Category: Weekly Summaries

DATA: Halifax reported house prices fell 1.0% in year to November 2023

This was a smaller fall than reported last month (-3.1%) and they suggested (PDF) “The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand”. This is despite other metrics showing a rise in the number of homes available for sale.

DATA: BoE reported quoted mortgage rates fell in November 2023

The average fixed rate on a five-year fix at 75% loan-to-value fell to 4.88% from 5.01% the previous month while the revert-to-rate fell slightly from 8.05% to 8.03%.

DATA: DLUHC published planning applications in England for Q3 2023

They report the number of applications received was 12% lower than Q3 last year while the number decided was 13% lower and the number granted was 14% lower. They also reported the number of “units granted planning permission” as 245,000 in the year ending September 2023, a 15% fall compared to the same period last year.

DATA: HMRC published Stamp Tax statistics 2022/23

The release provides detail on transactions and receipts by property type, price band, and region. It also includes tables on Higher Rates on Additional Dwellings (HRAD), Non Resident SDLT, and First Time Buyers’ Relief.

DATA: ONS published Household Costs Indices for UK household groups

Their analysis shows “The highest rate in September 2023 of 9.3% was experienced by mortgagor and other owner occupiers. This was mainly because of mortgage interest payments, pushing the inflation rate up for this subgroup relative to other tenure types”. Though their analysis also notes: “Restaurants and hotels also increased the rate for mortgagor and other owner occupier households relative to social and other renter households”.

DATA: ONS published People experiencing homelessness: Census 2021

It provides analysis on those living in hostels and temporary accommodation at the time of the census so does not cover all people experiencing homelessness.

POLICY: DLUHC published impact assessments on restricting ground rent

This is the ‘Impact assessment for the government’s consultation “modern leasehold: restricting ground rent for existing leases”’

REPORT: BoE published Financial Stability Report – December 2023

They report “Since the July FSR, household income growth has been greater than expected. This has reduced the share of households with high cost of living adjusted debt-servicing ratios, and a lower expected path for Bank Rate has reduced the extent to which that share is projected to rise. Nevertheless, household finances remain stretched by increased living costs and higher interest rates, some of which has yet to be reflected in higher mortgage repayments. Arrears for secured and unsecured credit remain low but are rising as the impact of higher repayments is felt by borrowers”. They also report:

•“For the typical owner-occupier mortgagor rolling off a fixed rate between 2023 Q2 and the end of 2026, their monthly mortgage repayments are projected to increase by around £240, or around 39%”.

•“new mortgage lending at terms longer than 35 years have increased from around 5% in 2022 Q1 to 12% in 2023 Q3” with 11% of those remortgaging in Q3 2023 extending their existing term.

•“In 2023 Q3, the share of new mortgages with LTI ratios of 4.5 or above stood at 5.5%, compared with 10.0% in 2022 Q2”.

REPORT: IFS reported on family help for first-time buyers

The report provides plenty of information on the financial help provided by families to first-time buyers and highlights the inequalities in help: “Over half of those with university-educated homeowning parents received transfers when buying for the first time, with receivers getting around £35,000 on average. This compares to 29% of those with renting parents receiving transfers, with an average transfer of £11,000”.

REPORT: UK Finance published Household Finance Review for Q3 2023

They report “The contraction in house purchase lending continued, with cost-of-living pressures and higher interest rates presenting a significant barrier to mortgage affordability. Indications are that Q4 will show a further contraction” and “Mortgage lending is weak in almost every segment of the market, but this can be seen most acutely in the tighter end of affordability, in particular lending at higher LTVs and income multiples. Customers with lower incomes are currently putting down deposits equal to twice their annual income in order to meet affordability requirements”.

REPORT(PDF): IMLA published a survey of private rented landlords

They report landlords’ “median average income is £14,000 and profit less than £9,000. Average net rental yields were 3.8% and average return on equity excluding capital gains was 3.7%” and “In contrast to media coverage talking of an exodus of landlords, over the next five years, 35% plan to add properties while only 18% plan to downsize”.

REPORT: Centre for London published Homes fit for Londoners

The report proposes a number of solutions to “resolve the capital’s housing crisis” including development corporations to build on green belt and increasing affordable housing funding.

REPORT: Policy Exchange published “The Property Owning Democracy”

The report warns about the high proportion of younger generations that “would like to live in a socialist economic system” and provides some recommendations such as reforming planning with the aim of creating more capitalists through property ownership.

REPORT: Building Societies Association published Property Tracker

They report “Most homeowners remain confident they can afford their mortgage payments” but “Affordability of mortgage payments remains the biggest barrier to buying a home” and “Less than one in five people think now is a good time to buy a home”.

REPORT: Propertymark published Housing Insight Report for October

They report a fall in registered homebuyers, a fall in new properties coming to the market, and an increase in the time taken to exchange contracts.

CORPORATE: Berkeley Group published Half-year Report

They report they are “not currently investing in new developments due to the planning and regulatory environment” and “The value of net reservations during the period is one third lower than the comparative financial year, reflecting the sharp increase in interest rates and the ongoing elevated political and macro volatility” while “Sales pricing is firm and above business plan levels, with build cost inflation across most trades at negligible levels”.

Chart of the Week

This week’s chart was originally featured in the Times and shows how the average price paid by a mortgaged buyer has changed since the market peak in August 2022. Using all the variables that go into calculating how much someone can borrow (income, mortgage term, mortgage rate, and repayments as % of income), we have assessed how the change in each of these variables has affected the average budget over the last year. It shows the rise in mortgage rates (blue bars) would have substantially reduced the available mortgage on their own but they have been mostly compensated by a rise in the average repayments (purple). Alongside an increase in average mortgage terms (green) and incomes (yellow), this has largely offset the rise in rates, leaving the simple average price paid by a mortgaged borrower in September 2023 just 5% below its peak (black line). Basically, house prices haven’t fallen further because new borrowers are paying more each month.

DATA: Nationwide reported house prices fell 2% in year to November 2023

They report a seasonally adjusted 0.2% monthly rise – the third monthly rise in a row – as the “Shift in interest rate expectations eases affordability pressures”, leaving house prices 5.6% below their peak in August 2022.

DATA(PDF): Zoopla reported house prices fell 1.2% in year to October 2023

They report “Greater realism on pricing supporting new sales volumes which are 15% higher than a year ago and 5% up on 2019 levels” with “Sellers accepting 5.5% off the asking price to agree sales, an average discount of £18,000 – the largest gap for over 5 years”. They also report the number of “Homes for sale touches a 6-year high boosting choice and reenforcing the buyer’s market and downward pressure on prices”.

DATA: BoE reported a small increase in mortgage approvals for purchase

The data for October showed a seasonally adjusted 8.5% increase on last month’s figure but the total was still 17% lower than last year and 29% lower than the 2014-19 average.

DATA: HMRC reported a small fall in residential transactions in October

The provisional estimates show the number of seasonally adjusted sales were 2.5% lower than the previous month and 16% lower than their pre-pandemic average.

DATA: BoE reported further increases in average effective mortgage rates

The average rate on new lending (purchase and remortgage) rose to 5.27% in October, from 5.03% the previous month and 3.10% last year. This increased the average rate on outstanding balances to 3.22% compared to 3.16% last month and 2.29% last year.

DATA: DLUHC published net additional dwellings in England for 2022-23

See Chart of the Week for more detail on the latest release.

DATA: DLUHC published affordable housing supply in England for 2022-23

The release shows there were 63,605 affordable homes delivered during the year, a 7% increase on the previous year. The number of starts on site was 71,046, a 12% increase.

DATA: DLUHC published statutory homelessness in England for Q2 2023

The data shows “38,810 households were initially assessed as homeless and therefore owed a relief duty, up 6.9% from the same quarter last year” and “On 30th June 2023, 105,750 households were in temporary accommodation, which is an increase of 10.5% from 30th June 2022”.

DATA: ONS published percentage of dwellings covered by an EPC

The release provides data on “the percentage of dwellings covered by an live Energy Performance Certificate in England and Wales, as at 31 March 2023 and the percentage of dwellings covered by an Energy Performance Certificate by cumulative year and tenure”.

DATA: ONS published impact analysis on the redevelopment of private rental prices statistics

They report “On average, UK annual percentage change reported by the Price Index of Private Rents (PIPR) is 0.7 percentage points higher than the Index of Private Housing Rental Prices (IPHRP) between January 2016 and October 2023”. The new index will provide local authority and property type indices and will hopefully be released in March.

DATA: HMT published Mortgage Guarantee Scheme quarterly statistics

They report “There were 39,253 mortgage completions from scheme launch on 19 April 2021 to the end of June 2023, which represents 1.6% of all residential mortgage completions in the UK”. However, the success of the scheme should not be judged on the number of completions it directly supports.

DATA: Scottish Government published private sector rent statistics

They report “Average rents for 2 bedroom properties, the most common size of property in the private rented sector, increased at a Scotland level by 14.3% in the year to end September 2023, to reach an average of £841 per month”.

POLICY: DLUHC introduced Leasehold and Freehold Reform Bill

News reporting suggests the bill does not ban leaseholds on new build houses with government proposing to insert them via an amendment.

POLICY: DLUHC responded to committee report on planning reform

They published their response to the seventh report of the Levelling Up, Housing and Communities Committee on reforms to national planning policy.

REPORT: NHF reported on older people in the private rented sector

They report “Nearly half (48%) of private rented sector tenants aged 65 or over are in the bottom 20% of all household incomes” and “Two in five older private rented sector tenants (42%) struggle to meet the cost of either bills or essentials or both”.

REPORT: HBF reported on housebuilding and nutrient pollution

They analysis by Brookbanks finds “the occupancy of new homes accounts for just 0.29% of total nitrogen emissions each year and 0.73% of total phosphorus”.

REPORT: CPRE reported on the state of rural affordable housing in England

They report “Communities in rural England face an existential threat from an acute and overlooked shortage of genuinely affordable housing”.

REPORT: CPS reported on migration and housing

They suggest “we should instead be building 515,000 new homes each year – more than 73% higher than the official target”.

REPORT: ASI reported on housebuilding polling

Their polling “demonstrated support for building more homes in local areas, if it would increase the availability of affordable housing and if it is designed to fit in with the surroundings”.

CORPORATE: Rightmove published Trading Statement

In a sign of the difficulties faced by housebuilders trying to sell homes, they report “The majority of the growth [in average revenue per advertiser] has been driven by new homes developers, who have extended their usage of our Native Search Adverts and Advanced Development Listing products to sell their developments”. They also report “we took an important strategic step by launching our first broker product, to enable consumers applying for a mortgage to access brokered advice through our site”.

Chart of the Week

This week saw the release of the latest net additional dwellings data for England by DLUHC. This data covers the 2022-23 financial year and is the most comprehensive measure of housing supply (though it isn’t perfect and gets revised). The headline results were unsurprising with both net additions and new build completions unchanged from the previous year (234,400 and 212,600 respectively). However, the release gives us more detail and we’ll be updating our housing supply by local authority charts next week. In the meantime, we charted the headline net additions data by regions below. It shows a mixed picture with net additions in London 10% lower than the previous year (though London’s figures tend to get revised upwards) and net additions in the East Midlands rising by 14%

DATA: ONS reported SDLT receipts of £1.2 billion in October

The data covers stamp duty land tax receipts for both residential and commercial property and was 16% lower than the same month last year.

DATA: ONS published 2022 population estimates for England & Wales

They estimate the population of England & Wales increased by 578,000 people in the year to mid-2022,  driven largely by net international migration of 541,000 people. Alongside this release, ONS also published rebased population estimates for the period 2012-2021.

DATA: ONS published long-term international migration data to June 2023

They report “The provisional estimate of total long-term immigration for year ending (YE) June 2023 was 1.2 million, while emigration was 508,000, meaning that net migration was 672,000”. ONS also published analysis on international student migration and estimating international migration for the period 2012-21.

DATA: Home Office published quarterly immigration system statistics

The latest release finds “There were an estimated 129 million passenger arrivals from outside the Common Travel Area (CTA) in the year ending September 2023 (including returning UK residents)”. This was a 35% increase on the same period last year. The release also shows number of visas issued during the year to September 2023 was 30% higher than the same period last year and provides details on the different types of visa.

DATA: ONS published business demography data for 2022

The data shows 2022 was the first year that “the business death rate has exceeded the business birth rate since 2010”. Separate ad hoc data on businesses involved in the construction of domestic buildings shows a sizeable increase in the number of small active enterprises (employment size band of 0-9). The number of these enterprises rose from 29,470 in 2011 to 59,170 in 2021. Meanwhile, the number of enterprises with higher employment only increased from 2,565 to 2,685. This might suggest de-risking in the construction sector with greater use of subcontracting to smaller firms. Also please note that this data doesn’t tell us anything about SME housebuilders.

DATA: ONS published Private Rental Market in London data

The release provides similar data to the regular national release but also covers postcode districts.

DATA: Scottish Government published Short Term Lets Licensing Statistics

The release provides data on the number of licence applications received, granted, and pending up to 30^th June 2023.

POLICY: HM Treasury published Autumn Statement

The statement included the announcement that “In April 2024, LHA rates in Great Britain will be raised to the 30th percentile of local market rents”, the extension of the Mortgage Guarantee Scheme to June 2025, and “a consultation on a new Permitted Development Right for subdividing houses into two flats without changing the façade”. Plenty of organisations have published their take on including Resolution Foundation and the IFS.

REPORT: OBR published Economic and fiscal outlook – November 2023

See Chart of the Week for more detail on their housing market forecasts.

REPORT: NEF reported on Reforming Property Tax

They report tax reform is an important tool to fix the housing market and dampen further property speculation. They suggest “It can close loopholes, raise revenue to invest in more social homes, and shape behaviour to achieve wider policy objectives, such as increasing the volume of homes that are of secure tenure (homes for social rent and owner occupation)”.

REPORT: HBF published “Firmer Foundations” policy wish list

Their ten points included using existing housing stock rather than household projections as the baseline for the Standard Method and abolishing stamp duty for homes with an EPC rating of B or above. I didn’t spot them asking for a new version of Help to Buy though perhaps it is wrapped up in the roundtable on green/energy efficient mortgages point.

REPORT: RTPI reported on planning resources in Wales

It “explores the ways in which existing resources in the planning system in Wales can be used as efficiently and effectively as possible”.

BLOG: Bank Underground on why lower prices could lead to higher rates

They model possible changes in loan-to-value ratios under a 10% house price fall and suggest an “additional 350,000 mortgagors could be pushed above an LTV of 75%”. They note that if the spread on high loan-to-value mortgages rose by 100 basis points then this could “increase their annual repayments by an extra £2,000 on average”.

CORPORATE: Grainger published Final Results

They report “Occupancy in our PRS portfolio remains at an all-time high of 98.6%. Like-for-like rental growth is also strong at 8.0% for our PRS portfolio, in line with wage inflation, split between 9.2% on new lets and 7.2% on renewals”.

Chart of the Week

Alongside the Autumn Statement, the OBR published their latest Economic and fiscal outlook. This document includes details on their forecasts for the housing market including house prices (shown below). Their latest forecast predicts prices to fall -4.7% in 2024 and a total peak to trough fall from Q4 2022 to Q4 2024 of -7.6%. This a slightly slower correction and recovery than forecast last year (as per chart). On transactions, they forecast 1 million transactions this year, falling to 933,000 next year and 987,000 in 2025, before recovering to 1.1 million in 2026. On housebuilding, they forecast completions by private enterprises (a flawed measure) to fall by around 30% from current levels.

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

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

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

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

DATA: ONS published limited UK labour market statistics

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

DATA: ONS published index of private housing rental prices

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

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

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

POLICY: Lee Rowley appointed Minister for Housing

POLICY: Welsh Government launched consultation on Council Tax reform

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

REPORT: CMA published land banks and planning working papers

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

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

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

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

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

REPORT: NAO published Resilience to flooding report

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

REPORT: LGA reported on bringing empty homes back into use

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

REPORT: Resolution Foundation published 2023 intergenerational audit

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

REPORT: IFS reported on housing costs and income inequality

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

REPORTS: CaCHE published three reports

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

REPORT(PDF): IMLA published Intermediary Mortgage Market Tracker

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

REPORT: Savills on housing policy and the development land market

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

CORPORATE: Crest Nicholson published trading statement

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

CORPORATE: MJ Gleeson published AGM Trading update

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

Chart of the Week

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

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

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

DATA: ONS reported GDP was unchanged in Q3 2023

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

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

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

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

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

DATA: MoJ published mortgage and landlord possession statistics

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

DATA: DLUHC published Council Taxbase in England: 2023

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

DATA: NHBC published housebuilding statistics for Q3 2023

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

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

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

POLICY: DLUHC launched a short consultation on capping ground rents

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

POLICY: Welsh Government launched Help to Stay scheme

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

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

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

REPORT(PDF): RICS published October residential market survey

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

REPORT: WPI reported on the housebuilding outlook

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

REPORT: The Housing Forum reported on streamlining planning

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

REPORT: RTPI published “State of the Profession 2023”

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

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

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

NEWS: Savills published latest house price forecasts

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

CORPORATE: Persimmon published Q3 trading statement

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

CORPORATE: Taylor Wimpey published trading statement

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

CORPORATE: Redrow published AGM statement

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

Chart of the Week

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

DATA: Nationwide reported UK house prices fell 3.3% in year to October

They report the annual rate of falls eased from -5.3% the previous month. This partly reflects base effects and the impact of an unexpected 0.9% month-on-month increase. This monthly increase was blamed on “the fact that the supply of properties on the market is constrained” though other data suggests the number of homes available for sale is rising.

DATA(PDF): Zoopla reported house prices fell 1.1% in year to September

They report “4 in 5 housing markets are registering small annual price falls” and the stock of homes for sale is 45% higher than the same period last year and 19% higher than the five-year average. They also report “2024 is set for another year of 1m sales. This could be higher if mortgage rates fall back towards 4% sooner than expected in 2024”.

DATA: HMRC reported 85,600 residential transactions in September

The number of seasonally adjusted sales was 0.6% lower than the previous month and 17% lower than last year. Sales were 14% lower than the pre-pandemic average.

DATA: BoE reported another fall in mortgage approvals for house purchase

Their data for September showed a 5% monthly fall in the number of approvals for purchase. This was 32% lower than the same month last year and 35% lower than the pre-pandemic average. Approvals for remortgaging were 58% lower than last year as most borrowers stick with their existing mortgage provider (84% in Q2 according to UK Finance).

DATA: BoE reported the average rate on new loans hit 5.03% in September

This was the first time the average rate, covering both purchase and remortgage, was above 5% since November 2008. The average rate on outstanding balances increased to 3.16%.

DATA: HMRC published quarterly SDLT transaction statistics

See Chart of the Week for more detail on the stamp duty stats.

DATA: HMRC published Property rental income statistics: 2023

This release provides “information about unincorporated landlords that file Income Tax Self Assessment returns, their property income, and related expenses”.

DATA: ONS published Energy efficiency of housing: 2023

The analysis is based on energy performance certificates and provides “Insights on the energy efficiency, carbon dioxide emissions and central heating main fuel type for new and existing homes by property type, tenure, and property age”. Interestingly, they quality checked the EPC data against VOA data and “After we applied these quality assurance checks, 46.2% of the original EPC dataset remained”.

DATA: ONS published Changes in private rental sector behaviour

The release provides “Experimental longitudinal analysis of observed recent changes in the abundance and magnitude of private rental price changes in England and Wales”. They found “prices had risen by 10% or more for around one in five privately rented properties revisited in September 2023 in England and Wales”.

DATA: ONS published Employee earnings: 2023 (ASHE)

They report “Median weekly earnings for full-time employees was £682 in April 2023, which is a 6.2% increase over the £642 in April 2022; this is the highest growth since comparable records began in 1997”.

DATA: VOA published local reference rents by BRMA and property size

The data provides average rents by broad rental market area (BRMA) and number of bedrooms.

POLICY: BoE kept interest rates at 5.25%

The Monetary Policy Report also provides analysis on the impact of higher interest rates on demand including via the housing market. They note that while there are a large number of people on fixed rate mortgages that have not seen an increase in rates, the “aggregate reduction in consumption is likely to materialise somewhat faster than the realised increase in mortgage costs” as people cut back on spending in anticipation. They note their “NMG survey shows that just over 30% of mortgagors who are yet to reach the end of their fixed-rate loan have already spent less as a result”.

REPORT: Resolution Foundation reported on household wealth

They investigate “how wealth was distributed across the nations and regions of Britain on the eve of the pandemic, what determined those differences, and how wealth has evolved in different places since the recent rise in interest rates began”.

REPORT: DEMOS reported on delivering Net Zero

The report is the third in the series and looks at how investing in home improvement can help achieve net zero objectives.

REPORT: UK Housing Review published their autumn briefing paper

The PDF report provides a useful update on the new policy and housing market developments.

CORPORATE: Empiric Student Properties published trading update

They report “Strong rental growth underpins confident outlook and increased dividend target”. They also report “For the second year running, our accommodation is effectively full with revenue occupancy ahead of target at 99 per cent” and like-for-like rental growth of 10.5% and a larger proportion of UK students than previously: “UK students represent 50 per cent of all bookings, the balance comprising 31 per cent Chinese and 19 per cent other international”.

Chart of the Week

The latest HMRC quarterly stamp duty land tax (SDLT) release shows the number of residential transactions increased in Q3 compared to the previous two quarters but was 18% lower than the same quarter last year. Unfortunately, comparisons by price band to previous years is complicated by changes to SDLT thresholds and tax holidays. However, the data shows that the upper end of the market (£500k & above) and the investment/second home markets (via Higher Rate on Additional Dwellings transactions) have seen slightly bigger falls of around 22% compared to the same quarter last year.

DATA: ONS published delayed UK labour market overview

The delayed publication provides an alternative estimate of the UK labour market derived from PAYE real-time and claimant count data. The estimates suggest UK unemployment rose to 4.2% in the period June to August 2023, a 0.2 p.p. rise on the previous quarter.

DATA: ONS published private rental affordability data for 2022

The analysis, comparing private rents to the gross monthly income of private renting households, shows the “median household income could expect to spend 26% of their income on a median-priced rented home in England”. In London, the median rent of £1,450 being equivalent to 35% of median income. An issue with this type of analysis in the private rental market is that for a significant proportion of renters in some markets (students), the relevant income is that of their parents or guardians rather than the renters themselves.

DATA: DLUHC published Energy Performance Certificate data for Q3 2023

See Chart of the Week for more detail on the latest release.

DATA: RSH published registered provider social housing stock and rents

The data, covering England up to 31^st March 2023, shows registered providers owned 4.5 million homes, an increase of 0.8% over the year. They also report a “4.1% increase in average general needs (social rent) net rents since 2022”.

DATA: ONS published 2021 Census origin-destination data

This is another fantastically useful Census release that will be compromised by its timing.

DATA: ONS published 2021 Census data on vacant and second homes

Census data shows 6.1% of dwellings were unoccupied in England on Census Day but when adjusted for second homes, the share of “truly vacant dwellings” was 5.4%.

POLICY: Levelling-Up and Regeneration Bill becomes law

According to DLUHC, the new laws will “speed up the planning system, hold developers to account, cut bureaucracy, and encourage more councils to put in place plans to enable the building of new homes”. Lichfields have summarised the key planning related sections.

REPORT: GLA published Housing in London 2023 report

The report provides a comprehensive summary of the state of housing in London, covering a range of different topics and lots of charts.

REPORT: Unipol and HEPI reported on student accommodation costs

They report “Rent now swallows up virtually all of the average maintenance loan as the student accommodation market reaches ‘crisis point’”. They propose “Major reform of the student maintenance system”, “Financial support and introduction of affordable room options”, and “Facilitating more supply”.

REPORT: UCL CASA reported on London housing supply and the green belt

The paper investigates “the volume of housing delivery and travel sustainability outcomes” and suggests green belt reform. The research is also covered in this blog.

REPORT: JRF reported on destitution in the UK 2023

They find “approximately 3.8 million people experienced destitution in 2022, including around one million children. This is almost two-and-a-half times the number of people in 2017, and nearly triple the number of children”.

REPORT: JRF reported on housing costs and tackling homelessness

They have published two briefings setting out their recommendations.

REPORT: CSJ reported on building a better private rented sector

They report “PRS Reform is crucial for low-income households”. They suggest “Improving security for tenants”, “Encouraging and enabling good landlords”, “Cracking down on rogue landlords”, and the need to improve the quality of the sector and support affordability.

REPORT: CaCHE evaluated capital grant for social rented housing

The review of additional capital grant for new social rented homes in areas of “high affordability pressure” found it was an “effective intervention for stimulating the supply of social rent” but also found it “did not have an effect on new supply from local authorities, nor did it result in more affordable housing overall”.

REPORT: Savills reported on the residential development land market

The report, covering Q3 2023, finds “A relatively weak land market with pockets of resilience”. They report a 39% fall in development land sales compared to the same quarter last year and UK greenfield land values fell 8% in the year to September 2023.

REPORT: Propertymark reported on the state of the housing market

They report “Prospective buyer numbers down” but “Sales agreed levels remain static”.

CORPORATE: Vistry Group published trading update

They report “average weekly sales rate since 1 July has been 0.60 (2022: 0.64) and 0.76 (2022: 0.77) for the year to date” and “Open market demand continues to be supported by incentives of c. 5%”.

CORPORATE: Foxtons published trading update

They report “Q3 Sales revenue was down 17% to £9.9m (Q3 2022: £11.9m), compared to a 23% reduction in market exchange volumes. On a year-to-date basis, Sales revenue was down 18% to £26.9m (Q3 2022 YTD: £32.7m)”. They also report “the rate of rental price growth moderated compared to the previous two quarters, reflecting more normalised supply and demand dynamics”.

Chart of the Week

The number of new build Energy Performance Certificates is a useful leading indicator for net housing supply. The headline figure for England shows the total number of new build EPCs in the year to Q3 2023 was 237,000. This was 4.2% lower than the same period last year. However, as the chart below shows, there has been considerable regional variation over the period with the national falls largely driven by an 11% fall in London and 8% fall in the South East (also the largest regions by delivery). Meanwhile, Yorkshire and Humber, East Midlands, and East of England have all see slight increases in delivery over the period. It is likely that we will see these figures fall further in coming quarters given current market conditions.

DATA: Rightmove reported asking prices fell 0.8% in year to October 2023

They report the monthly figure was the “smallest average asking price increase at this time of year since 2008” and “The number of sales agreed are 17% below this time last year”.

DATA: ONS reported house prices rose 0.2% in the year to August

The index is based on completed prices and shows the annual change in house prices ranged from +3.6% in the North East to -1.6% in the East across English regions.

DATA: ONS reported CPI rose by 6.7% in the year to September

This was the same annual rate as recorded last month.

DATA: ONS reported private rents rose 5.7% in year to September

See Chart of the Week for more.

DATA: ONS delayed publication of UK labour market statistics

They delayed publication of data dependent on the labour force survey but still published estimates from the PAYE data, vacancies, and average weekly earnings. Regular pay (excluding bonuses) rose 7.8% in the year to August while total pay growth was 8.1%.

DATA: ONS reported SDLT receipts were 29% lower compared to last year

The data for September reports £1.1bn in residential and commercial property SDLT receipts, 29.1% lower than in the same period last year.

DATA: ONS published UK housebuilding data for the year to March 2023

Unfortunately this data undercounts delivery and should not be relied upon.

REPORT(PDF): IMLA published Market briefing: September 2023

The report provides a summary of the “Key developments in the housing and mortgage markets”.

REPORT: TwentyCi published Property & Homemover Report Q3 2023

They report there was a 9.7% quarterly fall in the number of sales agreed in Q3, though this might reflect seasonal trends. A comparison with previously published data shows the number of sales agreed was 18% lower than the same period last year. They also report “a rise in supply of 2.6% compared to 2022, accompanied by a 16% decline in demand”.

REPORT: Sheffield Hallam reported on housebuilder “value extraction”

The report shows “how billions of pounds have been lost to new housing supply through dividends, share buy backs and other means of dispensing the ‘surplus capital’ of large housebuilders. The value extracted is comparable to the total amount of public expenditure on new affordable homes”.

REPORT: Fabians published “Plans For Power”

Amongst the many recommendations, they suggest: “At least 35 per cent of new homes to be social or affordable housing”, “Significantly increase grants to build homes for social rent”, “Reduce the costs of buying land”, “Build new communities on well-connected green belt”, and “Buy existing homes for social housing”.

REPORT: Adam Smith Institute suggested a “debt free solution to the housing crisis”

They suggest using CPOs to buy metropolitan green belt land with shares issued to “land owners, local residents, central and local Government, which can be traded on the stock market”.

REPORT: Savills reported on the “Single Family Housing” market

The single-family rental market involves the purchase of houses rather than flats (multi-family). They report “Over £1 billion invested in the first nine months of 2023 – more than triple the amount invested in 2022” as housebuilders have struggled to sell to owner-occupiers.

REPORT(PDF): LPDF reported on “Public opinion on housing and development”

The land, planning and development federation commissioned research which found “The public want more affordable housing and a plurality support building it in their area” and “People can be persuaded to support building on greenfield land and the Green Belt”.

NEWS: Zoopla launched “Back to Market” listings tag

These tags flag properties that have returned to the market with Zoopla stating “With approximately 40% of sales falling through at the moment, the new feature will help agents boost demand for these listings and will also capture the attention of consumers”.

CORPORATE: Bellway published preliminary results

They report “The private reservation rate per site per week in the period was 0.41 (1 August to 2 October 2022 – 0.58), including a contribution of 0.03 (1 August to 2 October 2022 – nil) from the bulk sale”. The bulk sale was to a private rental sector investor.

CORPORATE: Barratt Developments published AGM trading update

They report “In the period our net private reservations per average week were 169 (FY23: 188) and net private reservations per active outlet per average week were 0.46 (FY23: 0.55). During the period sales to the private rental sector and registered providers of social housing contributed 0.04 (FY23: 0.04) to the reservation rate”.

CORPORATE: On The Market published interim results

They report “The New Homes segment experienced good growth, with revenues up 26%, driven by an increase in advertiser numbers and ARPA” as developers struggle to sell through their own channels. They also received an offer for the company from CoStar.

Chart of the Week

This week’s chart replicates one found in the latest ONS rental index release. It highlights the rapid rise in rents based on both asking and newly let properties over the last two years. There are now some signs of growth at least stabilising around 10% p.a. and some tentative signs in other releases that growth is slowing in London (by far the biggest private rental market). Meanwhile, the ONS index is based on all rents (at least in England and Wales). As such, it takes much longer for the increases in new lets to feed through to the ONS index.

DATA: ONS estimates monthly GDP rose 0.5% in year to August

They reported GDP grew by 0.2% in August following a 0.6% fall in July. The data has been revised and now shows GDP was 1.4% higher than its peak prior to the pandemic.

DATA: DLUHC published statutory homelessness in England, 2022-23

They report “140,790 households were owed a prevention duty in 2022-23, up 4.8% from 2021-22” while the increase in households with children was 7.9%. They also report “On 31 March 2023, 104,510 households were in temporary accommodation, an increase of 10.0% from 31 March 2022”.

DATA: DLUHC published green belt statistics for England, 2022-23

The release shows there was “an increase of 860 hectares (0.1%) in the area of land designated as Green Belt between 31 March 2022 and 31 March 2023”.

DATA: ONS published stats on older people living in care homes in 2021

The release shows “278,946 people aged 65 years and over living in a care home in England and Wales”. They also report “Between 2011 and 2021, there was a 4.0% decline in the number of care home residents aged 65 years and over, while the total usual resident population in this age group rose by 20.0% over the same period”.

DATA: ONS published stats on small area income estimates

The release provides “Small area model-based income estimates covering local areas called Middle layer Super Output Areas (MSOAs) in England and Wales”.

DATA: Bank of England published Credit Conditions Survey for Q3 2023

See Chart of the Week for more detail.

DATA: Homes England published Help to Buy equity loan arrears data

The FOI release shows the number of accounts that are in arrears on interest payments on their Help to Buy Equity Loan has increased from 1,592 in 2021, to 2,413 in 2022, and then to 4,854 at the end of July 2023.

POLICY: DLUHC published details on Brownfield Land Release Fund

The release provides a local authority breakdown of the second phase of the fund.

POLICY: Kier Starmer’s speech at Labour Conference

Housing was a key part of the speech with a commitment to build 1.5 million homes and threats to “fight the blockers” including “land-bankers” and “councils refusing to develop a local plan” as he tackles the “restrictive planning system”.

POLICY: DLUHC published reforms to new shared ownership rents

They propose “switching the maximum amount that shared ownership rents can increase by once a year from the Retail Prices Index (RPI) plus 0.5%, to the Consumer Prices Index (CPI) plus 1%”. This will only apply to new shared ownership homes.

REPORT(PDF): RICS published September residential market survey

They warn “Conditions remain challenging across the sales market” as “Indicators on demand, sales, instructions and prices all remain in negative territory”.

REPORT: Independent Age reported on older low income renters

They warn “The current private rented sector in England is not fit for the growing number of older people who deserve a place to call home” and provide a number of recommendations.

REPORT: UBDC reported on “the suburbanisation of poverty”

The report finds that since 2011, “low-income households in private renting have been increasingly pushed to less central locations as rents in more central areas have risen faster”.

REPORT(PDF): BPF reported on the co-living market

The very simple report provides a brief summary of the co-living market.

REPORT: Knight Frank reported “Prime Country House” price falls

They report “Prime UK regional prices suffered their largest annual fall since the global financial crisis in the third quarter of 2023” with prices falling 6.1% in the year to September.

CORPORATE: PRS REIT published full year results

They report “rent collection at 99% for FY 2023” and “occupancy at 97% at 30 June 2023”. They also report “like-for-like blended rental growth” of around 7% on stabilised sites and growth of around 12% on new lets. Their “average rent as a proportion of gross household income” was “very strong at 22% as at 30 June 2023”.

CORPORATE: Watkin Jones published trading update

They report “the Group has incurred certain additional costs, including acceleration costs to ensure successful completion on two schemes” and they have “had significant focus on operational and cost efficiencies within the business”.

CORPORATE: Travis Perkins published trading update

They report “The Group has continued to experience challenging market conditions with the pronounced slowdown in new build housing and domestic RMI activity persisting into the third quarter. As a result, Group revenue declined by (1.8)% in the period with like-for-like sales also down (1.8)%.”

Chart of the Week

The Bank of England published their latest Credit Conditions Survey this week. It shows “the availability of secured credit to households decreased in the three months to end-August 2023 (Q3)” and was “expected to decrease slightly over the next three months to end-November 2023 (Q4)” (dotted line). Meanwhile, the demand for secured lending decreased more than previously expected in Q3 and was expected to remain weak in Q4 (dotted line). The survey also shows “Lenders reported that default rates on secured loans to households increased, and losses given default increased slightly in Q3. Both were expected to increase in Q4”.

DATA: Nationwide reported house prices fell 5.3% in year to September

They report no monthly change on a seasonally adjusted basis in September. The annual rate of price falls is likely to ease through the rest of the year as last year’s autumn declines fall out of the comparison period.

DATA: Halifax reported house prices fell 4.7% in year to September

They report(PDF) a -0.4% monthly fall and prices are just “+1.0% above the level seen in December 2021 (£275,889), the month when Base Rate first edged up from 0.1% to 0.25%”.

DATA: BoE reported falls in quoted fixed rate mortgages in September

The average 5 year fix at 75% loan-to-value fell to 5.23%, from 5.52% the previous month. However, the average revert-to-rate increased to 7.93%, its highest level since Dec 1998.

DATA: Rightmove reported annual rental growth of 10% in Q3 2023

The figure excludes London where rents increased 12.1% over the same period. They also reported “The number of enquiries each property is receiving from would-be tenants has more than tripled to 25 from eight at this time in 2019” with “41% more tenants looking to move than in 2019 and available supply down by 35%”.

POLICY: DLUHC published Long-Term Plan for Towns

It will “provide long-term investment in 55 towns to be spent on local people’s priorities such as regenerating local high streets and town centres or securing public safety”. The selection methodology note is available here.

REPORT: Resolution Foundation on the macroeconomic policy outlook

They report “Only around a half to a third of the of the impact of past interest rate increases are evident in the data by June 2023” and “The UK labour market is loosening faster than elsewhere and is set to loosen further as the delayed impact of higher interest rates comes through”. They suggest this means the BoE is “is less likely to adopt a ‘high for long’ strategy” than the Fed.

REPORT: JRF published “Poverty in Scotland 2023”

They find “Over one million people still live in poverty in Scotland, with nearly half of those (490,000) living in very deep poverty” and “While the Scottish Child Payment is likely to reduce child poverty, the growth of in-work poverty is holding back further progress”.

REPORT: HBF reported on UK housing stock in an international context

They review how the UK’s housing stock compares to other countries.

REPORT: UCL suggest building more social and affordable housing

They suggest it could “save the UK government an estimated £1.5 billion a year overall by eliminating substantial costs related to homelessness”.

NEWS: Knight Frank published house price forecasts

They predict UK house prices will fall 7% this year and 4% in 2024.

CORPORATE: Grainger published trading update

They report PRS like-for-like rental growth of 9.2% on new lets and 7.2% on renewals and “Occupancy in our stabilised PRS portfolio remains at record-high levels” at 98.6%.

CORPORATE: Unite Students published trading update

They report “99.7% occupancy for the 2023/24 academic year (2022/23: 97.9%)” and “Rental growth of 7.3% for the 2023/24 academic year”.

Chart of the Week

This week’s chart shows how house price growth based on the non-seasonally adjusted Nationwide index tends to evolve through the year. During more normal years (e.g. 2017-2019), prices tend to rise in the first half of the year then stagnate or fall from July. So, in the absence of an external driver, by the summer we can have a good guess at what the year-end price change will be. This year started much weaker than normal but then recovered from March. However, prices then peaked earlier than normal (June) and prices have been weakening at a faster rate than usual since then. Based on these trends in previous years, we would currently expect year-end annual growth of -3.3% in December 2023 though the downside risks are large.