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.

Weekly Summary: 23rd October 2020

DATA: HMRC report transactions back to normal levels but no sign of boom

Transactions in September were just 0.7% below the same month in 2019 but were expected to be slightly higher. This may reflect the reported delays in reaching completion.

DATA: ONS report UK house prices rose 2.5% in year to August

The ONS index is based on completed sales so it may be around November/December before we see the higher growth rates reported by other indices.

DATA: Rightmove report asking prices rose 5.5% in year to (mid) October

The Rightmove index is a consistent leading indicator though could be starting to show sellers’ expectations rather than the buyers’ reality. They also report more sales agreed in the year to date than in the same period in 2019. However, there are some signs of activity slowing in October.

NEWS: Yomdel property sentiment tracker shows demand slowing

The tracker is based on activity in live chats on estate agents’ websites. It shows the big increase in both buyer and seller activity over the summer but has now started to fall back. Despite this fall, buyer and seller activity are both around 20% higher than normal levels.

NEWS: UK Finance report 162,000 payment deferrals in place, down from 1.8 million in June

Payment deferrals are down but there are other supports in place for stretched borrowers including extending the mortgage term, moving to interest only, or capitalising the interest.

REPORT: BPF report on housing and care for older people

The report provides a useful summary on the state of purpose-built housing for older people. While increasing the availability of purpose-built housing is important, the reality is that most people will age in their existing homes. We explored this issue in our recent Housing Conversation with Henry Smith from The Centre for Ageing Better.

REPORT: HBF survey of SME housebuilders suggests a “tough battle ahead”

The results highlight the challenges faced in the current economic environment along with the usual complaints about the planning system and changes to Help to Buy equity loan.

REPORT: CPRE suggest there’s enough brownfield land for 1.3m homes

Brownfield land makes an important contribution to housing supply but there isn’t enough to meet appropriate long-term levels of housing supply. Not all brownfield land will be appropriate for housing and changing housing preferences post-pandemic could have a big impact on the already significant shift in housing delivery towards lower density areas.

REPORT: Knight Frank report identifies areas for buying development land

The report is an interesting insight into their research for supporting land buying strategy.

Chart of the Week

There are widely reported delays in sales reaching completion at the moment. This is not surprising given the higher than normal levels of activity and the challenges faced by working from home and other disruptions. Data from Zoopla suggests that normally around two-thirds of sales agreed have completed three months later. We have combined this with sales agreed data to create a simple model showing when the sales agreed during the summer should reach completion as per the chart opposite. September’s transactions figure was in line with recent years and slightly lower than expected by the model. Actual sales over the rest of the year look set to be 30-50% above normal levels if they all reach completion.

Weekly Summary: 12th October 2020

DATA: ONS report a 2.1% monthly rise in GDP during August

This was lower than expected by many with GDP still 9.2% below February’s level.

DATA: Halifax report a 7.3% annual rise in UK house prices in September

A 1.6% monthly rise during September increased annual growth from the 5.2% reported in August to 7.3%. That’s the highest rate since June 2016.

DATA: ONS report a 2.3% annual rise in UK house prices in July

This data lags the mortgage approval indices as it is based on completions. We will have to wait several months to see if the current high house price growth reported in other indices feeds through to the ONS index. Also worth noting is that, in recent months, the ONS has been revising downwards the first reported price growth figure in subsequent releases.

DATA: BoE report continued increases in mortgage rates during September

See Chart of the Week for more information.

REPORT: RICS report “Housing market activity continues to advance at a strong pace”

They report “Survey metrics on demand, sales and instructions remain firmly positive” and “House price growth accelerating right across the UK”. The London rental market is the one weak market with falling tenant demand and negative expectations for rents.

REPORT: UK Housing Review 2020 released

The full report is available to purchase but several of the commentary chapters are available to read for free here and all the data tables are available here.

REPORT: GLA launch Housing in London 2020

The report contains a wealth of fascinating data and analysis on the state of London’s housing.

REPORT: Shelter publish “Building Our Way Out

The report suggests that investing in new social rented housing could help boost the economy, preserve capacity in the housebuilding industry, and help solve the “housing emergency”. The current government appear fixated on homeownership and it appears unlikely they would take this approach unless they absolutely have to.

Chart of the Week

The latest Bank of England data on available mortgage rates showed another increase in average rates in September as concerns about the prospects for the economy and housing market continue. The cost and limited availability (as reported in this FT article) of higher loan-to-value mortgages are the most visible signs of the ongoing credit crunch. However, they are not the only effects of lenders’ risk aversion with any cause for concern (e.g. self-employed, in the furlough scheme, or use of payment holidays) reasons to avoid lending.

Weekly Summary: 5th October 2020

DATA: MHCLG report second quarter housebuilding stats for England

Despite methodology changes and the introduction of an index, this data undercounts actual housebuilding activity and creates confusion about the true number of homes built.

DATA: Nationwide report 5% annual rise in UK house prices

This was the highest rate since 2016 with the highest regional price growth in the South West and the lowest in Northern Ireland. The year-end national price change looks likely to be around this rate (5%) barring any further shocks to the market.

DATA: ONS slightly revise Q2 GDP in second estimate

The fall in GDP was revised down from -20.4% to -19.8%. It’s the largest quarterly fall since quarterly data was first published in 1955 and will be revised further in the future.

DATA: BoE report August mortgage approvals 29% higher than 2019

The Bank of England data was the first proper evidence that the summer boom is translating into actual activity. See the Chart of the Week for more detail below.

POLICY: MHCLG announce PDR must meet space standards

They say “All new homes in England delivered through any Permitted Development Right must meet space standards” which should’ve been required from the start.

NEWS: Boris Johnson promises to create “Generation Buy”

A newspaper interview suggests government is looking at long-term fixed rate high loan-to-value mortgages a bit like those recommended in this CPS report (PDF) and announced in the 2019 manifesto. There is also the suggestion of removing affordability stress tests at higher mortgage rates and a state guarantee. It is highly likely this would be a one-off gain in first-time buyers with long-term consequences due to higher house prices.

NEWS: Savills revise their house price forecasts upwards

Having forecast a 7.5% fall in prices in June, they’ve now revised their forecast to a rise of 4% this year and five year growth of 20.4% (15.1% previously). The press release stated “The pace of change in the UK housing market has taken us all by surprise over the past few months suggestion normal rules simply don’t apply”. For an alternative view our latest housing market commentaries look at why prices are rising and what could happen next.

Chart of the Week

The Bank of England reported a large increase in the number of mortgage approvals for house purchase in August. This was the first evidence of the summer boom in sales agreed reported by listing sites and estate agents in public data and it’s likely we’ll see the boom feed through to transaction data over the next few months. While approvals for house purchase rose well above their pre-pandemic level, the number of approvals for remortgaging are still 36% below February’s level. However, these numbers only reflect those involving a change in lender so this may be under-reporting true levels of activity.

Weekly Summary: 28th September 2020

DATA: Zoopla report house prices rose 2.6% in year to August 2020

They report the “Ongoing supply/demand imbalance supports headline growth rate” and note that, unsurprisingly given the mortgage crunch, there is a “Gap opening up in relative strength of demand between existing homeowners and first-time buyers”.

DATA: HMRC report 81,000 UK residential transactions in August

Transactions were 16% higher than the previous month but were still 16% below August 2019 levels. The high numbers of sales subject to contract reported over the summer should start to feed through to the transaction data over the next three months.

REPORT: ONS report on the energy efficiency of housing

Using Energy Performance Certificate data, they present a number of findings including that “new dwellings are more energy efficient than existing dwellings” though there has been no improvement to the median rating for both types in recent years.

REPORT: Centre for Ageing Better report “Millions in cold and damp homes could be at greater risk of COVID-19 this winter”

The report highlights that “Poor-quality housing has a profound impact on health” while the “COVID-19 pandemic has exposed and amplified housing-related health inequalities”. It also suggests that “Interventions to improve housing quality, both in and outside of the home can be a highly cost-effective means of improving health outcomes”.

REPORT: Affordable Housing Commission calls for “National Housing Conversion Fund to buy-up private housing for social rent

They suggest it would help “not only on the urgent need to increase social and affordable housing and rebalance the housing system, but also as a quick and cost effective way of supporting the economy”.

NEWS: Scottish Government to re-open First Home Fund in April 2021

The fund was a “£200 million shared equity pilot scheme to provide first-time buyers with up to £25,000” and will close to new applications on the 2nd October. However, the Scottish Government have announced it will reopen in the next financial year.

Chart of the Week

The plight of students starting university is all over the news and so it’s worth looking at the available data on where they live. The HESA data is self-reported so it’s not perfect. For example someone living in a private sector hall but via a nomination agreement might think they live in a provider maintained residence. However, it highlights the important patterns and shows that around 43% of first-years live in halls of residence compared to 15% of other years.