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