Weekly Summary: 27th January 2023

DATA: HMRC reported 102,000 transactions in December

The figure was 2.6% lower than the previous month but 2.7% higher than the pre-pandemic average. It will take time (2-4 months) for lower approvals/sales agreed to filter through.

DATA: ONS reported a fall in stamp duty receipts in December

The figure for residential and commercial property was 18% lower than December 2021 – though that was the highest recorded month. November 2022 marked the peak in annual receipts, with £17.9bn collected in the 12 month period. It fell to £17.5bn in December.

DATA: DLUHC reported 252,500 new build EPCs in 2022

The data is a useful leading indicator for net supply. It shows the number of Energy Performance Certificates for new build houses was 12.6% higher in Q4 2022 than the same quarter in the previous year while the figure for flats was just 2.6% higher.

DATA: ONS published comparison of private rental growth measures

The release compares the ONS rental index – based on all tenancies – with measures based on new listings and new lets.

DATA: ONS published household income data for 2021/22

It reports the inflation adjusted median household disposable income fell 0.6% in 2021/22 compared to the previous year while the measure for the “poorest fifth of the population” fell by 3.8%. Meanwhile, the figure for the “richest fifth of people” increased by 1.6%.

DATA: DLUHC published data on social housing sales and demolitions

The release for England shows there were 25,000 sales of social housing in 2021/22 and 2,800 demolitions. Experimental statistics suggest, when other losses and new supply is factored in, the net supply of “affordable housing for rent” in 2021/22 was 11,200 homes.

DATA: Rightmove reported rents rose 9.7% in 2022

The latest rental index report record asking rents outside London (£1,172 p.m.) and inside London (£2,480 p.m.). They report competition is starting to ease as more properties are coming to the market but the lack of homes to available to rent is still significant.

DATA: Scottish Government published Quarterly Housing Statistics

The release provides a summary of housebuilding statistics for Scotland.

POLICY: Competition and Markets Authority letter to Gove

The letter says they “will prioritise work towards the launch of a market study into the homebuilding sector, following discussion by the CMA Board in January”.

REPORT: JRF published UK Poverty 2023 report

The report finds “13.4 million people were living in poverty in 2020/21” but warns “Living standards are likely to have fallen since the latest official data covering 2020/21”. It also suggests “Housing costs are a major factor in determining whether people are pulled into poverty” with 32% of private renters and 42% of social renters in poverty.

REPORT: CPS reported on “The Case for Housebuilding”

Any merits of the arguments in this report are compromised by a sloppy approach to evidence gathering, unsourced charts, and apparent cherry-picking of statistics. This included copying an image of our chart unacknowledged in the original version of the report.

REPORT: DEMOS reported on “A New Age of Inheritance”

The report highlights the role of residential property to the rising value of inheritances and warns about the “divide between the inheritance ‘will-haves’ and ‘won’t-haves’”.

BLOG: Bank of England published Overground/Underground Blogs

A flurry of blogs from the Bank investigate “How UK housing preferences shifted during the pandemic”, “How does household financial resilience compare to the early 1990s recession?”, and “How are the rising cost of living and interest rates affecting households’ ability to pay their mortgage?”.

REPORT: TwentyCi published End of Year Summary

They report the number of sales agreed was 14.3% lower in 2022 than the year before while the number of new instructions was 4.7% higher.

REPORT: Savills reported on development land values

They report a “significant” slowdown in sales of sites and UK greenfield land values fell 2.2% in the final quarter of 2022.

NEWS: Halifax reported on first time buyers in 2022

See Chart of the Week for more.

CORPORATE: Henry Boot published trading statement

They report pre-sales for land and houses are “encouraging” while the planning environment has become more difficult.

CORPORATE: Watkins Jones published full year results 2022

They report interest in forward sales is recovering but expect actual forward sales to return in the second half of the year. They also report gross margins for build-to-rent and student accommodation are being squeezed by the increased cost of borrowing.

CORPORATE: Inland Homes published trading update

They warn about market confidence and property valuations being adversely affected and have sold a portfolio of strategic land (mostly greenbelt) given the political environment.

CORPORATE: Foxtons published year end trading update

They expect the first half of 2023 will be challenging thanks to a subdued sales market.

CORPORATE: Paragon published trading update

They report BTL mortgage completions are expected to be lower in their second quarter due to the impact of the mini budget on new business flows.

Chart of the Week

The latest press release from Halifax reported the number of mortgaged first time buyers fell 11% in 2022 compared to the previous year. However, as our chart below shows, this was still in line with their peak numbers immediately prior to the financial crisis in 2006.

The chart also highlights the relative divergence in first time buyer numbers since 2014 across regions. Changes to stamp duty (both relief for first time buyers and higher rates for additional properties) helped shift buying power towards first time buyers and away from investors. This worked across most of the country except the most expensive areas such as London where affordability was too stretched for first time buyers to replace the investor buyers. More recently, the post-pandemic market has boosted numbers in the capital but many will have been dependent on very low mortgage rates which will affect this year.

Weekly Summary: 20th January 2023

DATA: Rightmove reported asking prices rose 6.3% in year to 7th January

This was higher than last month’s rate of 5.6% thanks in part to a bigger than usual monthly rise (0.9% not seasonally adjusted). We will have to wait and see whether this monthly increase just reflects the hopes and dreams of sellers during a quiet period of the year.

DATA: ONS reported UK house prices rose 10.3% in the year to November

The completion-based index tends to lag other house price indices but suggests house prices fell slightly in November compared to the previous month on a non-seasonally adjusted basis. The ONS index has been subject to significant revisions in recent years.

DATA: ONS reported CPI inflation of 10.5% in December

While the rate may have fallen from its peak of 11.1% in October and should fall further in coming months, the price rises of the last year are unlikely to be reversed.

DATA: ONS reported on the UK labour market

The unemployment rate was near record lows and the number of payrolled employees was still rising. However, the employment rate and hours worked are still below pre-pandemic rates and, while rising rapidly in nominal terms, real earnings were negative.

DATA: HESA published higher education student statistics for 2021/22

They report “The total number of HE students stood at 2,862,620 in 2021/22, an increase of 4% from 2020/21” and there was a “2% increase in first year enrolments between 2020/21 and 2021/22”. In related news, ONS published an article on measuring student populations by comparing different data sources for individual local authorities.

DATA: Bank of England published Q4 Credit Conditions Survey

See Chart of the Week below for more information.

POLICY: DLUHC announced Levelling Up Fund projects

They announced “More than 100 projects awarded share of £2.1 billion from Round 2 of government’s flagship Levelling Up Fund” though there are concerns about the distribution.

REPORT(PDF): RICS published December Residential Market Survey

They warn “Buyer demand still falling, resulting in fewer sales being agreed” and “National house price net balance continues to retreat”. Meanwhile, price and sales expectations suggest “further declines in the year ahead”.

REPORT: JRF and TBI reported on rental affordability since 1979

The report identifies “The erosion of subsidies explains the decline in housing affordability for renters over the past 40 years” and suggests “an expansion of social housing and reforms to housing benefits to improve housing affordability”. One of the authors, Ian Mulheirn, has also published a blog on the report.

REPORT: Households in Temporary Accommodation APPG report

They published their call for evidence findings, call for temporary accommodation to be included in the Social Housing Bill, and propose a 7-point policy plan.

REPORT(PDF): Knight Frank published Student Property Report

They report £7.2 billion was invested in the sector in 2022 and forecast growing student numbers but suggest new supply isn’t keeping pace with this growth.

CORPORATE: Crest Nicholson published preliminary results

They report sales per outlet per week of 0.6 in the year to 31st Oct 2022 compared to 0.8 the previous year. The rate has fallen to 0.35 in the eleven weeks since 1st Nov.

CORPORATE: Vistry published trading update

They report the weekly private sales rate per outlet was 0.71 in 2022 compared to 0.76 the previous year. However, they report the rate fell to 0.46 in the final quarter of the year but pricing “remained firm” during the period.

Chart of the Week

The latest Bank of England credit conditions survey highlights the impact of the Truss turmoil on demand for secured lending for house purchases. Demand for secured lending for house purchase had been expected to fall in the final quarter of 2022 (to end of November) with a net balance of -37% as per the red dotted line in the below chart. However, the actual reported figure for demand in Q4 was -75%. Expectations for the next quarter (to end of February) show both the availability of secured credit (-24%) and demand for secured lending for house purchase (-15%) will remain negative.

Weekly Summary: 13th January 2023

DATA: ONS reported GDP rose 0.1% in November

ONS have revised their monthly GDP estimates for the last couple of years. This has resulted in just 0.2% growth in the year to November and no month has been above the January 2020 peak since the pandemic hit. This data will be revised again in the future.

DATA: Bank of England reported falls in average quoted mortgage rates

The data for December reported bigger falls for lower loan-to-value ratios though mortgage rates were still much higher than earlier in the year.

DATA: ONS on “How increases in housing costs impact households”

The analysis provides analysis on how rising mortgage rates might affect borrowers and the impact of rising private rents. Some analysis is similar to our previously published charts.

POLICY(PDF): BoE/PRA published 2023 priorities for UK deposit takers

They warn “Firms need to be ready for a prolonged period of stress” and their “assessment of firms’ credit risk management will include a focus on traditionally higher risk areas”. These areas include buy-to-let and commercial property.

REPORT: Resolution Foundation published Living Standards Outlook

It can be summarised as “2022 was a disaster for UK living standards” and “We are only half way through a two-year crisis when it comes to household finances”.

REPORT: BoE research on the demand for long-term fixed-rate mortgages

The paper finds “the choice of fixation length tracks the life-cycle decline of credit risk in the mortgage market: the loan-to-value (LTV) ratio decreases and collateral coverage improves over the life of the loan due to principal repayment and house price appreciation. High-LTV borrowers, who pay large initial credit spreads, trade off their insurance motive against reducing credit spreads over time using shorter-term contracts”.

REPORT: Savills reported on local plan status

They report “10 years on, 1 in 5 local planning authorities still lack an NPPF-compliant plan” while “only 15 English local planning authorities (LPAs) adopting a new or revised local plan in 2022”.

REPORT(PDF): HomeLet published December rental market index

They report UK rents rose 10.8% in the year to December while London rents rose 14.6% over the same period. They also report “renters paying 31.4% of their income on rent in December, up from 30.5% a year earlier”.

REPORT: Shelter estimated “At least 271,000 people are homeless”

Their analysis of government data and responses to FOIs suggests that “at least 271,000 people are recorded as homeless in England, including 123,000 children”.

REPORT: Nationwide published mortgage affordability report

See Chart of the Week for more on this.

NEWS: Moneyfacts published best buy mortgage rate guide

The highlighted rates suggest the lowest for those with large deposits are currently around 4.5% while those for higher loan-to-value ratios are around 5%. This is well below the “terrifying” rates seen during the period of Truss turmoil but still above “scary” levels.

Chart of the Week

This week Nationwide published their Affordability Report showing a big increase in mortgage repayments as a percentage of take home pay. It suggests first time buyer repayments hit 39% of take home pay across the UK and 67% of take home pay in London.

However, these figures should come with a big warning. As we highlighted back in July, this data is based on ONS average earnings rather than the income of actual borrowers. It also assumes a fixed 80% loan-to-value ratio across the whole period covered. This data can tell us a lot about the failure of the housing market for those on average earnings but not a lot about the affordability of actual borrowers entering or in the market right now.

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