As political parties look towards their conferences in late September and October, recent headlines suggest that housebuilding will be hoisted back to the top of their agendas when parliament resumes.
UK house prices edged up in July while the decline in prime central London pricing eased, but attention is now turning to housing policy, especially the delivery of new homes, according Frank Knight.
This is clear from the number of headlines in recent weeks about various aspects of the housing market, not least several calls for a reform of stamp duty on housing transactions. A key topic will be the future of Help to Buy.
The Conservatives have batted away rumours that they will axe the Equity Loan Scheme before its natural end in 2021; however, its future beyond that is still in doubt.
First-time buyers borrowed £5.9bn in June, up 26% on the previous month and 9% on June 2016. This equated to 36,000 loans, up 22% month-on-month and 6% year-on-year, according to data from UK finance.
Around 120,000 buyers have used the Help to Buy Equity Loan to purchase a new home since the scheme was introduced in 2013.
Paul Smee, Head of Mortgages at UK Finance, said, “June’s figures show a busy month in the mortgage market, with home movers having their highest monthly activity levels for over a year and an especially high number of loans for first time buyers.
“But there are also signs of a softening market and we are not anticipating that this performance will be sustained in the second half of 2017.”
UK House prices overall grew by 4.9% in the year to June 2017, 0.1 percentage points lower than in the year to May 2017, according to land registry data. While the annual growth rate has slowed since mid-2016, it has remained broadly around 5% during 2017.
According to the Bank of England Agents’ summary of business conditions for the second quarter of 2017, housing market activity had been subdued in most parts of the United Kingdom, as demand weakened relative to supply.
RICS reported that new sales instructions remained negative for the sixteenth month in a row. They also report that average estate agent stock levels have reached a new all-time low with a lack of supply continuing to support prices.
This will make the delivery of new homes a hot topic, Frank Knight said in a recent update. New-build housing starts are rising, with 162,000 homes started in England in the year to April 2017, up from 103,000 in 2012/13.
Once conversions and office-to-residential schemes are added in, the number of new units delivered in England is expected to rise to more than 200,000 this year – a key milestone, but still some way off the 250,000 new homes a year that the Conservatives have said the country needs.
This data is a headline indicator however, with some local markets experiencing different trends. For example, housing starts in London, while well up on the levels seen after the financial crisis, were down in 2016 compared to 2015, Frank Knight reports. They have edged up a little so far this year, but the data suggests that completions will fall in 2017 and 2018 from current levels.
There is some positive news with the number of planning permissions for large residential schemes (10 units or more) in London, rising 20% between September 2016 and March this year compared to the same period 12 months earlier. However, there are still challenges around some aspects of the planning system, even once permission is given, which can cause delays.
This is just one area where clarity could help speed up delivery – so all eyes will be on the Conservative conference and Westminster once Parliament resumes.
Gráinne Gilmore, Head of UK Residential Research, said, “As political parties look towards their conferences in late September and October, housing will once again be an issue at the top of the agenda.”