Weekly Summary: 1st July 2022

DATA: Nationwide reported UK house prices rose 10.7% in the year to June

This was another record high following 11 consecutive monthly increases.

DATA: Zoopla reported UK house prices rose 8.4% in the year to May

They reported the monthly change fell to its lowest rate since December 2019 at just 0.1%. They also suggest there are “Emerging signs of impetus in the market slowing, with activity receding from record highs” and expect annual growth to reach 3% by the end of the year.

DATA: BoE reported 66,163 mortgage approvals for house purchase in May

This was similar to last month’s figure and in line with the pre-pandemic average.

DATA: BoE reported a rise in the average effective rate on new advances

The average effective mortgage rate on new advances was 1.96% in May. That’s slightly higher than the 1.91% recorded in May last year but still just below the 2.08% on outstanding balances. This figure looks likely to rise rapidly in coming months.

DATA: ONS published first major outputs from the 2021 Census

The release shows the usual resident population of England & Wales on the 21st March 2021 was 59,597,300 people, an increase of 6.3% over the previous ten years. The Census is a fantastic resource but it took place during a national lockdown in the middle of a global pandemic. This makes it very difficult to assess which results were longer-term trends (including the impact of Brexit) and which were short-term reactions to the pandemic. It probably should have been delayed till 2022 like the Scottish Census. Among others, the GLA and Lichfields have published analysis on the release.

DATA: FCA published Mortgage Product Sales Data for 2021

See Chart of the Week for more detail.

DATA: ONS published data on average prices by number of bedrooms

POLICY: Review into short-term tourist accommodation launched

The consultation on developing a tourist accommodation registration scheme will run for twelve weeks and is available here.

POLICY: DLUHC warns freeholders as Building Safety Act comes into force

In a letter to building owners and managing agents, Michael Gove warns “it will become an offence to attempt to pass on costs for relevant work to qualifying leaseholders”.

REPORT: JRF reported on the hardships faced by low-income households

It finds “Low-income families have fallen behind on payments by an average of £1,600” and are being forced to choose between going without the essentials or getting into debt.

NEWS: Knight Frank revised their 2022 house price forecast

Their forecast has been revised up from 5% to 8% as “Supply is rebuilding more gradually than anticipated”.

Chart of the Week

This week the FCA published their latest mortgage product sales data. Although very backwards looking (it covers the period up to Q4 2021), the data provides a useful breakdown on important trends in mortgage lending – including regional data. We’ve published a Digging Deeper slide deck covering the data in more detail but this week’s chart looks at first time buyer mortgage sales at high loan-to-value (LTV) ratios.

The chart highlights the collapse in very high LTV (over 90%) lending during the financial crisis followed by the partial recovery in 2014 thanks to the introduction of the Help to Buy mortgage guarantee scheme. Lending volumes then fell during the market lockdown. Unlike the lower LTV market which quickly recovered when the market reopened, those at higher LTVs (over 85%) remained suppressed thanks to the credit crunch affecting both their availability and cost. However, first time buyer numbers were buoyant during this period as the fall in buyers using very high LTVs was more than compensated for by an increase in those borrowing between 75% and 85% of their purchase price. The higher LTV market then started to recover following the re-introduction of the mortgage guarantee scheme.

Market Commentary – June 2022

Stuck In The Corner

Rapidly Rising Rates & Still Not So Special

Once Every Ten Years

The housing market is still booming despite higher mortgage rates and the rising cost of living. However, the risks of a slowdown are increasing but the impact of higher mortgage rates will depend on what happens to loan-to-income ratios. It’s not just the UK housing market that is facing these challenges, with other high growth markets facing higher rates and slowing prices. Meanwhile, interpreting the 2021 Census is a challenge given its timing.

Continue reading “Market Commentary – June 2022”

Weekly Summary: 24th June 2022

DATA: Rightmove reported asking prices rose 9.7% in year to June 2022

This marked a fifth consecutive record high. They predict an annual price rise of 5% at the end of the year with buyer demand starting to ease and new listings rising (though still above/below their respective levels prior to the pandemic. They also report “More than 500,000 homes are currently sold subject to contract, which is 44% higher than 2019”.

DATA: ONS reported UK house prices rose 12.4% in year to April 2022

This was higher than the revised 9.7% rise reported last month though the next few months are likely to see more volatility in the annual growth rate as last year’s stamp duty driven peaks and troughs in prices affect the comparison period.

DATA: HMRC reported 109,000 residential transactions in May 2022

The provisional seasonally adjusted data showed a 1.3% increased compared to the previous month and was 10% higher than the pre-pandemic average.

DATA: ONS reported another record high in annual SDLT receipts

Total receipts (for residential and commercial property) were £16.5 billion in the year to May 2022. This was the highest annual total ever recorded.

DATA: DLUHC reported an increase in housebuilding activity in Q1 2022

Both starts and completions increased slightly compared to the previous quarter but were lower than the same period last year. For a comparison of how these figures compare to other sources at a local authority level, check out our Housing Supply reports.

DATA: ONS published house price statistics for small areas

DATA: ONS published private rental market summary statistics

The data, covering housing delivered through programmes managed by Homes England in England, shows starts increased 3.0% to 38,436 while completions rose 6.4% to 37,164. Related DLUHC affordable housing tables have been updated to reflect this data.

DATA: DLUHC published planning application statistics for Q1 2022

The release includes the latest data on the number of homes granted planning permission in England from Glenigan. It shows the annual total fell to 307,000 in Q1 2022 from its record high of 336,000 in Q2 last year.

DATA: UK Finance published interest-only mortgage statistics

See Chart of the Week for more detail.

POLICY: BoE FPC confirms withdrawal of mortgage affordability stress test

As expected, the Financial Policy Committee has confirmed it will withdraw the 3 percentage point stress test rate for mortgage borrowers. However, the soft cap on loans above 4.5 times income remains and borrowers are still subject to the FCA’s Mortgage Conduct of Business responsible lending rules.

POLICY: DLUHC launch Help to Build scheme

The Help to Build scheme provides £150 million funding to help self and custom builders access funding to build their own home with just a 5% deposit.

Chart of the Week

This week UK Finance published a summary on the number of first charge interest-only homeowner mortgages that are outstanding. It shows the number outstanding continues to fall, to just over one million in 2021, compared to over 3 million in 2012. The data shows most borrowers are managing to repay their mortgage when it reaches maturity. Though there are around 26,000 mortgages with an expired mortgage term, this figure has been relatively unchanged over the last ten years despite the large number of mortgages reaching their maturity date. Meanwhile, other data sources (e.g. MLAR) suggest the majority of interest-only mortgages are non-regulated – typically buy-to-let borrowers.

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