Weekly Summary: 14th January 2022

DATA: ONS reported GDP rose 0.9% in November

The latest estimate suggests GDP in November 2021 was 0.2% higher than the pre-pandemic peak in January 2020.

DATA: Bank of England reported rises in lower LTV mortgage rates

The data on average quoted mortgage rates shows rates rising from their recent record lows at lower loan-to-value (LTV) ratios (75% and under). Average rates on higher LTVs are still falling but have returned to pre-pandemic levels.

DATA: DLUHC reported falls in housebuilding starts and completions in Q3

The leading indicators, based on building control data, show seasonally adjusted starts fell 5.1% compared to the previous quarter while completions fell 0.6%. This data should not be used for absolute levels of housebuilding but has demonstrated its value as a leading indicator.

DATA: ONS published 2020-based national population projections

The latest projections are interim projects given the uncertainty around the pandemic trends. ONS are due to publish Census-based 2021 projections next year. See our Digging Deeper report for more information on the latest projections and how they compare to previous versions.

DATA: Bank of England published Credit Conditions Survey for Q4 2021

See Chart of the Week for more detail.

POLICY: DLUHC warned developers they must pay to fix the cladding crisis

The Secretary of State has asked companies to “make financial contributions to a dedicated fund to cover the full outstanding cost to remediate unsafe cladding on 11-18 metre buildings, currently estimated to be £4 billion”, “fund and undertake all necessary remediation of buildings over 11 metres that they have played a role in developing”, and “provide comprehensive information on all buildings over 11 metres which have historic safety defects and which they have played a part in constructing in the last 30 years”. DLUHC also released data from mortgage lenders on flat valuations that required an EWS1.

POLICY: DLUHC launched consultation on proposals to reform leasehold

The proposals, based on the Law Commission’s recommendations, are intended to “make it cheaper and easier for leaseholders to buy the freeholds of their homes”.

POLICY: DLUHC set to close tax loophole on second homes

Rather than simply declaring an intention to let out their second home, owners will now have to rent them out for a minimum of 70 days to qualify for business rates.

POLICY: Welsh Government announced Renting Homes (Wales) Act implementation date of 15th July

REPORT(PDF): House of Lords Built Environment Committee reported on “Meeting housing demand”

The report provides some useful recommendations but is unfortunately compromised by basic errors in data and analysis of the housing market.

REPORT: Savills published Build to Rent market update

They report “More than £4 billion was invested into UK Build to Rent in 2021”.

Chart of the Week

The Bank of England’s Credit Conditions Survey reports lenders expect the availability of secured credit to households to continue to expand other the next three months (blue dot). This will continue the trend in expansion reported since the housing market reopened in 2020. However, lenders also report they expect the demand for secured lending for house purchase to decrease (red dot). While recent falls in demand perhaps reflect the end of the stamp duty holiday, the future fall perhaps reflects the impact of rising mortgage rates.

Digging Deeper – UK 2020-Based Interim Population Projections

Increase of 167,000 People Per Year Over The Next Twenty Years

Much Lower Projected Growth Than Previous 2018-Based Projections

Higher Net Migration Not Enough To Offset Negative Natural Change

4.5 Million More People Aged 60+ by 2040

The latest ONS population projections show continued population growth across the UK though at a much lower rate than in the previous 2018-based projections. The new 2020-based interim projections show an increase of 167,000 people per year over the next twenty years. However, this reflects much higher growth during the first five years (245,000 p.a.) than the following fifteen years (141,000 p.a.) as net migration is projected to fall slightly and natural change (births less deaths) is projected to turn negative from 2025.

As Figure 1 shows, these latest interim projections continue the trend of lower growth since the 2008-based projections. Figure 1 also highlights the challenges in projecting future population changes. Recent trends are not always indicative of what will happen in the future and even when we appear to get it right (e.g. 1975), it’s not always for the right reasons. The 2020-based interim projections are particularly subject to uncertainty given the unknown impacts of the pandemic. The release of 2021 Census data should improve the next version of population projections (2021-based) due to be published in 2023.

The new 2020-based projections project lower total population growth than the previous 2016-based and 2018-based projections. Net migration is expected to be higher in the latest projections with 4.2 million people over the next 20 years compared to 3.9 million in the 2018-based projections. However, the latest projections are based on a much lower number of births and slightly higher number of deaths. The net result of this is a negative natural change (-0.9 million compared to 0.7 million). The overall impact of the slightly higher net migration projection and negative natural change projection is to reduce the total change over the next 20 years by 1.3 million people.

The ageing population is a massive challenge for not just the housing market but also society as a whole. The new 2020-based interim projections show that the number of people aged 60 and above is expected to rise from 16.4 million in 2020 to 20.9 million in 2040 (Figure 3). While this is a massive 28% increase (4.5 million people), most of them are already housed appropriately. The biggest challenge will be in balancing their care needs against the housing needs of younger and typically less wealthy generations.

Previous Versions

Weekly Summary: 7th January 2022

DATA: Nationwide reported UK house prices rose 10.4% in 2021

This was “the strongest calendar year for house price growth since 2006”.

DATA: Halifax reported UK house prices rose 9.8% in 2021

They reported house prices hit a new record high and, with a rise of over £24,500, it was “the largest annual cash rise since March 2003”.

DATA: Zoopla reported annual UK house price rise of 7.1% in November

Their valuation data suggests “15.7 million homes register value rise of £15,000+” though they warn the “average price for a flat in London is broadly unchanged from early last year”.

DATA: HMRC reported a rebound in residential transactions in November

Transactions recovered back to their pre-pandemic trend after a fall in October following the end of the stamp duty holiday. The post holiday trough is perhaps smaller than expected given the scale of the stamp duty spikes in transactions.

DATA: BoE reported no change in house purchase mortgage approvals

The data for November showed the number of mortgage approvals for house purchase continued to track the pre-pandemic average for the second month in a row.

DATA: ONS reported record high stamp duty receipts

Total tax receipts in the year to November 2021 were the highest ever for a twelve month period despite the tax holidays over the period.

DATA: UK Finance published Q3 2021 postcode mortgage lending data

DATA: ONS published Total Wealth in Great Britain data

This release provides the “main results of household wealth from the seventh round of the Wealth and Assets Survey covering the period April 2018 to March 2020”. See Chart of the Week for more information on property wealth.

REPORT: ONS research found “Age of the property is the biggest single factor in energy efficiency of homes”

REPORT: Resolution Foundation published Q4 2021 Housing Outlook

The report warns about “The impact of higher inflation on social renters’ housing costs”.

REPORT: GLA published London housing market report

The report “summarises key trends and patterns in London’s housing market”.

REPORT: Create Streets reported on “Suburban Intensification in South Tottenham”

NEWS: Hamptons reported “Londoners spend a record £54.9BN on property outside the Capital” in 2021

The analysis provides estimates on trends in households moving out of London based on Countrywide data grossed up using HMRC data.

Chart of the Week

Today the ONS published their latest results from the Wealth and Assets Survey. It includes lots of details on how wealth varies according to the characteristics of households and individuals, including net property wealth. Our chart of the week shows the net property wealth of households by net equivalised income decile. It highlights the wide inequality of property wealth, with median net property wealth of £320,000 for households in the highest income decile. Meanwhile, the median net property wealth for households in the lowest two income deciles is zero. This reflects the much lower levels of property ownership in lower income deciles as the difference in net property wealth across the income deciles is less extreme when looking at just those households that own property.