In the absence of publicly available data from UK Finance and delays in publication of the FCA’s Mortgage Product Sales Data, we have constructed our own estimates of quarterly mortgage activity by first-time buyers and home movers.
It is simply the total value of mortgage advances to each group from the Bank of England’s MLAR data (table 1.33)* then divided by the average mortgage advance to each group from the Regulated Mortgage Survey published by ONS (table 15).
We have tested it against other data sources and it appears to accurately reflect mortgage activity but should only be relied upon at your own risk.
*make sure you use the aggregated data containing both regulated and non-regulated data near the bottom of the sheet.
There were no surprises in the two major housing related announcements in the Budget. Both the Mortgage Guarantee scheme and the extension to the stamp duty holiday were well known before the Chancellor stood up. There was a disappointing lack of announcements to help those people excluded from the housing market. Check out the IFS and Resolution Foundation reports for more information on the other announcements.
Alongside the Budget, the OBR published its latest Economic and Fiscal Outlook including a large revision to their house price forecast. Back in November, the OBR had forecast house prices to fall 8.3% in 2021 but now forecast a 0.2% rise with a 1.0% fall in 2022. Their transaction forecast is relatively unchanged with 1.3 million in each of the next five years.
The strategic planning document sets an annual target of 52,000 net new homes, well below the 93,500 set out in MHCLG’s December update of Indicative Local Housing Need. The GLA target is based on capacity for 40,000 to be delivered via sites identified in the 2017 Strategic Housing Land Availability Assessment (SHLAA) and 12,000 through small site windfalls. The plan has a target for 50% of all new homes to be “genuinely affordable”.
REPORT: Molior report on “Who buys new homes in London?”
The fascinating report, just published by the GLA, looks at the profile of buyers in 2019. It highlights three interesting trends: the internationalisation of London’s residential development market since 2008; the impact of Help to Buy: Equity Loan on sales in outer London; and the increasing professionalisation of PRS buyers over the last six years.
REPORT: Centre for Ageing Better report on housing quality
The report looks at the housing experiences of people aged 50 to 70 living in poor quality homes. It warns that “Emotional attachment often prevents people from being realistic about the problems that exist in their home” and “People in this age group can be reluctant to think ahead” while “Many do not have the finances available” to make changes.
REPORT: Crisis release The Homelessness Monitor: England 2021
The report provides a wealth of information on the state of homelessness in England. It highlights the effect temporary measures have had in preventing homelessness during the pandemic but warns of a rise when evictions restart and unemployment rises.
REPORT: UK Finance release Q4 2020 Household Finance Review
The report provides a summary of household finances. See Chart of the Week for more.
Chart of the Week
Despite the lockdown, residential transactions were just 11% lower in 2020 than the year before thanks to the boom at the end of the year. The latest UK Finance report provides us with useful data so we can see the change in type of buyers over the last year. At first glance of the chart below, the proportion of buyers appears relatively static with only a small fall in first time buyers and rise in mortgaged movers. This may be surprising given the credit crunch affecting high loan to value mortgage but we’ve seen some first time buyer activity supported by Help to Buy: Equity Loan and a shift to higher income borrowers with larger deposits. The government will hope its Mortgage Guarantee scheme will solve the credit crunch but it is unlikely to solve the longer-term challenges facing Generation Rent.
The two major housing announcements in the 2021 Budget were not a surprise given the earlier leaks but the most important message from the Chancellor on housing remained unstated but clear. This was a budget to support the housing market and avoid the previously widely predicted housing market crash.
DATA: HMRC reported slightly lower transactions in January
Despite the small monthly fall (-2.4%), the number of residential transactions in January was 24% higher than the same month a year ago.
DATA: Zoopla reported 4.3% annual rise in house prices in January
While Zoopla have reported higher growth rates in recent months, their index is no longer closely tracking the ONS index which has rocketed ahead. It will be interesting to see which is more heavily revised in coming months – we suspect it will be the ONS index.
DATA: ONS reported their latest labour market statistics
They reported a small increase in number of payroll employees, a slight increase in the unemployment rate (5.1%), a Claimant Count of 2.6 million in January, and very high wage inflation though this may reflect fewer younger, lower earning employees starting work.
POLICY: Possible Stamp Duty holiday extension reported in the press
It has been reported in the press that the Chancellor will announce the extension of the holiday till the end of June at next week’s Budget. This would be a longer period than appropriate and will simply delay the cliff edge effect expected at the end of the holiday.
REPORT: GLA release analysis of housing floorspace per person
The report shows the amount of floorspace per person rose between 1996 and 2018 but with a large rise for owner occupiers and fall for private renters. The report also highlights the link between housing costs and space per person across England and London.
The report suggests there are still plans to build houses on flood plains and the Environment Agency is concerned about surface level flooding, particularly in urban areas.
Chart of the Week
If you’re looking for transaction numbers you might be tempted to use the sales data published alongside the ONS index here. You’ll end up with a large spreadsheet containing what appears to be monthly sales data by geography. And this is what it is for everywhere except Northern Ireland.
When you look closely at the sales data for Northern Ireland, you’ll see that it’s the same figure for the three months in each quarter. This is because the index data is based on Department of Finance data which is only published quarterly. Unfortunately, it means that if you attempt to use the data as monthly totals, you’ll end up with a number that is three times larger than the actual number of transactions. There’s no warning about the issue and there’s a danger than when you add together the constituent country totals to get a UK figure, you’ll end up with too many transactions. Exactly as ONS/Land Registry have done in their data