Weekly Summary: 3rd August 2020

DATA: Nationwide report UK house prices rose 1.7% in July

This reverses some of the prices falls they reported in recent months with the annual change now 1.5% (previously -0.1%). See the Chart of the Week for more information.

DATA: Zoopla report UK house prices rose 2.7% in June

They also reported “year to date volume of sales agreed are 20% lower than in 2019” and they expect “sales volumes for 2020 to be 15% lower than 2019, a much improved outlook than a few months ago.” See the Chart of the Week for more information.

DATA: Bank of England mortgage approvals for house purchase rise 331% in June compared to the month before

Despite the large bounce back, mortgage approvals for house purchase are still 39% below last year’s level while mortgage approvals for remortgage are 23% below.

DATA: MHCLG report the number of Energy Performance Certificates (EPCs) on new build homes fell 49% in Q2 2020

EPCs have been a good leading indicator for total new supply (completions, conversions, change of use etc) and the latest weekly data from MHCLG shows numbers have now recovered back to normal levels.

POLICY: There were newspaper reports over the weekend that MHCLG will publish their paper on reforms to the planning system this week

We will avoid commentating until we have seen the detail.

POLICY: MHCLG announce a small extension of Help-to-Buy Equity Loan

The deadline for new homes being finished under the existing scheme has been pushed out from the end of December to the end of February but the end of March deadline for legal completion remains the same. The scheme continues as planned from April 2021 with regional price caps and restrictions to first time buyers.

REPORT: Transparency International UK report on corruption risks in major planning decisions

In their research looking at a sample of 50 councils in England, they identified five key corruption risks relating to councillors’ involvement in major planning decisions: Opaque lobbying, Bribery & excessive gifts/hospitality, conflicts of interest, abuse of the revolving door, and weak oversight. They recommend increased transparency, tighter rules and strengthened oversight of councillors conduct and engagement with developers.

Chart of the Week

The divergence in house price measures has generated debate with Nationwide reporting annual prices falls, Halifax showing monthly falls but continued price rises over the year, the ONS index suspended, and the Zoopla/Rightmove indices reporting annual house price growth. With the rebound in the latest Nationwide data, it appears the lenders’ indices have been as much a reflection of their risk management during the lockdown period as a indication of what buyers are prepared to pay. House prices look set to continue rising over the summer but the economic situation suggests future price falls are highly likely.

Weekly Summary: 27th July 2020

DATA: HMRC report residential transactions increased 32% in June

Transactions are still 36% below pre-lockdown levels and it will take some time for the recent spike in sales agreed reported by Zoopla and Rightmove to complete.

DATA: MHCLG reported the number of Help-to-Buy Equity Loan completions fell 8.6% in Q1 2020 when compared to Q1 2019

While most of this fall reflects the impact of the lockdown in March, there were already signs that new build completions were levelling off. See the Chart of the Week for more info.

POLICY: MHCLG announce new laws to extend homes upwards and revitalise town centres

“The new rules, which will come into effect by September, will mean full planning applications will not be required to demolish and rebuild unused buildings as homes and commercial and retail properties can be quickly repurposed to help revive our high streets and town centres.” Homeowners will also be able to add up to 2 additional storeys to their home through a fast track approval process.

REPORT: MHCLG funded report into permitted development released

The UCL/University of Liverpool report concludes that “permitted development conversions do seem to create worse quality residential environments than planning permission conversions in relation to a number of factors widely linked to the health, wellbeing and quality of life of future occupiers. These aspects are primarily related to the internal configuration and immediate neighbouring uses of schemes, as opposed to the exterior appearance, access to services or broader neighbourhood location.”

REPORT: Law Commission publish their recommendations to transform home ownership and help leaseholders

They suggest reforms that “would make it easier and cheaper for homeowners to buy the freehold or extend their lease, and to take control of the management of their block of flats or an estate” and “would also improve commonhold to ensure it is the preferred alternative to leasehold as a way of owning home”.

REPORT: HCLG Select Committee says “a social housebuilding programme should be top of the Government’s agenda to rebuild the country”

The reports suggests “there is compelling evidence that England needs at least 90,000 net additional social rent homes a year and it is time for the Government to invest. The sector estimates that £10 billion in extra grant funding will be needed.”

Chart of the Week

The chart of the week shows the annual percentage change in the number of Help-to-Buy equity loan completions. The sharp fall in March 2020 due to lockdown is clear but what is perhaps more surprising in the performance since September 2019. Since then, the number of Help-to-Buy completions has been lower in every month when compared to the same month in 2019. It appears the housebuilding market was slowing even before COVID-19.

Weekly Summary: 20th July 2020

DATA: Rightmove report asking prices up 2.4% since March

Annual growth increased to 3.7% with larger rises since March for the “Top of the ladder” sector and lowest for  “First-time buyers”. London was the weakest region, only rising 0.5% since March while sales agreed were “up 15% in England on last year, and in the five days after the stamp duty announcement it jumped to 35% up on the same days a year ago”.

DATA: ONS reports GDP rose 1.8% in May

This was a slight improvement on April’s figure but is still 24.5% below February’s level and at a level last seen in 2002.

DATA: ONS labour market presents mixed picture falls in number of paid employees but no rise in unemployment

Although there has been an increase in the number of people out of work, unemployment has not risen because they are not (yet?) looking for work. However, the number of paid employees, vacancies, hours worked all point to continued stress in the job market.

REPORT: MHCLG report on land use shows just 8.3% of England is of a developed use

The report also showed that 12.4% of England is designated as Green Belt and 6.7% of that Green Belt is developed, with around half highways and roads.

NEWS: OBR publish new economic scenarios

They included three scenarios with peak-to-trough price falls of -3.3%, -8.2%, and -16.4%. They also published transaction scenarios but these don’t look sensible as they have transactions peaking in Q2 2021, after the end of the stamp duty holiday.

NEWS: BoE Credit Conditions Survey report decreased supply of secured credit to households in Q2 and lenders expect it to decrease further

The report also shows the demand for secured lending decreased in Q2 but was expected to increase in Q3.

NEWS: Nationwide increase lending limit to 90% loan-to-value

This will go some way to countering the mortgage supply crunch but there are some suggestions that mortgage terms will be limited to just 25 years while other criteria will remain constrained.

Chart of the Week

Last week MHCLG released data on affordable housing completions in England funded by Homes England and the GLA (.xlsx file). This data has tended to be a decent leading indicator for total affordable housing supply and it suggests the number of affordable homes completed in 2019-20 was slightly lower than last year. However, recent years have seen an increase in affordable homes completed via other funding mechanisms and so the total will be dependent on the wider housing market. That should be ok for 2019-20 but raises many questions about affordable housing delivery in 2020-21.

Weekly Summary: 13th July 2020

DATA: Halifax report house prices fell 0.1% in June, the 4th month in a row

House prices are still 2.5% higher than June 2019 but have fallen 1.2% since February.

NEWS: RICS report the “Recovery in activity now underway but longer-term expectations remain cautious”

The majority of surveyors responding to the survey reported increases in buyer enquiries, new instructions, and sales agreed. However, price expectations are still negative.

NEWS: MHCLG English Housing Survey release a wealth of reports and fact sheets on housing in 2018-19

These include reports on Energy, Housing across the life course, and Housing costs and affordability. Along with fact sheets on Accessibility, Size, Sofa surfing and concealed households, and Second homes. Among the many interesting findings, was an increase in UK based second homes from 279,500 in 2008-09 to 495,000 in 2018-19.

POLICY: Chancellor increases Nil Rate Band of Residential SDLT to £500,000 until 31st March 2021

The stamp duty holiday marks a substantial reversal in housing policy. The previous focus on first-time buyers and home-ownership has been set aside and the priority now appears to be supporting transactions irrespective of who is buying.

POLICY: LBTT Nil Rate Band increased to £250,000 for residential sales

The stamp duty policy only applies to England and Northern Ireland so Scotland has announced its own LBTT holiday, again until 31st March 2021.

REPORT: Savills’ development land report shows “Fewer land deals and lengthened payment terms”

There’s a lack of publicly available land transaction data and so insight from agents is useful if treated with care. The latest index reported slight falls over the last year but it is the longer term trend that is more intriguing. It shows UK greenfield land values have risen by 21% since June 2013 but the ONS index shows UK new build house prices have risen 47%.

Chart of the Week

Among the fascinating, surprising, and depressing data published in the latest English Housing Survey was some analysis on affordability, specifically the proportion of private renters spending more than 30% of their income (including housing benefit) on rent. The chart below shows the result of this analysis by region and how it has changed over the last ten years. Affordability is most stretched in London and the south, and the proportion of households spending more than 30% has increased. Conversely, there are fewer renters spending more than 30% in the north of England and West Midlands than ten years ago.

Weekly Summary: 6th July 2020

DATA: Nationwide reported house prices fell 1.4% during June

Annual growth is now -0.1% though prices are still up 0.5% since December 2019. These price falls are not yet reflected in other indices and so they may just reflect valuer caution rather than actual market trends.

DATA: ONS latest estimate of GDP for Q1 2020 revised down to -2.2%

The previous estimate for Q1 was -2.0% and this is now the joint largest quarterly fall in UK GDP since Q3 1979.

POLICY: Prime Minister has apparently “announced the most radical reforms to our planning system since the Second World War”

The announcements so far are limited by a lack of new money and the new rules around changing property use may increase supply but come with massive risks already highlighted by the poor quality of homes delivered in recent years via permitted development rights. We await the promised planning Policy Paper later this month to find out if it really is radical.

REPORT: Resolution Foundation look at housing quality across generations

They report “Younger age groups have spent lockdown in considerably less salubrious conditions than those in older age brackets. They have less space, are more likely to live in a damp home, and are more likely to have no garden or to live in a derelict or congested neighbourhood than older generations”. They also highlight the differences within age groups where “income and ethnicity are strongly corelated with housing quality”.

REPORT: Shelter & Savills assess the impact of COVID-19 on housebuilding

They report that Savills predict “that up to 244,000 jobs will go in the first year, and as many as 300,000 fewer homes will be built over five years” and Shelter suggest that Government can help avoid this by investing in social housing.

DATA: Open data released by OS, HM Land Registry & Registers of Scotland

OS have released their Open Identifiers products including UPRNs, and HM Land Registry and Registers of Scotland have released INSPIRE spatial data. UPRNs provide a unique  reference number and location for properties while the INSPIRE data provides a polygon for freehold properties. Unfortunately the lack of an open data lookup between UPRNs and addresses, and INSPIRE polygons with title numbers severely constrains their usefulness.

Chart of the Week

There are issues with some of the housebuilding data published by MHCLG as highlighted in our recent conversation with Kate Barker on YouTube. Given these issues, the  number of new build Energy Performance Certificates (EPC) has emerged as a useful leading indicator for net additional supply. The latest data suggests activity in June rebounded to 75% of the level seen in June 2019, having been just 28% of previous levels in April. It is not yet clear whether this rebound will be reflected in actual completions or sustained over the summer. It is possible that the new build market may perform relatively stronger than the existing market given the availability of H2B equity loan though there may be timing issues that emerge between the lodgement date of the EPC and when/if the new home is completed.

Weekly Summary: 29th June 2020

DATA: HMRC report residential transactions increased in May but were still 50% below last year’s level

The latest month’s data is based on partial returns and so, given the market reopened nearly two weeks into the month, we may see substantial revisions in next month’s release

DATA: Bank of England reports just 9,273 mortgage approvals for house purchase in May

Mortgage approvals for house purchase were 86% below the level seen in May 2019. This suggests most of the transactions during May were either using mortgages approved prior to the lockdown or were cash only transactions.

DATA: Zoopla report UK house prices rose 2.4% in May and their UK city index rose 2.1%

House prices are rising slightly slower than in March but still much faster than seen in 2019. Zoopla also report sales agreed have rebounded above pre-lockdown levels.

POLICY: MHCLG announces “new plans to get Britain building”

These include extending planning permission deadlines to 1st April 2021 for sites with expiry dates falling from the start of lockdown to the end of the year. It also includes allowing flexible working hours and changes to speed up the planning appeal process.

NEWS: IFS report on living standards suggests “COVID-19 crisis hit at a time when income growth had already been extremely disappointing for some years”

Their report suggests “Median household income was essentially the same in 2018−19 as in 2015−16” while the “Trends among low-income households had been worse still – they had experienced five years of real income stagnation between 2013−14 and 2018−19”.

NEWS: HM Land Registry set to share their INSPIRE spatial polygon data

HM Land Registry and Registers of Scotland have announced their spatial data set will be available from the 1st of July. However, the usefulness of the data will be constrained without lookups between INSPIRE polygons, title numbers, and UPRNs (Unique Property Reference Number).

NEWS: Geoff Meen and Christine Whitehead blog on why there are no simple solutions to complex problems

Ahead of their new book “Understanding Affordability”, they suggest that “both the demand and supply sides of housing markets have to be addressed together, compared with the concentration on supply in recent years”.

Chart of the Week

There’s been a lot of commentary and speculation suggesting more people are looking to move out of London since the lockdown. This is nothing new as data from the ONS last week reinforces: London has seen a net domestic migration outflow (comparing the number of people arriving from the rest of the UK to those leaving) every year since 1975, and probably since 1946. This is likely to continue though possibly in greater numbers. London’s continued growth will rely on international migration and natural change.

Weekly Summary: 22nd June 2020

DATA: PAYE data from HMRC shows median monthly pay has fallen 4.3% since February

The data also shows the number of paid employees has fallen 2.2% since January but the data for May are early estimates so may be revised.

DATA: ONS data for SDLT receipts in May were 54% below last year’s level

Total receipts (for residential and commercial) for the first five months of 2020 are £1billion below the total for the equivalent period in 2019 reflecting the impact of the lockdown.

NEWS: Nationwide reduce maximum loan-to-value (LTV) ratio to 85%

The credit crunch continues with this change predominantly affecting first-time buyers.

NEWS: UK Finance reports 1.9 million mortgage payment holidays

They report that “One in six mortgages are now subject to a payment deferral”.

REPORT: LGA warns “100,000 social homes a year needed as part of COVID-19 recovery”

The report’s aspirations are welcome but a housebuilding boom driven by government investment in social rented homes is unlikely (though it is 2020 so anything is possible).

REPORT: Centre for Cities suggest “The UK should introduce a flexible zoning system to build more homes”

The planning system is not the sole cause of low housing delivery and low housing delivery is not the sole cause of the housing crisis. It is true that the current approach does not always lead to the best outcomes in terms of where housing is built, its type, its cost, and its quality. But the challenges in changing to a “flexible zoning system” will be great and come with significant risk. It is naïve to suggest implementing a zonal planning system will end the housing crisis as there will still be other un-tackled contributing factors remaining.

REPORT: Transport for New Homes warn the design of new Garden Villages & Towns is “condemning their residents to car-dependent lifestyles”

They suggest the “government should commission an urgent re-assessment of every one of the garden villages and towns in terms of funded sustainable transport”.

REPORT: NAO report 167 (37%) of high-rise buildings identified with unsafe ACM cladding have not begun remediation works as at April 2020

The report says identifying the building owners responsible for funding remediation work has been difficult due to complex ownership arrangements including overseas owners.

REPORT: NHF research on people’s experience of moving to Universal Credit finds significant financial harm caused by the five-week wait

The pre-COVID 19 research found “The vast majority of claimants did not have any money saved to live on over the five-week waiting period” and “There was a very high incidence of struggling to afford necessities following the claim”. The report recommends ending the five-week wait for money.

Chart of the Week

The coronavirus lockdown has led to considerable changes in how people are living and working. A survey by ONS shows 38% of people working during the survey period worked from home while a further 11% worked both from home and travelled to work. This is much higher than pre-lockdown and there is considerable debate about what the long term changes will be. You can watch BuiltPlace consultants Yolande Barnes and Brian Green discuss the future of home and work here.

Weekly Summary: 15th June 2020

DATA: ONS reports a 20% fall in GDP during April

This fall reduced GDP to a level last seen in 2002. It’s worth remembering GDP is a flow rather than stock measure and so we hope this just reflects the temporary impact of the lockdown. However, we fear some of the economic damage will be permanent.

DATA: Rightmove report asking prices in England rose 1.9% in Q2

This result reduced the annual rate to 2.9% (3.5% previously). London was the only region to see a fall in the second quarter and Rightmove’s “Top of the ladder” sector recorded the biggest increase. Rightmove also reported the number of sales agreed on Friday 5th June was just 3% below the same day the previous year.

NEWS: RICS report “Indicators on prices and sales remain negative but enquiries stabilise” in May

Their various measures rebounded from the historic lows in April but remained negative. This may partly reflect the timing of the survey, only just after the market reopened.

NEWS: ONS reports “Renters spend a higher proportion of their budget on essential items that cannot be cut back”

Analysis by ONS shows “Renting households spend 61% of their usual weekly budget on essentials, compared with 52% for households who own their home outright or with a mortgage.” and “This is largely driven by housing costs, which account for 28% of budgets for renting households and 21% for homeowners”.

NEWS: Zoopla reports “New sales agreed return to early March levels”

Their data shows that as of the 7th June: “New sales agreed have rebounded and are just 12% short of the levels seen in early March” and “the higher the price band, the greater the increase in the volume of sales agreed compared to pre-COVID”. However, the recovery in London appears more limited with a slower recovery in the number of sales agreed.

Chart of the Week

The limited availability of higher loan-to-value (LTV) mortgages (as reported by MoneyFacts) is a massive barrier for many prospective first-time buyers given the large numbers that are reliant on them. The chart of the week highlights the trend in mortgage sales to first-time buyers by LTV ratio. It shows 22% of first-time buyer mortgages were above 90% LTV and a further 26% were above 85% LTV in the year to Q2 2019. Any reduction in the availability or increase in the cost of higher LTV mortgages will limit the ability of first-time buyers to access the housing market. While some of the recent trends in limited availability will reflect the lockdown and attempts by lenders to control their lending volumes, the ongoing economic fallout of the pandemic will inevitably be a significant factor. For more information on first-time buyers, check out our recent Digging Deeper slide deck and YouTube conversation.

Weekly Summary: 8th June 2020

DATA: Nationwide reported UK house prices fell 1.7% in May

This reduced the annual rate of change to 1.8% (3.7% previously) and the trend in prices since the beginning of the year suggests year end growth of 1.6% but is likely to fall further given the ongoing recession.

DATA: Halifax reported UK house prices fell 0.2% in May

This was the third consecutive monthly price fall, with a total fall of 1.1% since February. We still have concerns about the new methodology and current market conditions suggest it and other indices will be volatile and subject to revision (where possible).

DATA: Bank of England reported mortgage approvals for house purchase down 72% in April

The mortgage approval figures for April reflect the full impact of the market lockdown, with a massive collapse in home buying. Mortgage approvals for remortgaging were 32% below the level in April last year.

POLICY: MHCLG announce “Ban on evictions extended by 2 months to further protect renters”

This is welcome news but should’ve been announced much earlier to avoid the stress and upset that many renters will have experienced given the uncertainty. There are still significant causes for concern when looking at the immediate future of the private rented sector (for both tenants and landlords).

NEWS: Cass Business School report suggests “Incentives to downsize would ease the housing crisis”

While increasing the number of downsizers would help some people buy a family home, the reality is that most older people only own an average priced home. Downsizing from a house worth £250,000-£300,000 into a new build apartment while also releasing some equity just doesn’t add up irrespective of any stamp duty cuts. The reality is most people are going to age in their existing homes and we need to ensure they are suitable.

NEWS: JRF reports “A third of furloughed private renters worried about paying their rent when lockdown ends”

They are calling for an increase in Local Housing Allowance to cover median rents and the removal of the national cap.

Black Lives Matter: The Case For Improved Data

The inequalities in housing are so great that it is all too easy to think you are doing enough by highlighting the broad issues and campaigning for their improvement. However, it is clear that this is not enough and we should all be much more aware of how these inequalities fall disproportionally on particular groups of people.

The scale of the issue is highlighted by some of the brief statistics available on the housing situation of black people in the UK. Analysis of the ONS Labour Force Survey (Q1 2020) shows that black people are much less likely to live in an owner-occupied home. This is true irrespective of age with 87% of black children under the age of 5 living in rented housing compared to 39% of white children. The stock condition report of the 2016 English Housing Survey found 31% of households with a black household reference person (HRP) lived in poor housing (27% for all households) and 45% lived in a deprived area (19% for all households). The 2017-18 English Housing Survey reports households with a black HRP are more likely to live in a flat (52% compared to 20% for all households) with many more living in high rise flats (7% compared to 2% for all households).

These statistics provide only a very brief summary of the challenges facing black people in respect to housing and they are clearly great. This is an exceptionally difficult topic to tackle given the complexity of housing statistics, the limited availability of data, and the possibility of misinterpreting them. There is also a challenge in how the language and processes used by statisticians and analysts is perceived. But, if we want to solve the inequalities in housing, this is something we can not and should not ignore.

Weekly Summary: 1st June 2020

DATA: Zoopla report UK house prices rose 2.4% in the year to April 2020

This was slightly lower than the revised figure for March (2.7%) while their 20 City Index reported annual price growth of 1.9% (2.0% previously).

NEWS: Rightmove report “busiest ever day” on Wednesday 27th May

They report the daily number of visits to their website exceeded six million for the first time, with activity up 18% compared to the same day last year. However, they warn that sales agreed are 47% lower than last year.

NEWS: Zoopla report 60% of people searching for a home prior lockdown still plan to proceed

They also report large increases in activity on their website and interactions with estate agents following the end of the market lockdown but sales agreed, previously running at around 10% of normal levels, were “up 12% in the week after the lockdown”. They also warn that “We expect the recent spike in demand to be relatively short-lived, with demand likely to moderate over the coming weeks”.

NEWS: Glenigan report 47% of suspended private housing development sites have now restarted

But they also report that over 1/3rd of private residential development sites remain closed, a larger proportion than any other sector.

NEWS: Resolution Foundation report renters are more likely to have fallen behind with housing costs than home owners

Their analysis, based on a survey during 6-11 May, show 17% of social renters and 13% of private renters have been unable to cover their housing costs in recent weeks. 8% of mortgaged home owners have also been unable to. It also shows that, with less financial support, renters are more likely to have reduced their spending to cover their housing costs.

Chart of the Week

There is considerable debate about the role of density in the COVID-19 outbreak and the longer-term impact on urban living. Estate agents and listings portals are reporting increased interest in rural property and there are plenty of people suggesting urban living has lost its attraction.

A shift away from urban living would represent a big change on recent trends. For example, London’s total population has grown by 32% since 1981 compared to 19% for the UK as a whole. However, it is not just London’s total population that has changed but also the profile of its residents. One important trend in recent years, as shown below, has been the growth in the number of children living in London. The number of children aged 0 to 4 years has increased 53% since 1981 and the number aged 5 to 9 years has increased 59%.

London and other urban areas will inevitably remain popular amongst younger adults given the social and economic benefits of living in denser locations. However, recent years had already shown falling numbers of younger children, and tracking the number of children living in urban areas in the future will help prove estate agents right or wrong.