Download - Housing market overview
Housing Market OverviewLucian Cook
Head of UK Residential Research, Savills
@LucianCook
Current Position
UK House Price Growth
Dec-05
Jun-0
6
Dec-06
Jun-0
7
Dec-07
Jun-0
8
Dec-08
Jun-0
9
Dec-09
Jun-1
0
Dec-10
Jun-1
1
Dec-11
Jun-1
2
Dec-12
Jun-1
3
Dec-13
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
Land Registry Halifax Nationwide
An
nu
al H
ou
se
Pri
ce
Gro
wth
Nationwide
+9.4%
Halifax+7.9%
Land Registry+4.2%
Heavily driven by London
Source: Nationwide, Regional Quarterly Index
11.7%Since
June 2005
7.0%Annual
15.2% SinceMarch 2009
18.2%Since
June 2005
3.6% Annual
2.6% Since March 2009
14.9%Annual
43.5%Since
June 2005
41.0% SinceMarch 2009
Prime Markets
Q on Q Y on Y Since 2007 Peak
London 2.9% 11.4% 30.6%
Suburbs 1.6% 4.7% 2.9%
Inner Commute 1.5% 4.7% 0.5%
Outer Commute 1.8% 5.3% -2.9%
Remainder of South 2.2% 3.1% -12.9%
Midlands and North 0.1% -0.1% -16.9%
Scotland 1.1% -2.3% -23.0%
A resurgence in demand
Transactions
+31%3 months to
end Jan
Mortgage Completions
+20%Q4 2013
Transactions
+26%Q4 2013
Mortgage Completions
+19%Q4 2013
Transactions
+30%3 months to
end Jan
Transactions
+25%Q4 2013
Mortgage Completions
+20%Q4 2013
Transactions
+30%3 months to
end Jan
Transactions
+25%Q4 2013
Mortgage Completions
+20%Q4 2013
Source: HMRC, CML
Understanding the shape of the market
FTB Mortgages Home Mover Mortgages BTL Mortgages Cash Transactions -
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Average 1993 - 2002 Average 2003 - 2007 2012 2013
Source: HMRC, CML, Savills
Locally speaking
Source: Registers of Scotland
Aberdeensh
ire
Mid
loth
ian
Mora
y
Angus
Highla
nd
Dumfri
es & G
'way
Scottis
h Bord
ers
Dundee
Perth &
Kin
ross
Inve
rclyd
e
W D
unbartonsh
ire
S Lanark
shire
E Ayr
shire
N Lanark
shire
W L
othia
n30%
40%
50%
60%
70%
80%
90%
-
40,000
80,000
120,000
160,000
200,000
240,000
Transactions v Pre Crunch Average House Price
Looking Forward
Political issues
Avoiding Boom & Bust
Housing Delivery
Help to Buy
Taxation
Independence
Affordability issues
0%
20%
40%
60%
80%
100%
120%
FTB deposit as a % of Income
Source: Savills / CML
Q4 1983Q1 1989Q2 1994Q3 1999Q4 2004Q1 20105%
10%
15%
20%
25%
30%
FTB Interest as a % of IncomeFTB Total Repayments as a % of Income
UK Housing Market Outlook
0%
H
ouse
pric
e gr
owth
40
%
3.5% Mortgage Rates 7.0%
FORECASTEarnings led
price growth with gradual recovery
in transaction levels
BUBBLESignificant issues
of deposit & mortgage
affordability - leading to price falls at end of
period
PRICESTAGNATION
Erosion of mortgage
affordability resulting static
house prices and falls in real terms
SALES STAGNATION
High deposit requirements
constrain transactional activity in the mortgaged
market
Unlikely given capacity for price rises based on current levels of affordability and
prospects for growth in
household income
Disposable Income
UK House price
2014 3.1% 6.5%
2015 3.4% 5.0%
2016 4.3% 4.5%
2017 5.8% 4.0%
2018 5.5% 3.0%
5 year 24% 25%
Mainstream ResidentialFive Year Forecasts2014 - 2018
The Scottish Prime Market
2008 2009 2010 2011 2012 20130
500
1,000
1,500
2,000
2,500
3,000
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Sales Stock Sales to Stock
Source: Savills
The international element
Source: Savills
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Buyers from EnglandOther International Buyers
Prime regional forecasts
2014 2015 2016 2017 20185 years to end2018
Prime London
4.5% -0.5% 7.0% 5.5% 4.5%
23%
Prime Regional
4.5% 1.0% 5.0% 5.5% 5.0%
23%
Prime Scotland
1.0% 2.0% 4.5% 4.5% 5.0%
18%