Weekly Summary: 29th June 2020

DATA: HMRC report residential transactions increased in May but were still 50% below last year’s level

The latest month’s data is based on partial returns and so, given the market reopened nearly two weeks into the month, we may see substantial revisions in next month’s release

DATA: Bank of England reports just 9,273 mortgage approvals for house purchase in May

Mortgage approvals for house purchase were 86% below the level seen in May 2019. This suggests most of the transactions during May were either using mortgages approved prior to the lockdown or were cash only transactions.

DATA: Zoopla report UK house prices rose 2.4% in May and their UK city index rose 2.1%

House prices are rising slightly slower than in March but still much faster than seen in 2019. Zoopla also report sales agreed have rebounded above pre-lockdown levels.

POLICY: MHCLG announces “new plans to get Britain building”

These include extending planning permission deadlines to 1st April 2021 for sites with expiry dates falling from the start of lockdown to the end of the year. It also includes allowing flexible working hours and changes to speed up the planning appeal process.

NEWS: IFS report on living standards suggests “COVID-19 crisis hit at a time when income growth had already been extremely disappointing for some years”

Their report suggests “Median household income was essentially the same in 2018−19 as in 2015−16” while the “Trends among low-income households had been worse still – they had experienced five years of real income stagnation between 2013−14 and 2018−19”.

NEWS: HM Land Registry set to share their INSPIRE spatial polygon data

HM Land Registry and Registers of Scotland have announced their spatial data set will be available from the 1st of July. However, the usefulness of the data will be constrained without lookups between INSPIRE polygons, title numbers, and UPRNs (Unique Property Reference Number).

NEWS: Geoff Meen and Christine Whitehead blog on why there are no simple solutions to complex problems

Ahead of their new book “Understanding Affordability”, they suggest that “both the demand and supply sides of housing markets have to be addressed together, compared with the concentration on supply in recent years”.

Chart of the Week

There’s been a lot of commentary and speculation suggesting more people are looking to move out of London since the lockdown. This is nothing new as data from the ONS last week reinforces: London has seen a net domestic migration outflow (comparing the number of people arriving from the rest of the UK to those leaving) every year since 1975, and probably since 1946. This is likely to continue though possibly in greater numbers. London’s continued growth will rely on international migration and natural change.

Market Commentary – June 2020

Market Bounces Back But How Much Is Just Delayed Demand

•Crash or No Crash, This Will Exacerbate Existing Housing Inequalities

The housing market has reopened in England and it appears to have ignored the last three months and taken off from where it was prior to the lockdown. There are numerous reports of high demand and the number of sales agreed rebounding back to normal levels. The lockdown is easing, the economy is slowly recovering, and house prices are rising. But this bounce is unlikely to last given the massive economic shock and on-going credit crunch in the mortgage market. Irrespective of the outcome, the current market will exacerbate existing inequalities.

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Weekly Summary: 22nd June 2020

DATA: PAYE data from HMRC shows median monthly pay has fallen 4.3% since February

The data also shows the number of paid employees has fallen 2.2% since January but the data for May are early estimates so may be revised.

DATA: ONS data for SDLT receipts in May were 54% below last year’s level

Total receipts (for residential and commercial) for the first five months of 2020 are £1billion below the total for the equivalent period in 2019 reflecting the impact of the lockdown.

NEWS: Nationwide reduce maximum loan-to-value (LTV) ratio to 85%

The credit crunch continues with this change predominantly affecting first-time buyers.

NEWS: UK Finance reports 1.9 million mortgage payment holidays

They report that “One in six mortgages are now subject to a payment deferral”.

REPORT: LGA warns “100,000 social homes a year needed as part of COVID-19 recovery”

The report’s aspirations are welcome but a housebuilding boom driven by government investment in social rented homes is unlikely (though it is 2020 so anything is possible).

REPORT: Centre for Cities suggest “The UK should introduce a flexible zoning system to build more homes”

The planning system is not the sole cause of low housing delivery and low housing delivery is not the sole cause of the housing crisis. It is true that the current approach does not always lead to the best outcomes in terms of where housing is built, its type, its cost, and its quality. But the challenges in changing to a “flexible zoning system” will be great and come with significant risk. It is naïve to suggest implementing a zonal planning system will end the housing crisis as there will still be other un-tackled contributing factors remaining.

REPORT: Transport for New Homes warn the design of new Garden Villages & Towns is “condemning their residents to car-dependent lifestyles”

They suggest the “government should commission an urgent re-assessment of every one of the garden villages and towns in terms of funded sustainable transport”.

REPORT: NAO report 167 (37%) of high-rise buildings identified with unsafe ACM cladding have not begun remediation works as at April 2020

The report says identifying the building owners responsible for funding remediation work has been difficult due to complex ownership arrangements including overseas owners.

REPORT: NHF research on people’s experience of moving to Universal Credit finds significant financial harm caused by the five-week wait

The pre-COVID 19 research found “The vast majority of claimants did not have any money saved to live on over the five-week waiting period” and “There was a very high incidence of struggling to afford necessities following the claim”. The report recommends ending the five-week wait for money.

Chart of the Week

The coronavirus lockdown has led to considerable changes in how people are living and working. A survey by ONS shows 38% of people working during the survey period worked from home while a further 11% worked both from home and travelled to work. This is much higher than pre-lockdown and there is considerable debate about what the long term changes will be. You can watch BuiltPlace consultants Yolande Barnes and Brian Green discuss the future of home and work here.