Weekly Summary: 5th March 2021

DATA: Nationwide reported 6.9% annual rise in UK house prices in Feb

The 0.7% monthly rise increased the annual rate of change to 6.9% from 6.4%, though it’s still slightly lower than the 7.3% annual growth reported in December.

DATA: Halifax reported a 5.2% annual rise in UK house prices in Feb

The annual growth rate slowed from 5.4% in January thanks to a 0.1% monthly fall.

DATA: BoE reported 98,994 mortgage approvals for house purchase in Jan

The number of mortgage approvals for house purchase was slightly lower (-3.7%) than the previous month but was still 40% higher than the same month last year.

DATA: Bank of England reported falls in quoted mortgage rates in Feb

Quoted mortgage rates fell across all loan-to-value (LTV) ratios but the biggest fall was for 75-90% LTVs. Mortgage rates on 95% LTV mortgages have only fallen slightly since Dec.

POLICY: 2021 Budget housing announcements

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.

REPORT: OBR revise house price forecasts

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.

POLICY: GLA publishes Mayor’s London Plan 2021

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.