Weekly Summary: 20th August 2021

DATA: Rightmove reported a 5.6% annual rise in asking prices in August

Asking prices fell slightly compared to the previous month (-0.3%) but this reflects normal seasonal trends as the index is not seasonally adjusted. They also reported the average stock per agent (including homes under offer/sold subject to contract) fell to 50 properties, from 55 the previous month and a recent high of 66 in November 2020.

DATA: ONS reported UK house prices rose 13.2% in the year to June

This was the highest annual growth rate since November 2014 with prices rising fastest in the north of England and slowest in London. However, the index continues to be affected by the lag in Land Registry registrations and the initial reading for June is based on around 10% of the transactions that actually occurred in the record breaking month.

DATA: ONS reported GDP rose 1% in the month of June

The annual rate of 15.2% is distorted by comparisons to lockdown last year but GDP is now just 2.5% lower than January 2020. These figures may be revised heavily in the future.

DATA: ONS reported the UK labour market continues to recover

The unemployment rate fell to 4.7%, the number of payrolled employees continued to rise along with total hours worked, and job vacancies were at record levels. However, the employment sector of the job vacancies do not necessarily match the sectors where employees are still furloughed (as per this chart from Pro Bono Economics on Twitter).

DATA: UK Finance reported continued low levels of mortgage arrears in Q2

Mortgage arrears are still close to record lows thanks to the widespread support for borrowers during the pandemic. The release also included the news that the number of outstanding buy-to-let mortgages hit a record high of 2.02 million at the end of June.

DATA: Ministry of Justice reported Mortgage & Landlord Possessions stats

The release shows an increase in the number of claims issued but they remain well below pre-pandemic levels.

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

A record high £1,393 million was collected in July, possibly reflecting the rush of completions at the end of June. Next week’s transaction data should provide more clarity. This record high clearly illustrates the large number of transactions still liable for stamp duty despite the holiday including investors and purchases of homes priced over £500,000.

DATA: MHCLG reported record high Help to Buy equity loans in 2020/21

The number of completions using Help to Buy equity loan fell in the first quarter of 2021 but this reflects the highly seasonal new build market and the 55,649 completions in the 2020/21 financial year was a record high for the scheme.

REPORT: ONS explored 50 years of change using the Census

Thanks to the digitisation of the 1961 Census, the ONS have published some fascinating interactive maps exploring how life has changed over 50 years. It includes data on homes without inside toilets, divorce, housing tenure, and population.

REPORT: RICS reported “Activity cools as Stamp Duty break is tapered”

The latest market survey reported “New buyer enquiries and newly agreed sales dip over the month” while the “Volume of fresh listings coming onto the sales market remain in decline”. The release also reported increases in tenant enquiries in London with future rental expectations now positive for the capital.

REPORT: Scottish Land Commission report on the Housing Land Market.

The report suggests “Significant reform is needed to the way land is brought forward for housing and development if Scotland is to build the houses it needs”, The report makes five proposals: establishing a new recyclable fund to support the creation of a network of ‘place pioneers’, empowering local authorities to designate Regeneration Partnership Zones, introducing new approaches to land value capture, creating a new public land agency, and introducing a new transparency obligation for options agreements and conditional contracts.

Chart of the Week

Persimmon announced strong results in their Half Year Results with new home completions 51% higher in H1 2021 compared to the lockdown affected H1 2020. Thanks to this and a rise in the average selling price, their operating profits increased by 65%. Our chart of the week looks at the gross profit and costs for Persimmon on a per plot basis. The total of the bars equates to the average selling price which has risen over the last decade but can be affected by changes in the mix and location of what they are selling. Perhaps more interesting is the stable cost of land and building over the period that has allowed Persimmon to capture almost all the rises in house prices in gross profit. It is only recently that build costs have started to rise, perhaps as they deal with their quality issues but the cost of development land has not been an issue for the company. The cost of land does not appear to be an issue looking forward either. The average cost to revenue ratio for their existing land bank is just 11.9% with new land proceeding to contract at just 11.5%.