Economic briefing

A digest of economic data, news and comment, with BuildInsight views on read-across. Where relevant, links are provided to the prime sources accompany websites.

18 Feb UK house prices rose by 5.5% y/y in December 2013, up from 5.4% in November, ONS. The average price of £250,000 in December 2013 is now 1.6% above the pre-Crash peak in January 2008. House prices grew by 5.7% in England, 4.8% in Wales, 0.5% in Scotland and 4.8% in Northern Ireland. In London the rise was 12.3%. Excluding London and the South East, UK house prices increased by 3.1% during the year. On a seasonally adjusted basis, average house prices increased by 0.9% between November and December 2013. The rate of annual increase for first time buyers was 7.4%, well above the 4.7% for existing owners.
Insight: Although London remains the clear leader in house price growth, recovery now appears to be taking hold through most of the UK.

Source: ONS

17 Feb Asking prices have risen 3.3% in February and 6.9% y/y, despite an 18% increase in new properties coming on the market, according to property website, Rightmove. In London the comparisons were +5.2% and +11.2% respectively. However, the increase in new stock coming onto the market has been exceeded by homes coming off the market, leading to the average number of properties available per estate agent's office has fallen from 58 to 57.
Insight: Despite the increase in new supply, availability of stock continues to fall, suggesting either further upwards pressure on prices or a standoff between buyers and sellers leading to a fall in completed transactions.

12 Feb The Bank of England struck what sounded like a dovish tone, in its Inflation Report: "there is scope for the economy to recover further before the Bank Rate is raised and, even when [it] does rise, it is expected to do so only gradually and to a level materially below its pre-crisis average of 5%" The linkage of potential rates decision principally with unemployment hitting 7% (now "likely ... over the next few months") has been relegated and decisions would be based on a basket of factors including spare capacity in the economy, inflation and "head winds", such as those in the Eurozone and emerging markets.
Insight: Although the markets do not seem to believe Governor Mark Carney (the pound continued to climb against the dollar and housebuilding shares - a bellwether of likely rates movements fell), if rates remain low it is clearly good - at least in the mid-term - for the housing market.  

11 Feb Residential land values rose 7.1% in 2013 in England and Wales and by 2.7% in Q4, with Prime Central London rising by 14.4% y/y, Knight Frank. The rate of change appears to be accelerating for England and Wales as a whole, but flattening out for PCL.
Insight: Intuitively, the growth appears low, given that land should, theoretically grow or fall at a multiple of house price inflation (approximately 8%). But it is likely that like-for-like new house prices are probably rising at around half this rate nationally, once geographical and product mix changes are stripped out.
Source: Knight Frank Residential Research

10 Feb  Building contractors in Q4 13 recorded a third quarter of consecutive growth for the first time since the financial crisis, but the rate of increase slowed, Construction Products Association. A net balance of 15% of contractors reported y/y increases in workload, down from +43% in Q3 and +72% in Q2. A small net balance of 2% of contractors reported a rise in their tender prices, but this was dwarfed by a net 63% seeing rises in their input costs, both labour and materials. A balance of 41% reported difficulties in recruiting bricklayers and 32% in hiring carpenters. There were surprising falls in orders in all sectors except public new housing (balance +9%) and private new housing (flat).
Insight: One quarter's figures should not be given too much weight, but this suggests the potential for a serious squeeze in margins and cash flow for many contractors during 2014, historically a common feature of past recoveries.

6 Feb The Halifax Price Index for January rose by 1.1% m/m (Dec -0.5%) and by +7.3% y/y(+7.5%). Although there was a slight reduction in the annualised growth rate, the price-earnings ratio (comparing average prices with average male wages) edged up from 4.69x in December to 4.74x, the highest level since October 2008, but well below the 5.83x reached in July 2007. Housing Economist Martin Ellis warned: "Official schemes, such as Help to Buy, appear to have boosted housing demand. However, continuing pressures on household finances, as earnings fail to keep pace with consumer price inflation, are expected to remain a constraint on the rate of growth of house prices."
Insight: Despite Halifax's official caution, the direction of prices and the earnings multiple seems likely to maintain its upwards momentum for some time to come, in the view of BI.

Source: Lloyds Banking Group

4 Feb Construction growth almost reached its pre-crash high in January, as measured by the Markit/CIPS Construction Purchasing Managers' Index. The index recorded a seasonally adjusted 64.6, up from 62.1 in December and just shy of the 64.8 peak in June 2007. A reading of 50 indicates no change in activity. All three sub-sectors - Residential, Commercial and Civil Engineering - showed strong gains, with housing increasing at the strongest pace in over 10 years. The strong rate of job creation continued during the month.

30 Jan Bank of England mortgage approvals for house purchase rose by 1.2% m/m to 71,638 in December, seasonally adjusted, down from +4.1% in November. Y/Y non-SA, approvals were up 35.6%, the fastest annualised rise since December 2009.

Source: Bank of England

29 Jan Annualised house price inflation rose to a 45 month high of 8.8% in January, up from 8.4% in December, Nationwide. The rate is steadily approaching the pre-Crash high of 11.1%. On a seasonally-adjusted prices rose by 0.7% in January, down from what had been a four-year high of +1.4% in December. 

Source: Nationwide

28 Jan GDP in Q4 rose 0.7% q/q, 2.8% y/y, FY 2013 +1.9%, ONS. The strongest growth since the start of the financial crisis. Of the 0.7% rise, Construction saw a surprise 0.02% fall. 
Insight: although largely in line with market estimates, the strengthening economy bodes well for private sector construction.

24 Jan Mortgage approvals for house purchase climbed in December to their highest level, seasonally adjusted, since September 2007. Non-seasonally adjusted, 33,895 loans were approved in December, 50% up y/y and the highest y/y change for a single month since December 2009. The average loan rose 7.2% y/y NSA, the highest rate since September 2012. The chart below shows the less volatile rolling 3m y/y change, NSA.
Insight: more evidence of a surging market, more imperative for Carney to make an intervention.

Source: British Bankers Association, BuildInsight

Bank of England Governor Mark Carney wants the Treasury to cut back the maximum Help to Buy loan cut back from £600k to around £350 - 400k, according to BBC's Robert Peston. BoE quickly denies the story; Peston reaffirms he stands by it ...
Insight: this blog has already speculated that Carney favours direct intervention, both to mortgage lending and government stimuli, to peg back house price inflation before the ultimate control of a rate rise.   

Mark Carney makes the biggest hint yet that the MPC has demoted the unemployment rate as the key criterion in the timing of a future interest rate rise. Speaking from the World Economic Forum in Davos, he tells BBC Newsnight's Jeremy Paxman he was against "unnecessarily focusing on one indicator in the future" and that there was "no immediate need to increase interest rates". He will outline his stance more fully in a speech today. In his first Inflation Report in August, he indicated the MPC would not consider cutting rates until unemployment fell to 7%, but expected this not to happen before 2016. Employment stats out two days ago showed it hitting 7.1% in the three months to November.
Insight: an expected U-turn; focus likely to turn to a basket of measures, probably most likely any strengthening in wage inflation. BuildInsight Blog weighs the possibility of a rise this year.

Switzerland has doubled the amount of capital banks must hold against risks in their mortgage books, in a renewed effort to calm the country’s booming property market. Since 2000, prices have soared 76%, FT.
Insight: One of the possible "tools" Mark Carney has publicly discussed using to combat house price inflation.

23 Jan Betting shifting further in direction of a rise in Band of England base rate occurring in 2014, despite yesterday's MPC reassurance that there was "no immediate need to raise the Bank Rate". The pound rallied a further 0.5% against the dollar to a near three-year high of almost $1.66. Citi brought forward its estimate of the timing of a rise, from Q2 2015 to Q4 2014.
Insight: rising expectations of a rise in 2014 may be self-fulfilling, with the MPC inclined to "go with the flow"; moreover, as said yesterday (see below), it would be a brave Governor who would want to be associated with a rise close to an Election in 2015.


22 Jan The Bank of England voted unanimously to hold rates and QE, according to Minutes of the MPC. But the big challenge to the MPC's "forward guidance" policy is that unemployment fell to 7.1% in Sep - Nov, down from 7.6% in Jun - Aug, approaching its 7% target much quicker than the 2016 horizon initially expected. Nevertheless, the Committee concluded there was "no immediate need to raise the Bank Rate even if the 7% unemployment threshold were to be reached in the near future. The headwinds to growth would persist for some time yet and that inflationary pressures would remain contained. Consequently when the time did come to raise Bank Rate, it would be appropriate to do so only gradually". Pay rose 0.9% y/y in November, less than half the 2.1% CPI rate that month, further squeezing household budgets.
Insight: A real conundrum for the MPC, especially given its open concerns about house price inflation and political issues associated with raising rates in early 2015, ahead of a General Election. The more the BoE holds rates, the more pressure there will be to make specific interventions regarding mortgage lending and the Help to Buy stimulus.

17 Jan The Experian Construction Forecasting Committee has raised its estimates for industry output over the next three years, Building. It has raised 2014 from +1% to +4.2%; 2015 from +2.5% to +4.4%.; and introduced a +2.7% forecast for 2016. The estimate for 2013 goes from -2.3% to +2%. Infrastructure, the strongest performer over the next two years, underpins the upgrades.
Insight: follows close on the heels of similar upgrades from the Construction Products Association

16 Jan The number of homes sold per estate agent hit a six-year high of 21.3 in the three months to December, a 117% increase y/y, RICS. During December a net balance of 56% more agents saw price rises than falls. The market is "starting to thrive once more", but, unless the supply of properties coming onto the market improves, price rises could become "unsustainable" in some areas, the institution warned.

14 Jan UK house prices rose 5.4% in the 12 months to November 2013, according to the ONS, down from a +5.5% in the 12 months to October. The year-on-year increase reflected growth of 5.6% in England, 5.4% in Wales, 2.5% in Scotland and 3.3% in Northern Ireland. London rose 11.6% (down from 12.0% the previous month), while the South East was up 4.5%. Excluding London and the South East, UK house prices increased by 3.1% in the 12 months to November 2013.
Insight: the ONS figures are more representative than the lenders’ house price surveys. It will take a few more releases to determine whether the latest month’s slowdown in growth in London and the South East is the start of a trend.

13 Jan Construction output will expand by a total of almost 18% over the next four years following a better than expected 2013, according to the latest forecast by the Construction Products Association. Infrastructure, Commercial and Private Housing are the key drivers in the forecast, but the CPA's commentary expresses concerns about the sustainability of housebuilding's recovery as the stimulus of Help to Buy nears an end in 2016. The latest estimates (below) are a significant upgrade to the CPA's summer forecasts of a 1.5% fall in 2013, followed by +2.2% in 2014 and 4+.5% in 2015.

Source: CPA 

10 Jan Construction output slipped 4.0%, seasonally adjusted, between October and November 2013, according to the Office of National Statistics. This was largely due to a slowdown during the month in Commercial new work. Compared with November 2012, overall output rose 0.2% on a non-seasonally adjusted basis. On a more underlying basis, the three months to November were up 4.4% non-SA compared with the same three a year earlier. This was a slower rate than the +6.3% recorded in the three months to October (see chart).
Insight: one month should not be viewed in isolation, but the rolling annualised 3m trend looks slightly worrying. The recent spate of flooding does not bode well for the next two months of data releases.

8 Jan Brick stocks fall again to multi-year low in November, according to the Monthly Bulletin of Building Materials and Components. Stocks fell 2.8% m/m, 37% y/y and by 70% since 2008. Stocks now represent 10.1 weeks at rolling annual delivery rates, down from 10.6 weeks in October, 17.3 weeks in 2012 and 32.0 weeks in 2008.
Insight: slide in stocks, with little scope short-term for capacity increases, highlights the wider challenges facing supply chains, especially in housebuilding.


Halifax House Price Index -0.6% m/m in Dec, +7.5% y/y (Nov, +7.7%). Price/earnings 4.68x (Nov 4.71x). It predicts that pressure on household finances plus a rise in sellers entering the market will "curb upwards pressure on prices" in 2014, but maintains its 4 - 8% forecast. 
Insight: as frequently has been the case on a month-by-month basis, Halifax goes in the opposite direction as the headline grabbing Nationwide release (below). The underlying direction still appears to be upwards. 

3 Jan Nationwide House Price Index rises 1.4% m/m in December, the fastest rise since August 2009, pushing annual inflation or 2013 to 8.4%, exceeding forecasts of 7.1%. All regions recorded y/y increases, with London hitting +14.9%, Q4 y/y, and North lowest at +1.9%.
Insight: the accelerating m/m trend and beat to forecasts will increase speculation that a rates rise could be made in 2014 (although most economists believe there won't be one). A more likely scenario - at least at this point - is a more interventionist approach by the BoE to mortgage lending criteria and more hawkish rhetoric on housing from Governor Mark Carney.  

23 Dec Bank of England Deputy Governor Andrew Bailey emphasises over the weekend the bank's vigilant stance on the housing market. He told the Telegraph that, should the market show signs of over-heating, it would consider strengthening the tests potential buyers have to go through before they are offered a mortgage and increasing the amount of capital banks have to hold against household lending: “We are watching the housing market very carefully. We have set out our desire to see robust mortgage underwriting standards. We know sadly from history mortgage underwriting standards are very cyclical."
Insight: More evidence, following several comments from Governor Mark Carney, that the BoE is growing more concerned about the potential for a bubble and that it would consider more intervention as an alternative to an early rise in rates. 

20 Dec Housing starts in the three months to November were 30% up on the same period a year earlier, according to the NHBC. Total registrations 34,356 new homes were registered during the period, compared to 26,420 last year. In November alone 11,409 homes were registered, a 20% increase on last year. In the three month period private homes rose by increased by 28% y/y to 25,079,  while public sector registrations increased by 37% to 9,277. All regions made increases except Northern Ireland, which fell 60%. The biggest riser was the East Midlands, at +71% and smallest London with +20%. 


Source: NHBC

19 Dec World stock markets, and US homebuilding stocks, react positively to Federal Reserve decision on Quantitative Easing. It will "taper" its monthly purchases of Treasury bonds and mortgage backed securities from $85bn a month to $75bn. The imminent onset of tapering was widely anticipated - and some observers expected a steeper decline - but what cheered the markets was a more benign tone on when historically low interest rates will start rising. This is likely to be "well past the time that unemployment declines below 6.5%". It had been expected that 6.5% would have been a more explicit trigger.
Insight: The era of cheap money is receding but more gently than many or most in the markets had expected. Possibly less pressure to tighten money supply on other policy makers worldwide, including UK, hence a net positive for UK housing, unless other pressures (falling unemployment, rapid house price inflation) come more to the fore.

Gross mortgage lending falls 4% m/m in November but rises 30% y/y, Council of Mortgage Lenders. CML now forecasts gross lending for 2013 of around £170bn - compared with its original £156bn forecast. It compares with £363bn peak in 2007.  

17 Dec ONS House Price Index for October hits 186.3, beating the previous record level in August 2013 by 0.2%. All regions showed rise (see below), including +5.7% England, + 12% London, +3.1% UK ex-Lon/SE.
Insight: increasing pressure on Bank of England to take housing-specific action other than rates rise (inflation was slightly softer than expected.)


16 Dec Property website Rightmove forecasts new sellers' asking prices in England and Wales will rise by 6 - 8% in 2014, before what it says could be a characteristic "pause" prior to the election in 2015. The upper end of the predicted range for next year is based on the number of property transactions continuing to outstrip new ones being put on the market. So far in 2013, transactions have risen +13% y/y, while newly properties listed with estate agents have only risen 2%.
Insight: this level of increase sounds feasible, but on top of the availability of stock, the key factor will be banks' lending criteria amid signals from the Bank of England about preventing a "bubble".

Another implication of an 8% rise is it would push the average price of a UK home through the 3% Stamp Duty threshold, which starts at £250,000, notes The Telegraph.

13 Dec High LTV mortgages in England and Wales double y/y to 9,493, according to estate agent LSL, FT.

10 Dec RICS Residential Market Survey: price index rises to a balance of +58 in November (58% more surveyors saw rises than falls), from +57 in October; expectations rise to a 14 year high of +59; each region sees rise for second consecutive month; transactions per surveyor +30% y/y to 20.6. 

Bank of England Governor Mark Carney steps into the housing debate again, accepting the "potential" for a housing bubble developing (something he has previously played down) and warning the Bank will use a range of banking "tools", other than interest rate rises to stop he market hitting "warp speed", Telegraph.
Insight: more direct intervention ahead, but a slight easing of worries about arly interest rate rises

Average house prices will soar over the next seven years by 35% across England and by 43% in London, to £650,000, according to research by the National Housing Federation and Oxford Economics and homes will be out of reach for a generation, Telegraph.

4 Dec Brick stocks in October fell to 10.6 weeks at current delivery rates, according to Monthly Statistics of Building Materials and Components, further emphasising the squeeze on the supply chain. Brick deliveries rose by 8% m/m and 24% y/y, while stocks fell by 37% and 6% respectively. Production only rose 3% m/m and now looks to be nearly at full capacity. Stocks are now at the lowest point since the financial crisis and the October level compares with 11.5 weeks in September and 32.0 weeks in 2008.
Insight: brick stocks, a good proxy for wider building materials, now appear to be at crisis levels and hefty price increases appear to be inevitable.

3 Dec Construction growth, as measured by the CIPS/Markit Purchasing Managers' Index, soars from 59.4 in October to 62.6 in November, close to the August 2007 peak of 64.8 (50 = no change). The housebuilding element is at its fastest growth rate for ten years. This is resulting in deteriorating supply conditions, CIPS stated: "Suppliers are struggling to keep up with the sharp surge in demand; stocks are being squeezed and delivery times continue to lengthen, to the greatest degree since 1997. 

29 Nov Annual house price inflation rises to two and half year high of 6.5% in November from 5.8% in October, but the average price of £174,566 is still 6% below its 2007 peak, according to Nationwide

28 Nov In another sign of potential tension between the Bank of England and the government over Help to Buy (see below), FT reports that Mark Carney has contradicted ministers' assertions that the Financial Policy Committee has powers to intervene in its operation only once a year. “The FPC is not constrained by the government’s timetable for any such advice,” he wrote in a letter to Andrew Tyrie, chair of the Treasury select committee.  

27 Nov Bank of England Governor Mark Carney clashes with Chancellor George Osborne over the impact of Help to Buy, according to The Times. Giving evidence to MPs on the Treasury Select Committee, he said he did not expect to “see a marked improvement in the supply of new homes”, largely due to the  planning regime.
Insight: Probably the most significant figure to question Osborne's contention that Help to Buy will substantially boost supply. 

US housing data was strong overnight, prompting a jump in housebuilding shares. Housing permits were up 6.2% m/m in October to an annualised rate of 1.03 m, a five year high and up 13.9% y/y. The S&P/Case-Schiller 20 City House Price Index rose 0.7% m/m in September and 13.3% y/y.

22 Nov Council of Mortgage Lenders predicts housing transactions will hit 1 million for first time in six years after yesterday's strong HMRC figures (see below).
21 Nov The major impact on housebuilders of the Help to Buy equity loan scheme was made clear in statistics released today by DCLG. Between the launch of the first phase of Help to Buy in April and the end of September 5,375 newly built homes were legally completed in England. The total value of these equity loans was £208m, with the value of the properties sold under the scheme totalling £1.04 bn.

Under the first phase of Help to Buy the government provides buyers with loans of up to 20% of the price for an equity share in newly built property. Buyers must provide a deposit of at least 5% and the remaining 75% is covered by a mortgage. (The second phase of Help to Buy, consisting of government guarantee for up to 95% loan to value mortgages, and covers secondhand as well as newbuild properties, was launched in October. It led to 2,000 mortgage offers in the first month, according to today’s release.)


The vast majority of the 5,375 completions under “H2B#1” were in June to September. This amounts to 18% of the 29,433 private completions during Q2 and Q3, pro-rata’d to four months.  But appears likely that the number of legal completions will increase significantly. In their latest interim management statements (see Briefing, Corporate) Britain’s three biggest housebuilders alone, Barratt, Taylor Wimpey and Persimmon recorded a combined total of 8,410 potential sales at various stages of progress. For most mainstream volume housebuilders, H2B#1 anecdotally appears to account for around one-third of their forward sales.

The average price of a property bought under the scheme was £194,167, with an average equity loan of £38,703. First time buyers accounted for 92% of total purchases and almost 50% of all buyers had household incomes in the £20,000 - 40,000 bands. 73% were on 95% loan to value mortgages and 16% on 90 – 95% LTVs. 60% of purchase were for terraced or semi-detached units.

H2B#1, has now overshadowed the government’s previous flagship policy NewBuy, which has resulted in 4,450 legal completions in the 18 months to September.
21 Nov Construction of new homes across Britain in the 12 months ending September 2013 is now running at 16% ahead of the previous 12 months, DCLG. In England (for which more detailed figures are available) total starts increased by 24% y/y, with private starts up by 29% and housing associations by 11%.

UK property transactions totalled 102,900 in October, just short of the 105,400 in August, which had been the highest level since December 2007, HMRC. The year on year growth of 22.3% in October was the fastest growth rate since April 2010.

20 Nov Gross mortgage lending reached an estimated £17.6bn in October, a rise of 9% over September and 37% higher than in October last year, Council of Mortgage Lenders. This is the highest monthly estimate for gross lending since £18.6bn in October 2008.
Bank of England minutes provide further evidence that Monetary Policy Committee is retreating from its emphasis on unemployment falling to 7% as the main criterion for considering a rates rise, so long as the public continued to expect stable inflation: “the projections for growth and inflation under constant Bank Rate underlined that there could be a case for not raising [the] Bank Rate immediately when the 7% unemployment threshold was reached”. There was unanimous agreement on holding the base rate at 0.5% and the stock of assets purchased under quantitative easing at £375bn.

AIA Architectural Billings Index, a main lead indicator of US non-residential work, falls from 54.3 in September to 51.6 in October, indicating work is still rising but at a slower rate. Multi-family residential (build-to-rent) was strongest (57.0), institutional was weakest (50.2). The Federal shutdown was cited as a possible contributor to the slowdown.
Insight: growing economic uncertainty may be stifling US construction.

19 Nov Architects's workload rose 11% between October 2012 and October 2013, although it remains around a third below the peak of early 2008, according to the RIBA Future Trends survey.The private housing sector workload balance figure increased to +34 (34% more architects reported rises than falls) in October 2013, up from +25 in September. The commercial sector workload balance figure rose to +18 from +17, while the public and community workload indices were both unchanged at +3. 

18 Nov Three quarters of the population believe that getting on the property ladders is getting harder, according to a survey for KPMG and homelessness charity Shelter, This is Money.

15 Nov 33 lenders now offer mortgages with a deposit of just 5%, the highest number since 2006 and an 18% increase on last year, according to figures from Moneyfacts, FT.

High mortgages, with loan-to-values of 90 - 95%, can fundamentally destabilise the economy warns MPC member, Prof David Miles, which FT says is directly at odds with Help to Buy. As an alternative Prof Miles argues for the creation of a market for external equity finance for housing, whereby investors would share both the upside and downside of house price movements with homeowners.
Insight: probably the most explicit criticism to date from the MPC of the effects of Help to Buy.    

14 Nov Markets rally, including US homebuilding shares, as Janet Yellen, nominee for Federal Reserve chair, mounts a robust defence of quantitative easing, FT.
Read-across: world drifting backwards to loose monetary policy, with Eurozone cutting rate and UK seemingly softening stance on Forward Guidance.

UK commercial property returned 1.1% in October, just below its 3½ year record of 1.2% in September, as recorded by the IPD UK Monthly Property Index. The return consisted of 0.6% from income and 0.6% from capital growth. Offices produced the highest return, 1.5% (0.6% income, 0.9% capital) but Industrial and Retail also showed positive returns.
Read-across: continuing positive news infers further investment in commercial construction.

13 Nov Bank of England Inflation Report gives two opposing views of likely rates policy. The unemployment rate is falling quicker than anticipated and there is now a 40% chance of it hitting 7% (the most high profile trigger for a rise under "Forward Guidance") by the end of 2014 and 60% by end-2015, earlier than projected in August. But the short-term outlook for inflation has been lowered. There appeared to be more "hedging of bets" as to whether 7% would automatically trigger increases in rates.
Read-across: on balance it looks like a rates hike will still occur earlier than Carney's guidance, but there could be a suspicion that politics will influence a decision close to the 2015 General Election.

12 Nov RICS Residential Market Survey shows house prices being driven to new highs, squeezed by rising demand and dwindling stocks of houses on estate agents' books. The headline net price balance for October hits 11-year high of +57 (57% more surveyors reported price rises than those seeing falls over the past three months). This was largely due to a multi-year high in sales per surveyor (chart below left), largely due to the government's Funding for Lending and Help to Buy schemes, says RICS, exacerbated by a multi-year low in their stock levels (below right).

First time buyers' loans-to-income are now at their 2007 peak, according to the Council of Mortgage Lenders, which also saw the highest quarterly level of lending for house purchase since that time. The multiple in September was 3.39x, up from 3.26x a year earlier. The total number of new loans for house purchase fell in September, down 14% on August, but was up by 21%year-on-year, while their value increased by 27%. New advances to first time buyers in September were up 34% in volume y/y and 50% by value. Movers were up 11% and 18% respectively and the income multiple was 2.97x. There was a 29% y/y increase in the number of new buy-to-let mortgages for house purchase in Q3.



 Source: Savills

11 Nov Jobs growth accelerating faster than anticipated, according to survey of 1,000 employers by the Chartered Institute of Personnel and Development, raising prospect of early rates rise, FT. Over weekend, media speculated that BoE will announce at Wednesday's inflation report that unemployment will fall to 7% earlier than its three year horizon, paving the way for rates rises.

6 Nov Halifax House Price Index for October +0.7% m/m (from +0.4% in September) and +6.9% y/y (from 6.2%). Earnings ratio continues to climb, to 4.69x from 4.66x in September.

Brick deliveries in September +15% y/y and stocks -34% among Monthly Statistics of Building Materials, putting more pressure on prices and delivery times.
4 Nov Two sets of data point to increasing demand and pressures on the supply chain in most construction sectors. The Markit/CIPS Construction Purchasing Managers' Index for October rose from 58.9 to 59.4 (50 = no change in activity), the highest level for six years. Although the housing component remains the strongest of the three sectors covered, commercial and civil engineering were closely behind. Although data was not given, CIPS said the increase in demand is leading to strains on stock s and operating capacity at suppliers. Lead-times for the delivery of input materials has lengthened markedly, with the latest deterioration of vendor performance the second-sharpest since June 2007, while stronger demand for raw materials and higher utility bills have contributed to upward pressure on input prices.

The National Specialist Contractors Council reported its fifth consecutive quarter of rising enquiries, with the result that difficulty to recruit labour has hit a six year high and 35% of specialist contractors are now operating at 90% of their capacity or higher.

28 Oct Hometrack survey shows 0.5% increase in house prices, falling discounts to asking prices and widening gulf between supply and demand (see today's Blog).
23 Oct
Strong data on mortgage lending and transaction volumes from British Bankers' Association and HMRC, respectively. However, Bank of England minutes show unanimous vote to hold Base Rates at 0.5% and maintain the level of Quantitative Easing. Transactions in the three months to September rose by 22% year-on-year. The more forward looking BBA statistics for the number of mortage approvals for house purchase showed a 32% increase on the same basis. Significantly, the transactions data showed a broad-based recovery throughout the UK (see chart, below). Looking beyond the housing sector, the BBA data also showed the biggest increase for four years in lending to businesses - encouraging for wider commercial and industrial demand and for construction companies' growth prospects.

22 Oct RICS Construction Market Survey shows the strongest rate of growth in activity since mid-2004. The net balance of surveyors in all sectors recording rises, less those reporting falls, was +31%, up from +21% in the second quarter. Housebuilding saw the greatest increase, with a record balance of +41% seeing rises in privately-funded housing projects compared with the previous quarter (+31%), the first time that every region has reported growth since the beginning of the market crash. Outside housing, growth was largely driven by private commercial and industrial developments. A net balance of 71% of the surveyors questioned saw work volumes picking up further speed.

21 Oct Rightmove housing survey for October generates more "bubble" stories in the media. The main House Price index shows a 2.8% month on month increase in asking prices, and up 13.8% year on year. In London asking prices soared by 10.2% (pushing prices up by £50k in the capital) compared with September there was a 15% increase in sellers.

8 Oct RICS Residential Market Survey shows a continuing strong revival spreading outwards from London. Prices, price expectations and activity levels in September were at, or close to, at least pre-recession highs, which RICS attributes largely to Funding for Lending and the roll-out of Help to Buy. All regions apart from the North of England showed price rises. The rental market survey showed demand continuing to outstrip supply.


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