Weekly Summary: 8th December 2023

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.

Weekly Summary: 1st December 2023

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%

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