Weekly Summary: 24th May 2024

DATA: Rightmove reported asking prices rose 0.6% in year to May 2024

Asking prices reached a new record high of £375,131 while they also report “The number of sales being agreed during the first four months of the year is 17% higher than last year, outstripping the 12% increase in the number of new sellers coming to market” but the “154 days between agreeing a sale and legal completion remains a challenge for both agents and movers”.

DATA: ONS reported a lower rate of inflation in Apr 2024

They report CPIH rose 3.0% in the year to April 2024 compared to 3.8% the previous month, while CPI rose 2.3% compared to 3.2% the previous month.

DATA: ONS/HMLR reported UK house prices rose 1.8% in year to Mar 2024

They report house prices rose 6.7% in Scotland while they fell 3.4% in London over the period. The index is currently subject to significant revisions.

DATA: ONS reported a 5.6% annual rise  in SDLT receipts in Apr 2024

This was the first positive annual change in stamp duty land tax receipts for both commercial and residential property since November 2022. This suggests the next HMRC transactions release should be relatively positive.

DATA: ONS reported UK private rents rose 8.9% in year to Apr 2024

This was slightly lower than the 9.2% reported the previous month with growth in England ranging from 10.8% in London to 5.8% in the North East.

DATA: ONS published private rents by postcode district in London

The release expands on the usual national publication by including postcode district data.

DATA: DLUHC published dwelling stock estimates for England, 2023

See Chart of the Week for more detail.

DATA: ONS published long-term international migration estimate

They report long-term net migration was “provisionally estimated to be 685,000 in the year ending (YE) December 2023, compared with our updated estimate of 764,000 for the YE December 2022”. The Home Office also published immigration system statistics.

DATA: Scottish Government published Short Term Lets Licensing stats

They report “There were at least 23,576 applications for a short-term licence as of end December 2023”.

POLICY: Prime Minister called a General Election for 4th July

The leasehold reform bill is still being considered by the House of Lords but the renters reform bill has been dropped.

POLICY: DLUHC responded to LUHC Committee report on shared ownership

REPORT: House of Commons Library reported on short-term lettings

The report covers the growth in the short-term lettings market, restrictions on lettings, and concerns about the growth of the sector.

REPORT(PDF): LUHC Committee on disabled people in the housing sector

They report “Disabled people undeniably encounter unnecessary and severe barriers to accessing suitable housing in England” and “Too often too many disabled people are failed by the Government’s current housing policy”.

REPORT: Bank Underground reported on debt servicing ratios and arrears

They report an increase in the share of new lending on higher debt servicing ratios (DSRs). Their analysis suggests “that even for mortgagors with moderate DSRs, an increase in their debt-servicing burden implies a higher risk of payment shortfalls” but “we do not find evidence of a critical threshold above which this risk increases much more sharply”. As a result, they suggest “the recent shift in the DSR distribution for new lending implies that new mortgage lending in the UK has become riskier during the current tightening period even though lending at DSRs above 40% has remained flat”.

REPORT: Lichfields reported on repurposing town centre buildings

They warn repurposing former retail buildings is “often more complex than it may at first seem. It is not always viable in isolation and many repurposing schemes involve some form of extension or linked development to ensure financial viability” and “current building regulations often present real challenges – in both physical and viability terms – that are not obvious at first sight”.

REPORT(PDF): BPF reported on who lives in build-to-rent developments

They report average affordability for couples and sharers in the build-to-rent sector is 29% of income compared to 26% in the wider private rented sector. Affordability for single people is 33% of income compared to 31% for the wider sector.

CORPORATE: Watkin Jones published Half Year Results

They report “Current development schemes on track, supported by continuing moderation in build cost inflation” and “Investment market gradually showing signs of recovery as economic sentiment improves, albeit, a slower than expected reduction in interest rates has potential to impact pace of recovery”.

CORPORATE: ESP published Business and Trading Update

Empiric Student Property report “Revenue occupancy for academic year 2024/25 underpins confidence that our portfolio will again be effectively full for a third consecutive year” and “Like for like growth in average weekly rents to exceed 6% for academic year 2024/25”.

CORPORATE: Henry Boot published AGM Trading Update

On the land market, they report “Whilst activity has not recovered to the heights of 2022, land prices have remained stable in Q1 24”. They also report Stonebridge Homes “grew its private sales rate to 0.59 houses per active outlet per week (April 2023: 0.46), operating from 9 sales outlets”.

Chart of the Week

This week DLUHC published their estimates for the number of dwellings in England in 2023. The headline figure of 25.4 million, an increase of 234,400 homes on the previous year, was no surprise given the previous publication of net additional dwelling data. However, the estimates by housing tenure are more interesting. As the chart below shows, DLUHC estimate the number of owner occupied dwellings increased by 176,000 in 2022/23, the number of dwellings in the social rented sector increased by 23,000, and the number in the private rented sector increased by 35,000 during the period.

Despite widespread reports of landlords selling up, the statistics appear to show the private rented sector is the largest it has ever been, at 4,939,000 dwellings in England. However, there is no direct way of measuring the size of the private rented sector and these figures are based on ONS Labour Force Survey (LFS) data on the size of the occupied private rented sector and English Housing Survey data on the vacancy rate in the tenure. Given issues with the LFS survey in particular, these dwelling estimates could be revised significantly in the future. The uncertainty also highlights the need for better data on the private rented sector including a register of landlords and properties in the sector.

Weekly Summary: 17th May 2024

DATA: ONS reported on the UK labour market

They report “early estimate of payrolled employees for April 2024 decreased by 85,000 (0.3%) on the month but increased by 129,000 (0.4%) on the year” while the unemployment rate “was estimated at 4.3% in January to March 2024, above estimates of a year ago, and increased in the latest quarter”. Meanwhile, the “Annual growth in employees’ average regular earnings (excluding bonuses) in Great Britain was 6.0% in January to March 2024, and annual growth in total earnings (including bonuses) was 5.7%”.

DATA: MoJ published mortgage and landlord possession stats for Q1 2024

The latest release reports “Compared to the same quarter in 2023, mortgage possession claims increased from 4,035 to 5,182 (28%), orders from 2,532 to 3,019 (19%), warrants from 2,636 to 2,881 (9%) and repossessions by county court bailiffs from 729 to 759 (4%)”. However, these are still below pre-pandemic levels. See Chart of the Week for more details on mortgage possession action timeliness.

DATA: NHBC published new home registrations for Q1 2024

They report “New home registrations down 20% in Q1 2024 vs. Q1 2023” and “New home completions down 13% in Q1 2024 vs. Q1 2023”. Care should be taken with these figures as we estimate NHBC had a market share of around 60% of completions in 2023 across the UK but this figure can be much lower in some markets such as urban areas.

DATA: HMT published Mortgage Guarantee Scheme stats for Q4 2023

They report “There were 42,836 mortgage completions from scheme launch on 19 April 2021 to the end of December 2023, which represents 1.3% of all residential mortgage completions in the UK”.

DATA(PDF): IMLA published Intermediary Mortgage Market Tracker

The survey covers Q1 2024 (it’s disappointing they’ve stopped published monthly data) and reports an increase in the conversion rate from Decision in Principle (DIP) to completion to 42% compared to 34% in Q1 2023. However, this is still well below pre-pandemic levels. They also report a higher conversion rate on the North (51%) compared to the South (37%).

POLICY: DLUHC announced High Street Rental Auctions

They report “Where a high street shop has been empty for over a year, High Street Rental Auctions will allow local leaders to step in and auction off a rental lease for up to five years. Auctions will take place with no reserve price, giving local businesses and community groups the opportunity to occupy space on the high street at a competitive market rate”.

POLICY: Scottish Government’s Cladding Remediation Bill passed

They report it will “allow the creation of a Cladding Assurance Register” and “Ministers will also have powers to establish a Responsible Developers Scheme”.

REPORT: Resolution Foundation reported on the impact of inflation

They report “The impact of the inflation surge on household balance sheets has been more complicated when it comes to housing. Higher inflation has reduced the real value of mortgage debt” but “the fall in real mortgage debt comes with a sting in the tail in the form of higher annual mortgage repayments, which increased by an average of around £2,450 for those re-mortgaging in 2023”. They also report “Despite falls over the past two years, house prices appear substantially overvalued at current interest rates”.

REPORT: TCPA reported on the downgrading of flood defences in England

They report on “the background to the major downgrading of flood defence investment in England” and the impact on Lowestoft where investment has been withdrawn.

REPORT: Labour Housing published review of the private rented sector

The report contains several recommendations including increasing the supply of social housing to help lower income renters, using a National Landlords Register to manage and enforce standards, providing tenants with more security, using “third generation” rent stabilisation measures, and preventing landlords from switching into short-term lets or temporary accommodation.

REPORT(PDF): BPF & Savills published Build-to-Rent update for Q1 2024

They report “The total number of completed units, having surpassed 100,000 in the previous quarter, now stands at 101,875. This has grown quickly over the past 12 months, up by 17%” and “the number of completions has overtaken the number of starts for the second quarter in a row” with a resulting fall in the number under construction.

REPORT: Migration Advisory Committee reported on the Graduate route

They report “We found no evidence of any significant abuse of the Graduate route” but the restrictions on bringing dependents is having an effect on student numbers with “Early indications suggest a 63% reduction in the number of deposits paid for the September 2024 intake by international postgraduate applicants for institutions in the UK compared to the same time in the previous year”.

CORPORATE: Savills published AGM Statement

They report “Most prime residential markets have remained resilient with volumes traded marginally lower than last year, as expected”.

CORPORATE: Grainger published Half year financial results

They report “8.1% like-for-like rental growth in H1 across our PRS portfolio (FY23: 8.0%), with new lets at 7.7% and renewals at 8.3%” and “High occupancy at 97.7% in our PRS portfolio (FY23: 98.6%)”. They also report “In light of the upcoming General Election later this year, our extensive dialogue with all main political parties provides us significant comfort that the risk of regulation to our responsible business model is minimal”.

CORPORATE: Vistry Group published Trading Update

They report “The Group’s total sales rate has averaged 0.96 (2023: 0.87) in the year to date, increasing to 1.23 (2023: 1.24) over the last 8-week period” and “In the open market, we have seen an improving trend in our open market sales rates since the start of the year.  Pricing on open market sales has remained relatively flat with incentives running at c. 4% of the open market sales price”.

Chart of the Week

Alongside the number of mortgage claims, orders, warrants, and repossessions, the MoJ data also covers the average time from initial claim to each of these. As the chart shows, the median time spiked following lockdown but has been quickly falling back to more normal levels as courts pushed to reduce backlogs and “ensure swift access to justice”. They report “Claims to order median timeliness has increased to 8.4 weeks, up from 7.7 weeks in the same period in 2023”, “Claims to warrant median timeliness has decreased to 36.6 weeks, down from 43.5 weeks in the same period in 2023”, and “Claims to repossession median timeliness has decreased to 45.7 weeks, down from 60.9 weeks in the same period in 2023”.

While the median timeliness has fallen back towards pre-pandemic levels, the mean time has not fallen as sharply (not shown). MoJ suggest the “long-term increases in the mean average time from claim to warrant and claim to repossession are due to an increasing proportion of historic claims reaching the warrant and repossession stages respectively in recent quarters. This is possibly due to defendants recently breaking the terms of the mortgage agreements put in place at the start of the process”.

Weekly Summary: 10th May 2024

DATA: ONS estimated monthly GDP rose 0.7% in the year to Mar 2024

An estimated 0.4% increase on the previous month resulted in 0.6% growth across the first quarter of 2024 and the end of the technical recession recorded in the second half of 2023.

DATA: Halifax reported house prices rose 1.1% in the year to Apr 2024

They report(PDF) an increase in the annual rate of change from 0.4% in the previous month and “Annual price falls are predominately found in the south of England, as the ‘North-South’ divide across English regions is sustained”.

DATA: BoE reported unchanged quoted mortgage rates in Apr 2024

They report the average two year fix at 75% loan-to-value increased slightly to 5.00% (prev. 4.97%) while the five year fix at the same loan-to-value decreased to 4.52% (prev. 4.53%). The average variable rate and revert-to-rate were unchanged at 5.69% and 7.92%.

DATA: UK Finance published arrears and possessions data for Q1 2024

See Chart of the Week for more detail.

DATA: ONS published Families and households in the UK: 2023

They report “There were an estimated 28.4 million households in the UK in 2023” and “The average household size was 2.36 residents per household, similar to the size in 2013”.

DATA: DLUHC published Leasehold dwellings, 2022 to 2023

They report “In 2022-23, there were an estimated 4.77 million leasehold dwellings in England. This equates to 19% of the English housing stock. Of these, 2.65 million dwellings (56%) were in the owner occupied sector and 1.82 million (38%) were privately owned and let in the private rented sector”.

POLICY: BoE voted 7-2 to maintain Bank Rate at 5.25%

REPORT: BoE published Monetary Policy Report, May 2024

They report “Higher incomes and improved sentiment among households are also likely to be supportive of the housing market” and “the housing market has shown further signs of recovery”.

REPORT: LUHC Committee reported on the social housing sector

They report the sector is “under serious financial pressure, although it remains resilient for the time being”. They also report “In order to deal with the financial headwinds, social housing providers have cut the amount they plan to spend on building new social homes” and the report “raises issues with the costs of maintaining social housing and the different financial risks faced by registered providers, as well as related issues”.

REPORT(PDF): RICS published Residential Market Survey for Apr 2024

They report “Recent recovery in buyer demand stalls somewhat with a flatter picture cited this month”. They also report “National house prices remain stable, with twelve-month projections still in expansionary territory” and “New listings coming onto the market continue to rise”.

REPORT: NEF reported on Reforming Right to Buy

Their analysis of FOI requests shows that “40.8% of homes sold under right to buy are now being let on the private market”. The report has “a package of reforms underpinned by a suite of powers that should be devolved from Westminster to local government”.

REPORT: NLA published London Tall Buildings Survey, 2024

They report “For residential towers across the capital, the momentum has slowed considerably. In 2024 the fall in the housing market, higher interest rates and high construction costs have served to dampen both demand and viability. The demand for second staircases to improve safety has also slowed the pace of development. But demand for new student accommodation is bucking this trend and driving demand for tall buildings”.

REPORT: Lichfields reported on local plans post Dec 2023 NPPF

Their comparison of 15 local plans shows “six have cut their housing targets by more than 100 homes per year; a seventh has cut it by more than 100 homes a year. None are proposing a material increase on their previous emerging targets”.

REPORT: Savills published their housing completion forecasts

They report “Housing delivery in England is set to fall to its lowest level for a decade. A combination of lower demand from new homes buyers and reduced capacity to deliver affordable housing, alongside a dramatic collapse in the number of planning consents, will lead to much lower volumes of housebuilding from 2024/5. We think new housebuilding could average 170,000 per year during the second half of the 2020s and there are no current policy proposals that look likely to turn the tide”.

REPORT: Localis reported their analysis of local regeneration policy

They report “Urban development and regeneration are crucial to solving our ongoing and increasingly urgent housing crisis” and “Local authorities can be the hinge around which regeneration actors revolve, particularly in the case of large-scale and innovative schemes for urban development”.

REPORT: ASI reported May 4th as “cost of rent day”

They report “every penny that, on average, renters earned before tax for working before and including May 4th went to their landlord”. However, the analysis is based on overall median earnings and so does not reflect the rental affordability for actual private renters.

NEWS: Savills published revised house price forecasts

They report “Falls in the cost of debt and an improving economic outlook have created more capacity for house price growth” and “now expect UK house prices to rise by 2.5% this year”.

CORPORATE: Rightmove published Trading Statement

They report “Sales agreed between January and April 2024 are 17% higher than the same period last year” and “Customer numbers expected to grow by up to +2% on 2023, versus previous guidance of a slight decrease”.

Chart of the Week

This week, UK Finance published data on the number of mortgage arrears in Q1 2024. The data shows a small quarterly rise (3.1%) in the number of homeowner mortgages in arrears as the number of those in arrears of 2.5%-5% of their balance fell slightly (-1.7%). Meanwhile, the number of buy-to-let mortgages in arrears was unchanged on the previous quarter as the number in arrears of 2.5%-5% of their balance fell by 10.7%. However, the total number of buy-to-let mortgages in arrears was nearly double last year’s figure (+93%).

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