Hello and welcome to our January Monthly Market Insight, bringing you the latest residential market data and industry news in one place.
With 2018 well underway, we have already seen the appointment of a new Housing Minister and the DCLG become the newly dubbed Ministry for Housing, Communities and Local Government, but how did the market fair over the festive period and how does this set us up for the new year?
For our 2017 round-up and 2018 market forecast compilation, please see our New Year Intro-Insight.
A quick look at this month’s UK-wide HPI releases...
|Nationwide||Dec 2017||Nov 2017||Oct 2017|
The Nationwide is the world's largest building society, and one of UK's largest mortgage providers.
Robert Gardner, Chief Economist, Nationwide
Annual price growth ended 2017 within the 2-4% range that prevailed throughout the year.
This marks a slowdown from the 4-6% growth recorded in 2016.
Low mortgage rates, employment growth and supply constraints supported prices, offset by pressure on household incomes exerting a drag on consumer confidence.
|Halifax||Dec 2017||Nov 2017||Oct 2017|
The Halifax House Price Index is the UK's longest running monthly house price series.
Russell Galley, Managing Director, Halifax Community Bank
2017 saw growth slow and building activity, completed sales and mortgage approvals fall flat.
HMRC: Sales volumes were above 100,000 in all months of 2017. November’s 104,200 is the strongest since March 2016 and the 3 months to November were up 7% from a year earlier.
Bank of England: Mortgage approvals remain flat. Volumes edged up 0.4% in November to 65,139, however, the 3 months to November were 2.1% down on a year earlier.
RICS: New buyer enquiries have fallen for the last 8 months while instructions to sell have now fallen for 22 consecutive months – the worst sequence for almost 8 years.
Rightmove House Price Index
Traffic indicates a busy start to 2018, with Rightmove visits up 9% on January 2017.
Average asking prices are up 0.7% (+£2,067) in January, similar to the 0.6% rise in January 2017 with a virtually identical number of properties coming to market.
Buyers are still price-sensitive with sales agreed in Q3 2017 down 5.5% on Q3 2016.
Average asking prices down 1.4% (-£8,819) in January and 3.5% (-£21,618) less than a year ago as London adjusts to over-stretched affordability and slower momentum.
Average time to sell in London in December 2017 at 78 days - almost 2 weeks longer than December 2016 and 11 days longer than the national average.
Rightmove Asking Price Data for London
|Category||Average Asking Price (January 2018)||Monthly Change||Annual Change|
|By Travel Zone|
|By Market Sector|
|Second - Steppers||£678,230||-0.7%||-1.4%|
|Top of the Ladder||£1,303,658||+1.3%||-4.3%|
|National Average for Comparison|
UK Finance Press Release
Helped by a continued pick-up in remortgaging activity, gross mortgage lending has been strong, with the total set to exceed £250 billion in 2017 - the first time in a decade.
Estimated gross mortgage lending totalled £23.1 billion in November 2017 (3% lower than October, but 9% higher than November 2016)
Buy-to-let activity is steady following tax and regulatory changes.
|Type of Borrower||Value of Loans||Monthly Change||Annual Change||Number of Loans||Monthly Change||Annual Change|
|First time buyers*||£5.6bn||+7.7%||+16.7%||34,800||+8.1%||+15.2%|
|BTL house purchasers||£0.9bn||-10.0%||Nil||6,600||Nil||-1.5%|
*The average FTB is 30 and has an income of £40,000.
Paul Smee, Head of Mortgages, UK Finance
Data shows housing market activity remains buoyant, despite November’s rise in the base rate. Steady increases in lending for house purchases and homeowner remortgages reflect a keenness among consumers to benefit from still historically low interest rates.
In contrast, declines in buy-to-let lending reflect the changing regulatory environment for landlord businesses, where some might be inclined to reappraise the viability of their portfolios.
Knight Frank – UK Residential Market Update
Average house prices rose 0.1% in November as growth moderated over 2017, with average values up 2.5% in the year to December, compared to 4.4% a year ago.
In prime central London, prices fell 0.1% in November, but the annual rate of decline continues to moderate, now standing at -2.2%.
Overall transaction volumes fell 6% in the year to November compared to the previous year, but are at similar levels to 2015.
Current trends are thought to continue, although the market remains localised, with forecasts for price changes in the regions ranging from -0.5% to +2% in 2018.
A Tale of Two Halves
The disparity in house prices across the UK has been a recurring theme in recent years. 2017 saw a shift, as rates of growth in the south of England moderated towards those prevailing in the rest of the country. London saw a particular slowdown, with annual prices falling for the first time in 8 years and ending the year the weakest performing region for the first time since 2004.
While regional growth rates have converged, there remain significant differences in affordability, the variation of which has increased over the past 10 years:
Affordability has improved in Wales, Scotland, the North of England, and most markedly in Northern Ireland.
In London and the South East, affordability is increasingly challenging, with more priced out of the market or needing to borrow a greater multiple of income.
Another key aspect of affordability is the deposit required and the time taken to save it:
A 20% deposit in London is now in excess of £80,000 (based on the average FTB house price). This is circa £30,000 higher than a decade ago.
In regions such as the Midlands and Northern England, deposit requirements are similar to 2007, though prices were near their pre-crisis peak at this time.
A ‘typical buyer’ aiming for a 20% deposit, based on saving 15% of net income:
In most regions, it would take circa 8 years for the ‘typical buyer’ to save this.
This rises to 9 years in the South East and to nearly 10 years in London.
RICS – Leasehold Proposals
New measures announced by the Government aim to tackle unfair and abusive practices within the leasehold system. RICS are broadly supportive of the government’s aims.
Government proposals intend to:
Legislate to prevent the sale of new build leasehold houses except where necessary.
Work with the Law Commission to support existing leaseholders and make the process of purchasing a freehold or extending a lease much easier, faster and cheaper.
Provide leaseholders with support on the various routes to redress available to them.
Review the support and advice available to leaseholders to ensure it is fit for purpose.
Ensure freeholders have equivalent rights to leaseholders to challenge unfair service charges.
Ruling in the Mundy v the Sloane Stanley Estate is due Tuesday 16th January 2018 and could potentially significantly impact the leasehold sector in terms of substantially reducing the premiums payable by leaseholders to freeholders for the purposes of lease extension.
In other news…
Concrete Jungle or Green and Pleasant Land?
An Ipsos Mori survey asked British people how much of the UK's land area is densely built on. The average estimate was 47%, however, the figure based on satellite images is 0.1%.
The 0.1% refers to Continuous Urban Fabric (CUF) and is defined as land where over 80% of ground is covered by artificial surfaces like buildings and roads.
It appears the British people have the mistaken belief that much of the UK is concreted over, with the average Briton thinking 356 x more of our nation's land is concrete jungle than reality.
If the UK were a football pitch, those surveyed thought the ground between the goal-line and half-way line is densely developed when, in reality, it would fit into the arc for taking a corner.
So, what is land used for in the UK? The Corine Land Cover Inventory indicates:
- Farmland: 56.7%
- Natural: 34.9%
- Green urban: 2.5%
- Built on: 5.9%
Bobby Duffy, Managing Director, Ipsos Mori Social Research Institute:
"The majority of people live and spend their time in built-up areas and this will make up most of their mental image of the country."
We hope you find this market insight informative, however, should you have any queries or recommendations on this or any of our other articles, please contact us
Sources & Further Reading
|Halifax House Price Index||Halifax||08/01/2017||Find out more|
|Nationwide House Price Index||Nationwide||December 2017||Find out more|
|Rightmove - House Price Index||Rightmove||January 2018||Find out more|
|RICS Housing Market Forecast 2018||Royal Institution of Chartered Surveyors||22/12/2017||Find out more|
|Mortgage Market activity bouyant during November 2017||UK Finance||16/01/ 2018||Find out more|
|UK Finance Update on Lending||UK Finance||December 2017||Find out more|
|UK Residential Market Update - December 2017||Knight Frank||December 2017||Find out more|
|Prime Central London Sales Index - December 2017||Knight Frank||December 2017||Find out more|
|Prime Central London Rental Index - December 2017||Knight Frank||December 2017||Find out more|
|UK Housing Market Forecast - December 2017||Knight Frank||December 2017||Find out more|
|Has the Government answered the leasehold question?||RICS - Abdul Choudhury - London Policy Officer||05/01/2018||Find out more|
|A renamed ‘Ministry for Housing’ but the revolving door of housing ministers keeps on spinning||RICS - Lewis Johnston - Parliamentary Affairs Manager||11/01/2018||Find out more|
|London home-sellers cut prices by most since 2009 - Rightmove||Reuters||15/01/2018||Find out more|
|Property market braces for shockwaves from landmark leasehold case||The Guardian - Patrick Collinson - Money editor||14/01/2018||Find out more|
|UK house prices up 5.1% as London property market remains sluggish but steady||Evening Standard - Prudence Ivey||16/01/2018||Find out more|
|Asking prices in London fall while rest of the UK sees house price growth||Evening Standard - Kristy Gray||15/01/2018||Find out more|
|Buying a home: How long does it take to save a deposit?||BBC - Kevin Peachey||04/01/2018||Find out more|
|London's most affordable commuter towns||BBC - Brian Milligan||05/01/2018||Find out more|
|Sharp slowdown in house price growth in 2017, Halifax says||BBC - Business||08/01/2018||Find out more|
|The areas where house prices rose fastest in 2017||BBC - Business||11/01/2018||Find out more|
|The illusion of a concrete Britain||BBC - Mark Easton||03/01/2018||Find out more|