Weekly Summary: 13th January 2023

DATA: ONS reported GDP rose 0.1% in November

ONS have revised their monthly GDP estimates for the last couple of years. This has resulted in just 0.2% growth in the year to November and no month has been above the January 2020 peak since the pandemic hit. This data will be revised again in the future.

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

The data for December reported bigger falls for lower loan-to-value ratios though mortgage rates were still much higher than earlier in the year.

DATA: ONS on “How increases in housing costs impact households”

The analysis provides analysis on how rising mortgage rates might affect borrowers and the impact of rising private rents. Some analysis is similar to our previously published charts.

POLICY(PDF): BoE/PRA published 2023 priorities for UK deposit takers

They warn “Firms need to be ready for a prolonged period of stress” and their “assessment of firms’ credit risk management will include a focus on traditionally higher risk areas”. These areas include buy-to-let and commercial property.

REPORT: Resolution Foundation published Living Standards Outlook

It can be summarised as “2022 was a disaster for UK living standards” and “We are only half way through a two-year crisis when it comes to household finances”.

REPORT: BoE research on the demand for long-term fixed-rate mortgages

The paper finds “the choice of fixation length tracks the life-cycle decline of credit risk in the mortgage market: the loan-to-value (LTV) ratio decreases and collateral coverage improves over the life of the loan due to principal repayment and house price appreciation. High-LTV borrowers, who pay large initial credit spreads, trade off their insurance motive against reducing credit spreads over time using shorter-term contracts”.

REPORT: Savills reported on local plan status

They report “10 years on, 1 in 5 local planning authorities still lack an NPPF-compliant plan” while “only 15 English local planning authorities (LPAs) adopting a new or revised local plan in 2022”.

REPORT(PDF): HomeLet published December rental market index

They report UK rents rose 10.8% in the year to December while London rents rose 14.6% over the same period. They also report “renters paying 31.4% of their income on rent in December, up from 30.5% a year earlier”.

REPORT: Shelter estimated “At least 271,000 people are homeless”

Their analysis of government data and responses to FOIs suggests that “at least 271,000 people are recorded as homeless in England, including 123,000 children”.

REPORT: Nationwide published mortgage affordability report

See Chart of the Week for more on this.

NEWS: Moneyfacts published best buy mortgage rate guide

The highlighted rates suggest the lowest for those with large deposits are currently around 4.5% while those for higher loan-to-value ratios are around 5%. This is well below the “terrifying” rates seen during the period of Truss turmoil but still above “scary” levels.

Chart of the Week

This week Nationwide published their Affordability Report showing a big increase in mortgage repayments as a percentage of take home pay. It suggests first time buyer repayments hit 39% of take home pay across the UK and 67% of take home pay in London.

However, these figures should come with a big warning. As we highlighted back in July, this data is based on ONS average earnings rather than the income of actual borrowers. It also assumes a fixed 80% loan-to-value ratio across the whole period covered. This data can tell us a lot about the failure of the housing market for those on average earnings but not a lot about the affordability of actual borrowers entering or in the market right now.

Three Week Summary: 6th January 2023

DATA: Nationwide reported UK house prices rose 2.8% in 2022

They reported this was the “Fourth consecutive monthly decline” with prices falling 2.5% since August (seasonally adjusted). Annual growth peaked at 14.3% in March.

DATA: Halifax reported UK house prices rose 2.0% in 2022

Their index has reported monthly price falls in 5 of the last six months and prices are down 4.3% since August (seasonally adjusted).

DATA(PDF): Zoopla reported house prices rose 8.2% in year to November

They also reported “Discounts to asking price widen to 4%” and “Buyer demand 50% lower than last year, new sales agreed 28% lower”. They suggest the “Flight to rural and coastal areas moves into reverse” and “Flats and urban areas expected to fare better in 2023”.

DATA: BoE reported a sharp fall in mortgage approvals for house purchase

Their data for November showed a 33% fall compared to the same month in 2021 with the figure 30% below the pre-pandemic average. This figure is not surprising given previous reports on the number of sales agreed but highlights the shock to the market caused by very high mortgage rates. Approvals for remortgaging also fell sharply (-30%).

DATA: HMRC reported 107,000 residential transactions in November

This was just 0.2% higher than the previous month but was 8% higher than the pre-pandemic average – perhaps reflecting the rush to lock in lower mortgage rates.

DATA: ONS reported SDLT receipts of £1.5 billion in November

The stamp duty land tax data (covering residential and commercial property) was a record high for November and the total collected in the twelve months to November was another new record high of £17.9 billion.

DATA: BoE reported another rise in effective mortgage rates in November

Their data shows the average rate on new advances rose to 3.36% (1.51% in Nov 2021) and the average rate on outstanding balances increased to 2.39% (2.02% in Nov 2021).

DATA: ONS published population estimates for mid 2021

The first estimates based on the 2021 census show “The UK population at mid-year 2021 was estimated to be 67.0 million, an increase of 3.7 million (5.9%) on the population in mid-2011”.

DATA: ONS published housing outputs from the 2021 Census

The release includes details on accommodation type, housing tenure, number of rooms and bedrooms, central heating, and occupancy. The Census interactive maps are a useful place to start exploring the data. See Chart of the Week for more on housing tenure.

POLICY: Prime Minister Sunak’s priorities for 2023 don’t include housing

We didn’t spot any mention of housing in the his speech beyond references to the broader cost of living and communities.

POLICY: HM Treasury extended Mortgage Guarantee Scheme by a year

The scheme works best when it offers lenders reassurance but isn’t actually required by them. It will be interesting to see if there is increased usage of it this year and if there is any cost to Treasury over the longer term.

POLICY: DLUHC consultation on Levelling-up and Regeneration Bill

The consultation closes on 2nd March and this Lichfields blog provides a useful summary.

POLICY: DLUHC launches Right to Shared Ownership The scheme combines Right to Buy and shared ownership to create something much worse.

BLOG: Municipal Dreams celebrated its 10th anniversary

Launched at a time when social housing was under serious political attack, it continues to provide a brilliant celebration and assessment of council housing in this country.

REPORT: Environment Audit Committee called for “war effort” on energy efficiency

It is calling for “a national mobilisation on energy efficiency to reduce household energy bills, cut climate-changing emissions and reduce reliance on fossil fuel imports”.

REPORT: Policy Exchange proposed “A School of Place”

The report “proposes that the UK government encourages, promotes or establishes a new school of architecture and urban design dedicated to placemaking”. Unfortunately, the report contains fairly basic statistical errors, suggesting the need for a different school.

REPORT: Coulter & Kuleszo on regional patterns of homeownership

The paper “examines how regional disparities in homeownership trajectories and transitions have varied across the life courses of four birth cohorts who entered the British housing system after 1990”.

Chart of the Week

This week, the ONS published the first housing data from the 2021 Census. The headline results for England and Wales show:

•“32.8% of households (8.1 million) owned the accommodation they lived in outright, an increase from 30.8% (7.2 million) in 2011”

•“29.7% (7.4 million) owned their accommodation with a mortgage or loan or shared ownership, which is a smaller proportion than in 2011 (33.5%, 7.8 million)”

•“20.3% (5.0 million) rented their accommodation privately, up from 16.7% (3.9 million) in 2011”

•“17.1% (4.2 million) were in the social rented sector, for example through a local council or housing association; this is a smaller proportion than in 2011 (17.6%, 4.1 million)” It is still not clear how the timing of the 2021 Census during the pandemic has affected the results. For example, the chart below compares the number of households by tenure as reported by the two most recent Censuses and the English Housing Survey (EHS). The latest Census suggests outright homeownership has not increased as quickly as the EHS has reported but it is not clear where the error is. Meanwhile, the Census has consistently  reported higher numbers of private rented households than the EHS. One factor may be total households in the EHS data for 2020/21 were 500,000 higher than the 2021 Census.

Weekly Summary: 19th December 2022

DATA: ONS reported UK house prices rose 12.6% in year to October 2022

This was higher than the 9.9% rise reported last month thanks in part to the slowdown in October last year following the end of the stamp duty holiday.

DATA: DLUHC reported a fall in housebuilding activity in Q3 2022

These figures undercount actual activity but are a useful leading indicator. They showed a sharp fall in starts compared to the previous quarter as there had been a rush to register them prior to changes in energy efficiency regulations in June. Starts in Q3 were 2% lower than the same quarter last year and completions were 0.4% lower over the same period.

DATA: ONS published house price statistics for small areas

DATA: VOA published private rental market summary statistics

DATA: ONS published private rental affordability: 2021

The analysis found “Private renters on a median household income could expect to spend 26% of their income on a median-priced rented home in England” while in London the ratio would be 40% of median income.

DATA: DLUHC published planning applications in England, Q3 2022

In the year to September 2022, they “granted 36,300 decisions on residential developments, of which 4,400 were for major developments and 31,900 were for minor developments, down by 10% and 7% respectively on the year ending September 2021”. The number of homes granted planning permission fell to 286,000 in the year to Q3 2022, down 12% compared to the same period last year.

DATA: FCA/BoE published Q3 Mortgage Lenders and Administrators data

The MLAR data provides a useful summary of mortgage lending conditions and we have highlighted some of the key trends in our Digging Deeper slide deck.

POLICY: Bank of England increased Bank Rate to 3.5%

The “MPC voted by a majority of 6-3 to increase Bank Rate by 0.5 percentage points, to 3.5%. Two members preferred to maintain Bank Rate at 3%, and one member preferred to increase Bank Rate by 0.75 percentage points, to 3.75%”.

REPORT: Bank of England published Financial Stability Report

The report warns “Household finances are being stretched by economic and financial developments” and “Pressures on household finances will increase over 2023, making it harder for households to service their debt”. They conclude “The risk that households default on debt, or sharply reduce their spending, has increased. But the increased pressure on UK households is not expected to challenge directly the resilience of the UK banking system”.

REPORT: BoE published Agents’ summary of business conditions, Q4 2022

They report “Contacts said higher borrowing costs and concerns about affordability had weighed significantly on demand from first-time buyers. House viewings had fallen sharply in recent weeks and most offers were now below the asking price, as the supply of homes for sale increased faster than demand. Contacts expect the market to continue to weaken next year”.

REPORT: DLUHC published English Housing Survey 2021/22

The headline report contains a wealth of detail on housing and households in England. There were still some issues given the challenges of the pandemic but it was improved from the previous year’s survey.

REPORT: DLUHC reported on overcrowding in South Asian households

The report found “There is a complex interplay of factors that can result in overcrowding, underpinned by people’s wish to live with or close to extended family members and attachment to an area. The critical factors that pushed participants into overcrowded living conditions appear to be systemic. This pertains to the availability of sufficiently suitable and affordable housing”. It also found “Experiences of overcrowded housing were dynamic and transitory, that is, households could move into or out of ‘overcrowded’ status depending on life events”.

REPORT: House of Lords committee reported on land use in England

Their key recommendations include: “Create a Land Use Commission tasked with producing a land use framework. The framework must consider several factors, including food, nature, housing needs and the push for net zero”.

REPORT: JRF published their cost of living tracker

Their report “makes clear that the Government support provided so far in the cost of living crisis hasn’t been sufficient to stem the rising tide of hardship for millions of families on the lowest incomes up and down the country”. They make several recommendations to “fill the gaps that the Autumn Statement left”.

REPORT(PDF): The Better Social Housing Review published its final report

They recommend “Every housing association, and the sector as a whole, should refocus on their core purpose and deliver against it” and they should “work together to conduct and publish a thorough audit of all social housing in England”.

REPORT: CaCHE reported on race equality in housing policy

The report’s focus was on “understanding the policy approach to protecting people from discrimination and advancing race equality in the housing system”.

REPORT: CaCHE reported on student housing in Scotland

The report, for the Scottish Government, finds purpose-built student housing “continues to move upmarket” and there is a need for robust data on students’ housing affordability.

REPORT: RTPI reported on resourcing the Planning Service in Scotland

It finds the planning service has seen a 38% reduction in budgets since 2010 and “Planning application fees only cover 66% of their processing costs”.

REPORT: Citizens Advice updated their cost of living dashboard

The dashboard provides important “insights from across our service on how the crisis is affecting the people we help”.

BLOG: Tracking gentrification using 2021 Census data

Duncan Smith has published fascinating maps showing the spread of the professional classes across London and Manchester over the last decade.

MAP: Tracking residential development with EPCs

Oliver O’Brien has published detailed maps using individual energy performance certificates. The maps include the build year of the property, providing an insight into the development of urban areas over time.

Weekly Summary: 12th December 2022

DATA: Rightmove reported asking prices rose 5.6% in the year to December

This was lower than the 7.2% reported last month. They forecast “prices will drop by an overall average of 2% next year as a multi-speed hyper local market emerges, with some locations, property types and sectors faring much better than others”.

DATA: Halifax reported a 2.3% monthly fall in house prices in November

The annual rate of change fell from 8.2% in October to 4.7% in November.

DATA: ONS reported monthly GDP rose 0.5% in October

This left GDP unchanged since August and 0.2% lower than the pre-pandemic peak in January 2020.

DATA: BoE reported small falls in quoted mortgage rates in November

Two-year fixed rates fell to just below 6% while five-year fixed rates fell to 5.5%. Two-year variable rates rose to 3.9% (3.2% previously).

POLICY: DLUHC published changes to the Levelling Up and Regen Bill

The Ministerial Statement promises to “instruct the Planning Inspectorate that they should no longer override sensible local decision making” and ends the obligation to maintain a five-year land supply (see Lichfields’ blog for more on this). There’s the usual promise to prioritise brownfield land and penalties for “slow developers failing to build already-approved homes” – this could get interesting if the market slows next year. The SoS has also asked the Competition Markets Authority (CMA) to undertake a housebuilding market study though hopefully the CMA have a better understanding of housebuilding data than when they looked at the NHBC and the market for new build warranties in 2017.

POLICY: FCA published reminder of support available for mortgages

The most important advice is to contact your lender as soon as possible. Possible options include mortgage term extensions (though these help those with shorter terms most) and moving to interest only (usually only temporarily) – see Chart of the Week for more on this. They also remind borrowers than if you switch to a new rate with your existing borrower then you shouldn’t usually have to pass an affordability check.

REPORT: Public Accounts Committee on The Affordable Homes Programme

The report warns “The Department does not focus support to local authorities with the highest housing needs” and it is “unlikely to meet its housebuilding targets – falling short by 32,000 homes from its original 2016 and 2021 Programme targets”. It is also “set to miss its targets to deliver 10% of homes in rural areas and may struggle to deliver 10% of homes as supported homes”.

REPORT(PDF): RICS published November residential market survey

They report “Indicators on buyer demand, agreed sales and new instructions remain negative” and “National house prices begin to fall” with “Both price and sales expectations point to these trends being sustained over the near-term”.

REPORT(PDF): Hometrack published December rental market report

They report “Rental inflation is 12.1% per annum, well ahead of earnings (6%)” and there’s “No sign of a slowdown due to chronic supply/demand mismatch” as “Demand is 46% above average while total supply is 38% lower”.

REPORT: UK Finance published Household Finance Review for Q3 2022

The report shows over half of first time buyers who took out a mortgage in Q3 had a term of more than 30 years while the average income for first time buyers in Q3 was “a shade under £60,000, 17 per cent up on the same quarter last year”.

REPORT: UK Finance published mortgage market forecasts

They predict the number of residential property transactions to fall to 1,009,000 next year and the value of gross mortgage lending to fall by 15%. The value of mortgage lending to homeowners buying a home is forecast to fall 23% next year while lending to landlords buying a property is expected to fall 27%. Mortgage arrears and predicted to increase 23% while possessions will rise 78% (from a very low base).

REPORT: Resolution Foundation reported on upgrading the housing stock

They report “Homes with poorly insulated walls are ubiquitous, but there are also pockets of acute need. 64 per cent of homes in London, and more than 40 per cent in other core cities, have poor or very poor walls”.

REPORT: CSJ reported on planning reform and affordable homes

The report calls for the government to “Make sure it delivers on its promise of more affordable housing”, “Set stronger requirements for local authorities to increase (and at least maintain) levels of affordable housing supply” and “Ringfence the Infrastructure Levy for affordable housing and community infrastructure delivery”.

REPORT: Crisis reported on homelessness during a cost of living crisis

They report “Unaffordable and precarious housing were key drivers of interviewees’ homelessness” while “outgoings were increasing at a higher rate than their income” for those facing homelessness”. It also warns: “It was common for interviewees to talk about sacrifices like skipping meals or avoiding turning on their heating”.

Chart of the Week

A temporary shift to interest only mortgage repayments could be a significant safety net for existing mortgage borrowers in coming years. MLAR data for Q2 2022 showed 83% of outstanding regulated mortgage balances were on repayment terms – borrowers paying off both capital and interest. As the chart below shows, the current spike in mortgage payments under a 5% rate (dotted lines) would take payment affordability to levels last seen prior to the last two market downturns. However, shifting to interest only payment terms would reduce the cost back down to levels seen in recent years. Unfortunately, this can only be a temporary solution as the borrower would eventually need to resume capital repayments at a higher level or extend their mortgage term – if their age allows them.

Weekly Summary: 2nd December 2022

DATA: Nationwide reported a 4.4% annual rise in house prices in November

This was much lower than the 7.2% reported last month thanks to a 1.4% monthly fall.

DATA: Zoopla reported a 7.8% annual rise in house prices in October

They also report(PDF) the “Mini-budget fallout hits demand (-44%) more than new sales (-28%)” with “New sales fell by half in the hottest markets, less in affordable areas”.

DATA: Bank of England reported a fall in mortgage approvals for purchase

The number of mortgage approvals for house purchase in October was 10.6% lower than the previous month’s figure and 11% below the pre-pandemic average.

DATA: BoE reported further rises in effective mortgage rates

The data, covering actual lending rather than available products, showed the average rate on new advances was 3.1% in October and the rate on outstanding balances was 2.3%.

DATA: Homes England published housebuilding statistics

The data for April to September 2022 shows a fall in starts and completions though this is “largely due to the transition from the Shared Ownership and Affordable Homes Programme (SOAHP) 2016-21 to the Affordable Homes Programme (AHP) 2021-26”.

DATA: ONS published further 2021 Census data

The release covers ethnic group, national identity, language, and religion.

POLICY: DLUHC launched pilot Medium-Rise Scheme (MRS)

The pilot will “provide funding for the remediation or mitigation of the fire safety risks linked to unsafe external wall systems on medium-rise buildings where a responsible developer cannot be identified”. Medium rise buildings are defined as 11m to 18m high.

REPORT: HBF published Q3 2022 planning pipeline report

They report “Overall approvals totalled 237,917 units during the first nine months of 2022, a 15% decline on a year ago, and the number of private sector housing projects (schemes of three or more units) was 14% lower than a year earlier”.

BLOG: Centre for Cities published a short guide to planning reform

The guide offers answers to frequently asked questions on planning reform.

BLOG: BoE published analysis of household spending

Their analysis of the latest NMG survey shows “Lower-income households have mostly tried to limit the rise in their expenditure by reducing the amount of goods and services they buy or by switching towards cheaper substitutes. Meanwhile, higher-income households have continued to consume the same goods or increased their purchases and have therefore spent more overall”.

REPORT(PDF): Knight Frank reported on the build to rent market

They report “Almost £3.2 billion of capital has been committed to the UK Build to Rent (BTR) sector during the first three quarters of 2022, up 10.2% year-on-year”.

NEWS: Shelter report on private renters threatened with eviction

Their survey found “One in 12 private renters in England – equivalent to 941,000 people – are currently under threat of eviction”.

Chart of the Week

It’s a fairly simple chart this week showing the change in three house price indices since 2019 (based on an average for the whole year). The chart highlights the uncertainty while the housing market was closed in early 2020 with Nationwide reporting prices falls and Rightmove stopping publication. However, the market has boomed since, with prices rising substantially. However, that now appears to have stopped with Nationwide reporting house prices down 3.6% since August and Rightmove reporting asking prices relatively flat since May. It appears house prices have peaked but it is still uncertain how far they could fall.

Weekly Summary: 25th November 2022

DATA: HMRC reported 108,500 residential transactions in October

The robust figure was 2.3% higher than last month’s figure and 9% higher than the pre-pandemic average. This might reflect the rush to complete sales as mortgage rates rose.

DATA: ONS reported another record high in annual SDLT receipts

Stamp duty land tax (SDLT) receipts rose to £17.7 billion in the year to October 2022, a new record high. This data covers residential and commercial property.

DATA: DLUHC reported net housing supply of 233,000 homes in 2021-22

See Chart of the Week for more detail.

DATA: ONS estimated net migration of 504,000 in the year to June 2022

The provisional data reflects a number of unique circumstances including the recovery in travel following the pandemic. It’s possible the short-term shock as international migration patterns recovered have contributed to the excess private rental demand reported in many cities across the UK. If so, we’d expect some of these pressures to ease in the future.

DATA: ONS reported on higher education students and the cost of living

The survey shows “Half (50%) of students felt they had financial difficulties, with 35% saying these were minor and 15% saying they had major financial difficulties” and “Nearly one in five (18%) students said they had considered moving back to their family home and commuting to their university from there, with 6% of all students planning to do so”.

POLICY: Gove warns social housing providers on housing conditions

Following the tragic case of Awaab Ishak, who died as a direct result of mould in his home, the Secretary of State wrote to all providers of social housing “saying they must raise the bar dramatically on standards and demanding urgent action where people complain about damp and mould”. He has also withheld Affordable Homes Programme funding for the responsible housing association and threatened to block any other provider that breaches the Regulator’s consumer standards.

REPORT(PDF): Glen Bramley et al reported on “Homelessness amongst Black and minoritised ethnic communities in the UK”

They found “overwhelming statistical evidence that people from Black and minoritised ethnic communities experience highly disproportionate levels of homelessness in the UK”.

BLOG: Housing energy efficiency by Parliamentary Constituencies

Owen Boswarva published analysis and data on the energy efficiency of housing in England and Wales.

NEWS: Moneyfacts reported five-year mortgage rates dropped below 6%

Their release on Tuesday reports the average five-year fixed rate mortgage fellow to 5.95% though there are “a handful of lenders offering sub-5% fixed deals”.

Chart of the Week

This week saw the release of the most comprehensive housing statistics in England covering the 2021-22 financial year. There were no surprises with the headline 233,000 net additions at the level already suggested by other lead indicators (EPCs & Council Taxbase) and new build completions came in at 210,000 homes, again the level suggested by lead indicators. The chart of the week shows this latest data by region and expressed as a percentage of the existing housing in 2021. It shows the much higher relative levels of new build delivery in the south of England during the period and the higher contribution of net conversions in London. Check out our updated local authority level analysis for more detail.

Weekly Summary: 18th November 2022

DATA: Rightmove reported asking prices rose 7.2% in the year to Oct/Nov

Their non-seasonally adjusted data showed a 1.1% fall in the month to 5th November, in line with the falls normally recorded at this time of the year. The annual rate of change fell slightly to 7.2% (previously 7.8%). They also reported “The proportion of properties seeing a reduction is only slightly up on pre-pandemic levels” and “Buyer demand is still up by 4% on the more normal market of 2019, but down by 20% on October last year”.

DATA: ONS reported UK house prices rose 9.5% in the year to September

This was lower than last month’s figure of 13.1% partly due to comparisons with September last year when house prices spiked as the stamp duty holiday finally ended.

DATA: ONS published UK labour market overview

ONS reported the number of payrolled employees was 29.8 million in October, well above pre-pandemic levels. However, the employment rate was just 75.5% in the three months to September, still below pre-pandemic levels. Meanwhile, the unemployment rate was 3.6% in the same period and real earnings (excluding bonuses) fell 2.7% over the year.

DATA: DLUHC published affordable housing supply data for 2021-22

The data, for England, reports 59,175 affordable homes were delivered during the year. This was 0.4% higher than the figure during 2019-20. Affordable rent was the largest tenure at 26,569 homes while a further 7,528 homes were social rent. Shared ownership accounted for 19,386 homes and there were 35 First Homes delivered during the period.

DATA: ONS published Construction statistics, Great Britain: 2021

The release provides a summary of the construction industry in 2021.

DATA: DLUHC published data on EWS1 form usage

The data, from seven mortgage lenders, shows just 8% of mortgage valuations for flats between July and September this year required an EWS1 form or equivalent. However, more limited data from five lenders shows the figure rose to 26% for flats in buildings with 5-6 storeys and 54% for those in buildings 7 storeys or more.

POLICY: HM Treasury’s Autumn Statement

It was relatively light on housing related news with the cap on social rent rises set at 7%, the Stamp Duty cuts now due to be reversed in March 2025, and the “refocus” of Investment Zones. Perhaps the biggest indirect effect might come from the reduction in Capital Gains Tax exemption and Dividends Allowance on landlords. See Chart of the Week for more. Meanwhile, the remit for the Bank of England’s Financial Policy Committee still includes a reference to homeownership and supporting first time buyers.

REPORT: OBR published their economic and fiscal outlook

Alongside a recession lasting over a year and unemployment rising to 4.9% in Q3 2024, they also forecast house prices will “fall by 9.0 per cent between the fourth quarter of 2022 and the third quarter of 2024”. Residential transactions are also predicted to fall, from 1,243,000 in 2022 to 1,051,000 next year.

REPORT: Resolution Foundation published latest intergenerational audit

The report suggests “The middle-aged are most likely to be hit by higher mortgage payments, but those young homeowners that have managed to get on the housing ladder face the biggest risks from higher interest rates”.

REPORT: NHBC reported on new home registrations

The latest release shows 44,729 new homes were registered in Q3 2022, an increase of 33% when compared to the same quarter last year. The NHBC data is compromised by changes in market share which makes it difficult to assess the impact on the wider market.

Chart of the Week

There are repeated references to landlords selling up and it is possible the tax changes in the Autumn Statement encourage others to do so. However, the evidence for the scale of landlords selling up is limited, as we explored in a previous market commentary: Rental Squeeze. In summary: the number of outstanding BTL mortgages is still rising while private renting stock and household measures are survey dependent and can be volatile.

One measure to track in the future might be the number of residential property disposals by individuals and trusts in the HMRC Capital Gains Tax (CGT) statistics. The chart below shows the number of disposals and it tracks at around 10% of transactions since the series started in April 2020  – the transaction data is divided by 10 to make an easier comparison than a dual-axis chart. The consistent trend between the two lines suggests there has been no change in the number of CGT liable disposals relative to wider market activity but it is unclear if 10% is historically high or low. Meanwhile, we will probably have to wait until next summer to find out if the relationship has changed during 2022-23.

Weekly Summary: 11th November 2022

DATA: ONS reported monthly GDP fell 0.6% in September

The latest monthly estimate suggests GDP was 0.7% lower than the pre-pandemic peak in January 2020 while the first quarterly estimate for Q3 reported a fall of 0.2%.

DATA: Halifax reported house prices fell 0.4% in November

The annual rate of change fell to 8.3% from 9.8% the previous month. They reported this was the third monthly fall out of the past four months though the index tends to be more volatile than other house price indices.

DATA: BoE reported sharp rises in quoted mortgage rates in October

Quoted average mortgage rates across all loan-to-value (LTV) ratios rose, with the 2-year fix at 75% LTV at 6.01%, up from 4.17% the previous month, and 1.29% in October last year.

DATA: UK Finance reported low rates of mortgage arrears in Q3

The release shows just 0.83% of homeowner mortgages and 0.28% of buy-to-let mortgages were in arrears of over 2.5% of the mortgage balance. They also reported 1,090 mortgage possessions during the quarter: 49% lower than the same quarter in 2019.

DATA: MoJ published mortgage & landlord possessions for Q3

The data shows mortgage possession claims and orders increased but are still below pre-pandemic levels. Meanwhile. landlord possession claims and orders are also still below pre-pandemic levels but rising much faster. There are backlogs due to the pandemic affecting this data so care should be taken when interpreting it.

DATA: DLUHC reported further falls in Help-to-Buy equity loan completions

The data for Q2 highlights the decline in completions under the scheme following the restriction to first time buyers and, more importantly, the regional price caps.

DATA: DLUHC published Council Taxbase in England: 2020

The release reports “In England there were a total of 25.2 million dwellings as of 12 September 2022, an increase of 238,000 (or 1.0%) compared with 13 September 2021”.

DATA: HMT published data on H2B ISA and mortgage guarantee scheme

The Help-to-Buy ISA data is available here while the mortgage guarantee scheme data is here. Both releases cover the period up to Q2 2022.

REPORT(PDF): RICS published residential market survey for October

The report shows the “Downward trend in buyer enquiries and sales gains further traction” with new buyer enquiries falling to a net balance of -55% in October (previously -36%). It also reports “National house price growth grinds to a halt” though “Demand remains robust across the lettings market, driving rents higher”.

REPORT: CaCHE published research on landlord behaviour

The research found “Some landlords have a proactive approach towards maintaining the physical condition of their properties and exhibit financial behaviours that are highly structured and professional. However, a significant proportion of participants did not adopt these practices and a reactive approach towards maintenance is common.”

REPORT: CPS reported on removing “top-down targets” for housebuilding

They warn “There is, however, a serious danger that by weakening or eliminating the systems set up to deliver new housing, without simultaneously introducing a clear and strong set of incentives to replace them, the Government would cause the number of houses being built to fall sharply”.

REPORT: Trust for London reported on offshore buyers in London

They report “Across England and Wales, 95,000 properties registered to offshore owners are residential. Almost half of these residential properties are located in London (42,000)”.

Chart of the Week

This week Taylor Wimpey released a trading update (PDF) reporting their net private sales rate per outlet per week had fallen to 0.51 in the second half of the year to date and the cancellation rate had increased to 25%. That’s a substantial fall as the chart below shows. Further detail in the conference call (PDF) shows it has fallen to 0.43 in the last six weeks. Other housebuilders have reported similar falls with Barratt reporting their sales rate was 0.48 between August 28th and 9th October and Persimmon reporting (PDF) a sales rate of 0.60 between 1st July and 7th November. The fall in sales rate has clearly been worsened by the recent mortgage rate shock but the rises in mortgage rates prior to the mini-budget appear to have already been reducing buyers’ demand for new homes. Meanwhile, Savills published research on how well the housebuilding sector can cope with a  downturn.

Two Week Summary: 4th November 2022

DATA: Nationwide reported house prices rose 7.2% in the year to October

This was slower than the previous month’s figure of 9.5% thanks to a 0.9% monthly fall – “the first such fall since July 2021 and the largest since June 2020”.

DATA: Zoopla reported an 8.1% annual rise in house prices in August

They report a 33% drop in buyer demand following the mini-budget and state the “More likely outcome is a fall in mortgage rates towards 4% and a modest decline in house prices of up to 5% over 2023 with 1m sales”.

DATA: Bank of England published effective mortgage rate data

The data shows, the average rate on new lending was 2.85% in September, higher than last month’s figure of 2.56% and the average on outstanding balances of 2.25%.

DATA: Bank of England reported a fall in mortgage approvals

The 10% monthly fall in mortgage approvals for house purchase reversed last month’s bounce and left the total (66,789) just 1% higher than the pre-pandemic average.

DATA: DLUHC published new build EPC data for Q3 2022

The number of Energy Performance Certificates on new build properties is a good leading indicator for net housing supply. The total for England in the year to Q3 was 246,200.

DATA: DLUHC published land use in England statistics for 2022

The data reports “8.7% of land in England is of developed use” and “5.0% of land within areas at high to medium risk of flooding from rivers and the sea is of developed use (after accounting for flood defences)”.

Alongside these statistics, they also published land use change statistics. They report “54% of new residential addresses were created on previously developed land” while “3% of new residential addresses were created within areas at high and medium risk of flooding from rivers and the sea (after accounting for flood defences)”.

DATA: HMRC published quarterly Stamp Duty Land Tax (SDLT) receipts

The Q3 2022 data shows the biggest % increase in transactions compared to Q3 2019 was for the top-end of the market – double the number of £2 million plus properties selling. At 2,000 sales, this was a record for this price band (published data rounded to nearest 100).

DATA: Regulator of Social Housing published stock summary data

They report “4.4m units of social stock owned by RPs” (RPs: registered providers) and “83% of social stock is general needs”. They also report “England general needs (social rent) average weekly net rents increased by 1.6% between 2021 and 2022”.

DATA: ONS published multiple Census releases

The releases include unrounded data, household & resident characteristics, international migration, interactive maps, and the raw data available to download from Nomis.

DATA: ONS published 2022 employee earnings data (ASHE)

The data shows “Median weekly pay for full-time employees was £640 in April 2022, which is a 5.0% increase over the £610 in 2021” though in real terms this was a 2.6% fall.

DATA: ONS reported on the energy efficiency of housing in 2022

The report shows “Flats and maisonettes were the most energy-efficient property type in both England and Wales” while “Social rented dwellings had the highest median energy efficiency score across all property tenures”.

DATA: ONS published UK National Accounts, The Blue Book: 2022

POLICY: Rishi Sunak becomes Prime Minister

Michael Gove returns as Secretary of State for Levelling Up, Housing and Communities.

POLICY: Bank of England increased Bank Rate to 3%

Their projections suggest the UK economy is “expected to be in recession for a prolonged period and CPI inflation remains elevated at over 10% in the near term”

REPORT(PDF): UK Housing Review published Autumn Briefing Paper

The paper includes multiple articles investigating how UK housing has changed since the spring. There is an interesting article on first time buyer numbers covered in more detail in the Chart of the Week below.

REPORT: LUHC Committee reported on Exempt Accommodation

They report “Exempt accommodation—that is, accommodation exempt from locally set caps on housing benefit—is an important component of supported housing” and find “There are many good providers, but in the worst instances the system involves the exploitation of vulnerable people who should be receiving support, while unscrupulous providers make excessive profits by capitalising on loopholes”.

REPORT: Mayhew Review report on retirement living was published

Among other recommendations it suggests “an accelerated programme of retirement housing construction with up to 50,000 new units a year”.

REPORT: The Smith Institute reported on temporary accommodation

The report “examines statutory homelessness and temporary accommodation (TA) in London and Greater Manchester” and finds it at “crisis point”.

REPORT: GLA published Housing in London 2022 report

The report summarises “key patterns and trends across a wide range of topics relevant to housing in the capital”.

REPORT: FCA reported on their review of borrowers in financial difficulty

The report presents the findings from their review of “firms’ treatment of borrowers in financial difficulty after the pandemic”. It found: “Firms could do more to encourage customers to engage, particularly when payment issues start to arise”, “Ineffective discussions can lead to unfair, inappropriate and/or unsustainable forbearance arrangements”, “Inadequate signposting and communication of the availability of independent, not-for-profit debt advice and the benefits this might have”, and “Fees and charges may be applied to customer accounts inappropriately and this, along with unpaid interest accruing, may result in escalating balances”.

REPORT: UK Finance reported on achieving a Net Zero housing stock

The report “proposes radical action to achieve a Net Zero housing stock”. They recommend “Prioritise public funding to retrofit social housing” and “Provide government grants to vulnerable populations” alongside amending SDLT and EPCs.

REPORT: HBF on additional levies and regulations in housebuilding

The report highlights the additional costs facing housebuilders and appears to be an appeal for more demand side subsidies given the current economic headwinds.

NEWS: Estate agents updated house price forecasts

JLL and Savills have updated their house price forecasts for next year. JLL argue the market is “set for a correction, not a crash” with prices falling 6% in 2023 while Savills predict a 10% fall next year but faster growth later – need to keep that five-year growth positive!

Chart of the Week

In the latest UK Housing Review briefing, Bob Pannell published some fascinating analysis suggesting that headline first time buyer (FTB) numbers may not be as high as widely thought. We’ve known that historic data on FTBs may not be representative thanks to the presence of “returners” – older, wealthier buyers returning to the market – with data for 2000-05 especially compromised. However, there’s little understanding of how they’ve inflated FTB numbers in the current market – until now. We’ve replicated his analysis comparing headline FTB numbers with the actual numbers claiming FTB relief from SDLT below. The benefit of the relief data is it has a “rigorous and narrow” definition of FTBs. It shows around 25% of FTBs immediately prior to the pandemic did not claim relief but this figure has increased to around 40% in the last couple of years. While there may be some other explanations such as FTBs buying above £500k and sub-market sales, this result would go some way to explaining the robust FTB numbers in recent years and the ease with which they dealt with the credit crunch that hit high loan-to-value mortgages in 2020/21.

Weekly Summary: 21st October 2022

DATA: Rightmove reported asking prices rose 7.8% in year to 8th October

This was slightly lower than last month’s figure of 8.7%. They also report there “is little sign of downwards price pressure on existing properties for sale. The number of homes seeing a reduction in the month creeps up by 2% to 23%” and “Buyer demand is still 20% higher than the more normal market of 2019, but it is down by 15% in the last two weeks compared with the same two weeks last year”.

DATA: ONS reported UK house prices rose 13.6% in year to August

This was slightly lower than last month’s figure of 16.0% though is perhaps a truer reflection of the underlying growth in the index when the impact of the various 2021 stamp duty deadlines are excluded. Next month’s annual change figure may well be lower due to the spike in prices when the tax holiday finally ended in September 2021.

DATA: ONS reported SDLT receipts of £1.6 billion in September

This took total Stamp Duty Land Tax receipts for the year to September to a record high of £17.7 billion. This annual figure was 38% higher than the same period last year though does include commercial and residential property transactions.

DATA: HMRC reported 104,000 residential transactions in September

Transactions rose 0.2% compared to the previous month but were 37% lower than September last year – when the stamp duty holiday ended. A more useful comparison shows they were 5% higher than the pre-pandemic average (2013-19).

DATA: Rightmove reported asking rents rose 11% in year to Q3 2022

The data for London shows a 16.1% increase over the same period with Inner London rising 19.3%. They also report “Tenant demand is up 20% compared with last year, and available properties to rent is down 9%”.

POLICY: Prime Minister Liz Truss resigned

The lettuce won.

REPORT: FCA published Financial Lives 2022 survey

The report provides “insights on vulnerability and financial resilience relevant to the rising cost of living”. See Chart of the Week for more.

REPORT: Resolution Foundation reported on rising mortgage costs

They estimate that thanks to the rise in mortgage rates (and if they stay this high): “by the end of 2024, more than 1.8 million mortgaged households will see housing costs absorb at least 10 per cent more of their household income than in Q3 2022” while “over 5 million currently mortgaged families – close to one-fifth of all households in Britain today – will be spending more on their housing costs by the end of 2024 than they were in Q3 2022”.

REPORT: Savills reported on residential development land values

They report UK greenfield land values rose 6.3% in the year to Q3 and were 0.4% below their 2007/08 peak. They also report “Appetite for Single Family Build to Rent (house-led) has grown over the last quarter, with an increasing number of investors looking to deploy capital into the sector” with housebuilders welcoming the opportunity to de-risk sites.

BLOG: Lichfields blogged on Investment Zones

Chart of the Week

Today the FCA published their latest Financial Lives 2022 survey. It provides data on “vulnerability and financial resilience, and insights into the financial positions of UK consumers in May 2022”. The data shows 24% of UK adults had low financial resilience – these are “people who are in financial difficulty, or who could quickly find themselves in difficulty if they suffer a financial shock, because, for example, they have little to no savings or are heavily burdened by their domestic bills or credit commitments”. We have presented the survey data split by housing tenure below. It highlights the much higher rates of low financial resilience in the rented tenures with many more adults already in financial difficulty when compared to those owning their own home.

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