Post on 05-Apr-2017
Where next and with whom?Lucian Cook
Where next?
Inner London
Outer London
South East
East
South West
Scotland
East Mids
West Mids
Y & H
North West
Wales
North East
-20% 0% 20% 40% 60% 80% 100% 120%
105%
79%
48%
46%
24%
19%
17%
14%
10%
7%
5%
-4%
10 year house price growth
Source: ONS, Land Registry, June 2016
Source: ONS
Partly replicated in the rental market
May-0
6
May-0
7
May-0
8
May-0
9
May-1
0
May-11
May-1
2
May-13
May-1
4
May-1
5
May-1
6-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
England excluding London London
Ann
ual R
enta
l Gro
wth
London
South East
East
South West
East Mids
West Mids
Scotland
Y & H
North West
North East
Wales
0.0% 1.0% 2.0% 3.0% 4.0%
3.7%
5 year annualised rental growth
Source: Savills
Affordability
U35
Great Britain London -
5,000
10,000
15,000
Mortgage Repayment Mortgage InterestPrivate Rent Social Rent
Ann
ual H
ousi
ng C
osts
59%
73%£8,800
£15,800
Looked at where two earners would need to be on the income scale...
.....to afford the median and lower quartile property at a local authority level
With a 20% deposit & 3.5 x loan to income ration mortgage or
spending 30% of gross income on rent
Source: Savills using Land Registry & ASHE
Accessibility
Inner London Outer London
South East South West East West Mids East Mids Y & H Wales North West North East0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
18%
30%
38% 41%44%
57%60% 61%
66% 67% 69%
Able to Buy Median
Source: Savills using Land Registry & ASHE
Accessibility
Inner London Outer London
South East South West East West Mids East Mids Y & H Wales North West North East0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
31%
45%
54%57% 58%
70% 73% 74%79% 80% 82%
Able to Buy Lower Quartile
Source: Savills using Land Registry & ASHE
Accessibility
Inner London Outer London
South East South West East West Mids East Mids Y & H Wales North West North East0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
52%
59%
71% 73% 73%79% 81% 81% 83% 82% 84%
Able to Rent Median
Source: Savills using Land Registry & ASHE
Accessibility
Inner London Outer London
South East South West East West Mids East Mids Y & H Wales North West North East0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
64%70%
78% 79% 78%83% 85% 85% 87% 86% 87%
Able to Rent Lower Quartile
Inner London
Outer London
South East
East
South West
Scotland
East Mids
West Mids
Y & H
North West
Wales
North East
8.6%
15.6%
12.3%
14.3%
8.0%
4.6%
7.9%
6.4%
5.5%
6.6%
4.9%
1.5%
Annual house price growth
Source: ONS, Land Registry, June 2016
Source: Centre for Cities
The economic catalyst
City Average Weekly Workplace Earnings 2015 (£)
London 674.9
Cambridge 585.9
Edinburgh 564.6
Leeds 516.8
Bristol 508.4
Southampton 494.3
Birmingham 486.5
Manchester 485.2
Liverpool 482.1
Newcastle 481.1
Cardiff 478.1
Working Age Population at NVQ4 or Above2014 (%)
48.1
61.3
56.3
34.2
42.4
35.4
26.6
32.6
25.7
30.6
46.0
Private Knowledge Intensive Business Services 2014 (%)
22.62
14.94
21.57
18.94
19.15
13.12
11.17
14.81
10.79
10.52
15.12
Business Start-ups 2014 (per 10,000 popln)
100.13
52.14
56.12
55.78
56.02
46.23
44.42
54.02
43.74
38.55
51.79
Infrastructure catalyst
Who next?
Source: Savills, HMRC, CML, CLG
First T
ime B
uyers
Mortga
ged H
omem
overs
Mortga
ged B
uy to
Let
Cash
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2001 2006 2011 2016
1.67 million transactions in 2006
183,000 private completions in 2006
1.29 million in year to June 2016
136,000 in year to June 2016
Help to Buy Equity Loan at circa 40,000 pa
Uncertainty feeds into economic
growth
Base rate cut & remains lower for
longer
Wage growth suffers
Sterling devalues pushing up
inflation
Bigger lenders margins & tighter lending criteria?
The B Word
Investors demand higher
UK returns
Source: RICS
The effect so far
Aug-06
Dec-0
6
Apr-07
Aug-07
Dec-0
7
Apr-08
Aug-08
Dec-0
8
Apr-09
Aug-09
Dec-0
9
Apr-10
Aug-10
Dec-1
0
Apr-11
Aug-11
Dec-1
1
Apr-12
Aug-12
Dec-1
2
Apr-13
Aug-13
Dec-1
3
Apr-14
Aug-14
Dec-1
4
Apr-15
Aug-15
Dec-1
5
Apr-16
Aug-16
-75
-50
-25
0
25
50
75
Difference New Buyer Enquiries New Instructions
Bal
ance
of o
pini
on
A squeeze on affordability
The prospect of a fall in transactions
Greater reliance on government intervention
A drag on house prices especially in London
Potential knock impact on future housing delivery
Continued pressure on the private rented sector
MarketBuild to Rent
Shared ownership and intermediate
tenure
Help to Buy
Starter Homes
Affordable Housing
Retirement housing
Discounted Rent
May 2005to
January 2008
October 2013to
July 2014
June 2009 to
May 2010
January 2008to
October 2008
July 2014 to
July 2016
May 2010 to
September 2012
October 2008to
June 2009
July 2016to
..............
September 2012
toOctober 2013
Consumers more demanding
Disruption and innovation in the industry
Planners more proactive
Developersmore ambitious
Providers more diverse
House builders more efficient
ThankYou