Weekly Summary: 21st September 2020

DATA: Rightmove report an annual rise in asking prices of 5% in September

This was higher than the 4.6% reported in August with annual price rises across all their market sectors and regions. See the Chart of the Week for more on their activity data.

DATA: ONS report an annual rise in house prices of 3.4% in June

This was higher than the 1.1% reported for May, though that was revised down from an initial estimate of 2.9%. Therefore it may be best to treat the latest month’s data carefully.

DATA: ONS labour market data shows weak state of the jobs market

There are early signs of rising unemployment: the number of payrolled employees fell; the claimant count rose; and redundancies are rising. However, average wage measures have started rising again, but this may reflect mix issues (higher earning older workers continuing to be paid and fewer lower earning new workers starting).

DATA: ONS rental index shows continued growth in August

However, the ONS index measures all rents rather than newly paid. Analysis by Zoopla shows rents are currently falling 3% year on year in London. It could be six months before this appears in the ONS data.

REPORT: Social Mobility Commission report on “The long shadow of deprivation”

They report that “The effect of deprivation in dozens of English local authorities is now so persistent that some families face being locked into disadvantage for generations unless the right action is taken”. They add “It is not a story of north versus south or urban versus rural; this is a story of local areas side by side with vastly different outcomes for the disadvantaged”.

ANALYSIS: Bank Underground blog concludes that first time buyers are increasingly richer than their cohort peers

While not a new finding on first time buyers (FTB), it’s great to see the Bank of England using their data for original research into the housing market. They also note that “slower than average income growth for younger workers have worked against FTBs” and “challenge the view that average FTB ages have got much higher”.

Chart of the Week

In today’s press release, Rightmove note that national sales agreed year-to-date are just 5% below last year’s level. The chart below shows the regional distribution with the East of England and South East already above. Meanwhile, the much lower numbers in Wales and Scotland may reflect their longer lockdown periods. Rightmove also state that sales agreed are “stronger for larger homes more than doubling in the largest ‘top of the ladder’ homes sector (+104 %), and growing strongly in the second stepper sector (+55%)”.

Weekly Summary: 7th September 2020

DATA: Nationwide reported an annual house price rise of 3.7% in August

The mortgage approval based index continued the rebound in prices started last month with a 2% monthly increase. The index is now at an all-time high.

DATA: Halifax reported an annual house price rise of 5.2% in August

Their mortgage approval based index reported a 1.6% monthly increase leading to the highest growth since “late 2016”. The index also hit an all-time high.

DATA: ONS reported an annual house price rise of 2.9% in May

The ONS index is based on completions rather than approvals and this release continues the catch-up process due to the suspension of the index during the lockdown period. June data is due out next week (16th September).

DATA: Bank of England reported a spike in mortgage rates during August

Average rates on available mortgages spiked across all loan-to-value (LTV) ratios but particularly those at higher LTVs. See Chart of the Week for more detail.

NEWS: CMA launches enforcement action against housebuilders

“The CMA is launching enforcement action involving 4 leading housing developers it believes may have broken consumer protection law in relation to leasehold homes.” The four are Barratt Developments, Countryside Properties, Persimmon Homes and Taylor Wimpey. However, the press release states “It should not be assumed at this stage of the CMA’s investigation that the businesses under investigation have been involved in any or all of the outlined practices”.

REPORT: Resolution Foundation investigate how big the negativity equity crisis will be and who will be affected if house prices fall

Using the OBR’s downside scenario for house price falls, they find that “12 per cent could fall into low or negative equity today compared to 15 per cent after the financial crisis”. They also find that “equity risk has migrated up the age distribution” and those “with equity risk now have higher income and wealth than those at risk after the financial crisis”.

Chart of the Week

There has been an ongoing credit crunch affecting the cost and availability of mortgages since the pandemic hit. It was initially blamed on the inability of surveyors to access homes during lockdown for the physical valuation required on higher LTV lending. However, it has since become clearer that it is a reflection of lenders’ attitude to risk during these uncertain times and the possibility of large falls in house prices once the various supports (furlough, mortgage payment holidays, possession moratoriums etc) are removed from the market.

Weekly Summary: 6th July 2020

DATA: Nationwide reported house prices fell 1.4% during June

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

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

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

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

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

REPORT: Resolution Foundation look at housing quality across generations

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

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

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

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

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

Chart of the Week

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