Weekly Summary: 30th September 2022

DATA: Rightmove reported asking prices rose 8.7% in year to September

They report the monthly increase (0.7%) was in line with the usual September increase (their data is not seasonally adjusted). They also noted “Buyer demand is up 20% on the pre-pandemic five-year average” while “The number of homes coming to market has risen back to 2019 levels”.

DATA: Nationwide reported house prices rose 9.5% in year to September

They report “annual house price growth slowed to single digits for the first time since October last year”.

DATA: Zoopla reported annual house price rise of 8.2% in August

They report(PDF) “The Housing market is transitioning to a buyers’ market as higher mortgage rates are set to cut buying power by up to 28%”. They also report “New sales are holding up with no sudden drop in demand in recent weeks – but buyer interest is weaker than a year ago” while “Asking price reductions are at the highest levels since before the pandemic as sellers adjust to more price-sensitive demand”.

DATA: BoE reported a sharp rise in house purchase mortgage approvals

The data for August was 16.6% higher than the previous month and 12% higher than the 2014-19 average. This may reflect buyers rushing to transact as mortgage rates rise.

DATA: BoE reported another rise in effective mortgage rates in August

The average rate on new mortgage advances was 2.56%, higher than last month’s figure of 2.33% and the average on outstanding balances (2.18%).

DATA: DLUHC published planning applications in England data for Q2 2022

The release shows a 17% annual fall in applications for planning permission and a 16% annual fall in the number of homes granted planning permission.

REPORT: Resolution Foundation on “Blowing the budget”

Their report shows that “today’s Government is no longer fiscally conservative or courting the Red Wall” while “the focus has shifted to the South of England where the beneficiaries of these tax cuts are more likely to be living”.

REPORT: LGA/Housing LIN report on “Housing our ageing population”

The report “makes a number of recommendations to government on how we can best meet the needs of people in later life”.

REPORT(£): Research on “Age segregation and housing unaffordability”

Their results “provide evidence of a strong association between increasing housing unaffordability (for sales and rentals) and increasing residential age segregation (beyond other local characteristics) in urban areas”. This Twitter thread provides further detail.

REPORT: Savills report on the Single Family Rental market

The “SFR” market could be one of the big beneficiaries of any housing market downturn.

NEWS: MoneyFacts on mortgage products withdrawn this week

Their last update (11:31am yesterday) put the total number of residential mortgage products available at 2,340. Last Friday morning the figure was 3,961.

Chart of the Week

Yesterday we published some estimates for which regions and countries of the UK would be worst affected by negative equity in the event of price falls. One of the key drivers is recent patterns in price growth. To illustrate this we have used the ONS house price index but shown the percentage change since June 2022 below – unlike most charts the x-axis is in reverse date order. It shows that most regions would be similarly affected by 10% price falls given recent high price growth but London was the region that would be worst affected by 20% price falls. This is shown by the London line taking much longer to fall below the -20% line – in August 2015. Meanwhile a 20% fall only takes the UK line back to around 2018/2019. However, the North East is the worst affected region if prices fall by 30%.

Market Commentary – September 2022

Truss Turned It Terrifying

Price Falls & Negative Equity

Long Lasting Impact

Last month we wrote this is getting scary. Since last week’s mini-budget, it has turned terrifying. There is still a great deal of uncertainty about the future and a housing market downturn is not guaranteed. However, the events of the last week have accelerated the market towards what was its worst case scenario and the opportunities to avoid it are reducing. Even a full reversal would leave a long lasting impact on the mortgage and housing markets.

Continue reading “Market Commentary – September 2022”

Weekly Summary: 23rd September 2022

DATA: BoE increased Bank Rate by 0.5 percentage points to 2.25%

DATA: HMRC reported 105,000 residential transactions in August

The seasonally adjusted figures were 1.1% higher than the previous month and 6% higher than their pre-pandemic average.

DATA: ONS reported record high stamp duty land tax receipts in August

See Chart of the Week for more detail.

DATA: DLUHC published statutory homelessness figures for 2021-22

They report in England “278,110 households were assessed as either being threatened with homelessness or already homeless in 2021-22, up 2.8% from the previous year but 4.0% below the pre-COVID level in 2019-20”.

DATA: BoE published agents’ summary of business conditions – Q2 2022

They reported “Demand for housing remained strong, but supply has started to increase in the owner-occupier market”.

DATA: PublicHouse updated their compilation of international housing data

It pulls together “publicly available data on the number of dwellings and people in cities and countries around the world” and has some updated data and analysis.

DATA: VOA called for help with private rental data

They “depend on the goodwill and trust of landlords, letting agents and tenants who provide details of rent levels being paid in the private rented sector” and are calling for more landlords and other organisations to provide data.

POLICY: HM Treasury published “The Growth Plan”

The government will launch Investment Zones with lower taxes – including “full stamp duty land tax relief on land bought for commercial or residential development” – and “planning liberalisation” (fact sheet). They are proposing to accelerate housing delivery through planning reform with a paper due later this year. They also doubled the nil-rate SDLT band to £250,000 and increased the level first-time buyers start paying stamp duty to £425,000. First time buyer relief was increased to £625,000. They forecast “Doubling the nil-rate band will enable up to 29,000 more people to move home each year” (fact sheet).

POLICY: DLUHC launched £2bn Rough Sleeping Strategy

REPORT(PDF): FCA reported on insurance for multi-occupancy buildings

They report the “Supply of insurance for mid-rise and high-rise multi-occupancy residential buildings has contracted significantly” while “Premium rates have doubled between 2016 and 2021”. There are also concerns about high commissions and sharing of those with freeholders and managing agents. The Secretary of State’s response is available here.

REPORT: Resolution Foundation published Q3 2022 Housing Outlook

The report highlights the rapid rise in private rents and high housing costs relative to other tenures. It also shows “The amount of space that private renters get for their money has fallen since the turn of the century”.

REPORT: HM Treasury published independent forecasts – September

Chart of the Week

Just this week ONS reported another record high for Stamp Duty Land Tax (SDLT) receipts over a 12 month period. But, in the years leading up to the pandemic, the receipts generated by the tax were far less important that its use as a political tool. And it proved very successful. It was first used to dampen the top-end of the housing market and stop the constant front page headlines about rapidly rising prices in Kensington & Chelsea. It was then used (via 3% HRAD) to shift buying power towards first time buyers and away from investors/second home buyers. This helped increase first time buyer numbers in all but the most expensive markets (e.g. London) where affordability was already too stretched for them. Today’s announcement extends the SDLT support to first time buyers in more expensive markets (e.g. London) but does little to help the other challenges facing the market and will be disappointing to agents at the top-end of the market given expectations.

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