the actual impact as news reports suggested UK Finance and the Building Societies Association had not agreed to the announcement.

POLICY: Chancellor presents the 2020 Spending Review

There were lots of big numbers for housing announced including a £7.1billion National Home Building Fund and funding to tackle homelessness and rough sleeping. However, as with all these announcements, the big question is how much is new funding and it looks like much of it had already been announced.

REPORT: OBR release their “Economic and fiscal outlook” report

Alongside the forecasts for the economy and public sector finances, the report also provides forecasts for the housing market. It suggests house prices will fall next year with the annual change falling to -8.3% by the end of 2021. However, it also suggests transactions will rise to 1,368,000 which was a level last seen in 2008.

Chart of the Week

This week the Home Office released data on visa numbers and this gives us a first, albeit hazy, look at what might be happening to international student numbers. The data shows a 36% fall in the number of Tier 4 (sponsored study) visas over the last 12 months, with a table on the Home Office website reporting a 56% fall in Chinese nationals being granted Tier 4 visas over the period. Unfortunately, the Home Office have not released the breakdown by type of institution so we have estimated the impact in the chart below (dotted yellow line). Based on the previous relationship between Tier 4 visas for higher education and non-EU first year enrolments at higher education institutions, it appear last year was a record high for international student enrolments (we’re still waiting on HESA data for 2019-20) but this year could be the lowest since 2008-09.

Weekly Summary: 20th November 2020

DATA: Rightmove reports 6.3% annual rise in asking prices in November

Despite a monthly fall in asking prices, the annual rate increased from 5.5%. See Chart of the Week below for more info. Rightmove also reported that sales agreed were 50% higher in October compared to last year and there are 650,000 sales in progress.

DATA: ONS reports 4.7% annual rise in house prices in September

Sales agreed during the summer are now reaching completion and the ONS index is now starting to reflect the faster growth rates already seen in other house price indices.

DATA: HMRC report Q3 2020 transactions by price band

The data shows the impact of the stamp duty holiday on the lower end of the price distribution but the biggest quarterly and annual increases are at the top of the market.

DATA: National Statistics UPRN lookup now links to postcodes

A geeky but very useful release that now allows us to link data with full postcodes to individual property locations. The next step is a full address to UPRN lookup.

POLICY: MHCLG launch Social Housing White Paper

The white paper contains some good, some bad, and some “offensive” parts. You can watch our Housing Conversation with council house tenant Rob Gershon on YouTube here.

POLICY: MHCLG launch Shared Ownership technical consultation

Shared Ownership has been described as neither shared nor ownership to reflect the unfair distribution in costs and legal ownership between tenant and landlord. These proposals go some way to fixing some of the problems but they are far from perfect.

POLICY: Dominic Cummings and planning reform

It is not clear exactly what impact the departure of Dominic Cummings will have on the proposed planning reforms but it was widely reported that he was responsible for pushing them despite widespread disagreement from backbench Conservative MPs. We’ve already seen Robert Jenrick promise to revise the housing need calculation but it’s possible we’ll see other reforms watered down or shelved.

REPORT: UCL research on new mortgage lenders and local housing markets

The report investigates what happens when a new mortgage lender enters a local housing market. It finds that “increased competition in the banking market can have adverse consequences for risk-taking and financial stability” with house prices rising by around 5% in the local market and an increase in transactions.

Chart of the Week

The Rightmove asking price index reported a monthly fall in its November release but the annual rate of growth increased from 5.5% to 6.3%. This situation reflects the seasonal nature of the housing market and, despite everything that’s happened this year, this pattern appears to have continued. To highlight this seasonal pattern, we have compared the year-to-date percentage change month-by-month for recent years. The chart below highlights this seasonal pattern, along with the lower growth seen in recent years. 2020 appears to be broadly tracking the average of 2013-16 when year-end growth was 6.6%.

Weekly Summary: 13th November 2020

DATA: ONS report GDP rose 1.1% in September

This was slower than the 2.2% growth reported in August and was 8.2% below February’s level. The recovery is clearly not V-shaped, even before the impact of the second lockdown is factored in. It’s also worth noting that these figures will be heavily revised in the future.

DATA: ONS report rising unemployment rate and record redundancies

The unemployment rate rose to 4.8% in the latest data period (Jul-Sep) with the single month estimate at 5.0% in September. ONS also reported “redundancies reached a record high of 314,000; an increase of a record 181,000 on the quarter”, and “a record annual decrease in the number of non-UK nationals from the EU in employment in the UK”.

DATA: Zoopla report a “two-speed” rental market

They report UK rents fell 0.5% in the year to September but actually rose by 1.7% if you exclude the 5.2% fall seen in London. Rent falls were greater in central London boroughs but it is not just London, with rents also falling in Birmingham, Edinburgh and Manchester.

DATA: RICS report “Sales market activity continues to display strong momentum”

They report “strength in buyer enquiries, agreed sales, new instructions and prices” though 12 month sales expectations are negative. The London rental market is the one exception with rising landlord instructions, falling tenant demand, and falling rent expectations.

DATA: UK Finance report a 5% annual rise in homeowner mortgage arrears

The rise in the number of homeowners with arrears of 2.5% or more of their outstanding mortgage balance is significant but numbers are still near record lows. They also reported a 19% increase in number of buy-to-let mortgages in arrears, though again from a low base.

DATA: MHCLG monthly update of the Building Safety Programme

The latest summary on the remediation works to remove and replace Aluminium Composite Material cladding reports that it has been removed from 56% of identified buildings.

REPORT: Whitehead and Williams report on affordable home ownership

The report reviews previous and existing affordable home ownership products. It also looks at what can be done now and concludes that government needs to “set out its vision for home ownership in general and affordable home ownership in particular”.

Chart of the Week

MHCLG are due to release their 2019/20 net housing supply data on the 26th November. However, this week saw the release of council tax data that provides further evidence, alongside Energy Performance Certificate (EPC) data, for what has happened since. The council tax data for September shows that net housing supply in England fell to 213,000 homes per year from a high of 251,000 in September 2019. Meanwhile, the weekly EPC data shows no bounce in completions with current numbers tracking last year’s trend. That suggests net housing supply for 2020 will be around 40,000 lower than 2019 (~215,000).

Weekly Summary: 6th November 2020

DATA: Halifax reported annual house price growth of 7.5% in October

This is the highest growth rate since June 2016 and takes their average house price above £250,000 for the first time.

DATA: Bank of England reported continued rises in mortgage rates

The data for October showed the average rate on a two-year fixed rate mortgage at 95% LTV is now over 4%, if you can get one.

DATA: ONS released their Annual Survey of Hours & Earnings (ASHE) data

The data is a useful and detailed look at employee earnings. This release is complicated by the pandemic and lockdown so care needs to be taken when using it.

DATA: HMRC released statistics on Stamp Duty Land Tax for 2019-20

The release showed residential receipts increased by just 1% from the previous year and the usual regional bias towards higher receipts in more expensive markets. This was released last Friday but we missed it (sorry!). We’re also still waiting for HMRC to release the Q3 quarterly SDLT data.

POLICY: The country entered lockdown on Thursday but the government was clear that the housing market remains open

Robert Jenrick reported on Twitter that people will still be able to move home and construction can continue. They also announced that “Evictions will not be enforced by bailiffs until 11 January 2021 at the earliest” and “Six month notice periods still in place until at least the end of March 2021”.

POLICY: FCA announces further proposals to support mortgage borrowers

They announced that borrowers “who have not yet had a payment deferral will be eligible for 2 payment deferrals of up to 6 months in total” but some will not be eligible because they’ve already used up these deferrals or have already agreed alternative support.

REPORT: Knight Frank launch 2020 Residential Investment Survey

The report reports that “investment into residential assets, incorporating purpose built student accommodation, investment-grade and purpose-built rented accommodation (PRS) and senior living, has continued to increase” and despites the challenges created by the pandemic, “the appetite to increase exposure shows no signs of slowing”.

Chart of the Week

The Bank of England released their November Monetary Policy Report on Thursday. Alongside announcements that Bank Rate was held at 0.1% and an additional £150bn of QE, the report highlights the potential impact of the second lockdown on the economy (see chart below) and the permeant damage done by the pandemic. Their latest projections show GDP will be 11% lower at the end of the year when compared to last year and will not return to Q4 2019 levels until the start of 2022.

Weekly Summary: 30th October 2020

DATA: Nationwide reported a 5.8% annual rise in house prices in October

This was an increase on the 5% annual rise reported in September and it looks likely that year-end growth could be 6% or more.

DATA: Bank of England reported mortgage approvals for house purchase were 39% higher in September than the same month last year

Approvals for house purchase rose 7% compared to the previous month and were 38% above normal levels. However, remortgaging approvals were still 34% lower than last year.

DATA: Zoopla reported a 3% annual rise in house prices in September

They also report “a sales pipeline that is 50% bigger than a year ago” and the “flow of new demand is starting to moderate, returning to pre-COVID levels although still >40% higher than a year ago”. See Chart of the Week for more information.

DATA: MHCLG Statutory Homelessness statistics for Q2 released

The release reported that “On 30 June 2020 the number of households in temporary accommodation was 98,300, up 14.0% from 86,240 on 30 June 2019”.

REPORT: Savills look at where First Homes “fit in the jigsaw of housing delivery”

They report “Value and income caps could prove a major constraint in London and parts of the South East” while “Local authorities in the Midlands and North will need to lower value caps to target households truly frozen out of the housing market”.

NEWS: Halifax report the “Demand for more space drives surge in price of detached properties”

They report prices for detached properties have increased 5% since March while prices for flats have increased 2.5%.

NOT EVEN NEWS: Mortgage lenders try to make the most of Halloween

Barclays report that “More than two thirds of Brits willing to buy a haunted house” while Halifax report that “Houses near haunted sites sell for less than county average in many areas”. I’m left wondering what the net effect of a haunted Waitrose would be.

Chart of the Week

Zoopla report that the “sales pipeline is 50% bigger than a year ago” and sales agreed are still around 50% higher than normal. However, there are growing concerns that many sales agreed may not complete before the end of the stamp duty holiday in March. The Chart of the Week shows the percentage of sales agreed that normally complete by the end of March and reinforces the warning that you need to do a deal before Christmas. However, this data is based on normal conditions. We now have activity levels around 50% higher than usual with many of those involved in the process having to work from home. There will inevitably be disappointment and frustration for both potential buyers and sellers in coming months as they rush to complete their transaction before the end of the stamp duty holiday.