Post-Holiday Depression
More Funding For Less
There are mixed messages in the latest housing market data, with some metrics pointing to increased activity and others showing prices weakening. We also have more information on the Government’s affordable housing plans.
Post-Holiday Depression
The latest housing market data is showing mixed messages. Both Rightmove and Zoopla reported stronger buyer demand while the Bank of England mortgage approval for house purchase data recorded its first monthly increase since December. However, the Nationwide index reported an unexpected 0.8% monthly fall in June and our projection for the year-end, based on previous seasonal price trends, is for growth of just 1.3%, down from the 2.1% projected last month. Meanwhile, stock on the market continues to rise and transactions are still depressed following the end of the stamp duty holiday.
We probably still haven’t seen the full scale of the post-holiday lull in transactions, but we can begin to get an idea of the overall net effect. Usefully the number of transactions in Scotland, where there was no holiday, has tended to be around 10% of the total for England. Using this as a benchmark shows there were 88,200 more transactions than might be expected in February and March but, thanks to sales brought forward, there have been 46,600 fewer sales in the two months since the holiday ended – giving a positive net result of 41,600 sales so far.
More Funding For Less
This week MHCLG published details on their Social and Affordable Homes Programme. With £39 billion in funding over the next ten years, they have aspirations for the programme to deliver 300,000 homes, 60% of which are intended to be social rented. To put these numbers into context, we’ve reconciled the data on where the funding for the homes actually delivered has come from. While there’s a lot of data available on affordable housing delivery, it can be challenging to put it all together. The chart below, pieced together from various sources including MHCLG table 1000, old JRF reports, and earlier HSSA section N returns, presents our best estimate.
The chart shows that, historically, grant provided a large part of the funding for affordable homes, either directly or in combination with S106 contributions from developers. However, the last decade has been a much tougher time for affordable housing funding and a growing number of new homes were fully funded by S106 contributions and other sources. Looking ahead, and the overall aspiration for 300,000 homes over the next ten years appears underwhelming, particularly when compared to their overall housing target of 300,000 homes per year. One reason why the increase in funding is not delivering a big increase in grant funded homes is the prioritisation of social rented homes – which requires more per home. This focus will see a welcome increase in the delivery of the most affordable homes, but still well below the delivery of the last Labour government.
Market A Glance
Economy – UK
The ONS estimated monthly GDP increased 0.9% in the year to April 2025. Monthly GDP was 3.8% above the pre-pandemic peak recorded in January 2020. However, this monthly data will continue to be revised in the future.
House Prices - UK
Rightmove reported a 0.8% annual rise in asking house prices in June 2025 while Nationwide reported a 2.1% annual rise in their mortgage approval-based index over the same period. Meanwhile, the ONS reported a 3.5% annual rise in its sales agreed index for the year to April 2025.
Transactions – UK
HMRC provisionally reported 81,470 residential transactions in May. This was 18% below the pre-pandemic (2013-2019) average. Meanwhile, the Bank of England reported mortgage approvals for house purchase in March 2025 were 4% lower than the pre-pandemic average.