LSL New Build Index - LSL Land & New Homes
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LSL New Build Index
The market indicator for New Builds February 2018
In the year to end January 2018 new build house prices rose on average
by 9.8% across the UK which is up on last year’s figure of 5.8%
Political events The market
Help to buy: Equity loan transactions now represent about one The UK Finance Mortgage Trends survey came out in January
third of new build sales. The scheme comes to an end in 2021 and reported some slightly mixed news on the mortgage
and some forward planning will be needed to prepare for this front.
change in the demand base. The recently published Lloyds
It reports that mortgage lending to first time buyers, home
Bank House Building Report 2018, finds that over four in five
movers and buy to let were all slightly down in December
(house builder) respondents to their survey finds the scheme
2017 compared to the same month last year. But that said,
to be fairly or very important to the industry.
2017 saw the highest number of first time buyers since 2006,
One way in which the Land Registry is trying to speed up and standing at 365,000. And of course the good thing about first
secure property transactions is through ‘Digital Streets’. The time buyers is that for the most part they start buyer chains.
aim is in part to speed up and reduce risk in the conveyancing
Their research also finds that the average age of a first time
process. Of course this sort of thing is particularly important
buyer is 30 with an income of £40,000, an LTV (loan-to-value
to house builders as one title deed gets split down to
ratio) of just under 85% and loan of £138,000. The average
many and anything that can simplify the surrounding legal
Home mover is 39 with an income of £54,000. Their average
complexities is to be welcomed.
LTV is just under 73% and average borrowing is £175,000.
Market forces are pushing change in terms of construction
But whilst the whole year figures show signs of healthy
techniques and labour availability and this is discussed below.Powered by
growth, the volume of mortgage approvals in December was ages and recruitment issues continue.
down on last year - so this might be an early indicator of a
Brexit uncertainty, rising material costs and access to EU
slowing market. Whether this is a blip or a knock on effect
labour were cited in the report as key challenges facing the
to the shortage of property for sale that has been previously
new build industry. As with the wider economy, the Brexit
reported is something that will become evident through 2018.
effect seems to be to reduce investment levels and confidence
Deloitte run a survey of economic activity at city level in planning for the future.
by counting the number of cranes in various centres, as
Propertywire has recently reported that one of the tallest
more building work generally indicates more economic
modular property developments has just got the go ahead
prosperity. Record levels of construction activity were noted
in Birmingham City Centre with confidence
being high as a result of HS2 and the
2022 Commonwealth Games. Over 4,000
residential units were identified as being
under construction. In Leeds the second
highest volume of office construction
in a decade was noted, which is driving
employment and in turn nearly 1,600
residential units were found to be under
construction - the highest level since 2008.
Manchester has been tagged as one of
Europe’s fastest growing cities and the
report has found that 11,000 residential
units are under construction, up 60% on
last year.
The long view
The Lloyds Bank 2018 House Building
Report proves a good sounding board for
the industry and includes some interesting
findings. Average five year turnover growth
expectations from current turnover, for the
100 house builders that were interviewed
stood at 29%, with SME house builders
predicting a higher rate of growth than
last year and top ten house builders now
expecting a slower rate of growth over the
period. This may of course be due to the
Government’s targeted help towards these
smaller businesses.
The report also found that only around
one in four companies were expecting
to increase the number of houses that
they were building this year and five year
house price inflation expectations has held
steady at 11%. That is broadly consistent with other market in Croydon. The 21 storey modular block will be constructed
projections. offsite and then the units are dropped into place on site.
Against Government led calls for a growth in the output of So market forces – a demand for ever more new build property,
new housing, the report finds that the sector expects to see a combined with a reducing ability to build new homes in the
contraction in its workforce in coming years as the workforce traditional manner - must eventually drive output towardsPowered by
Modern Methods of Construction (MMC). The above mentioned And rising interest rates in America will have a global knock on
Lloyds Bank review finds that for the most part, over 50% of effect and will make gilts a more attractive investment as their
companies with a turnover exceeding £25 million are trying out return improves. So the outlook to shares relative to gilts has
various MMC approaches. changed and a share price correction occurs. But whilst few
seemed to have forecast this market correction, the resulting
The above mentioned Deloitte’s crane report suggests that
likelihood of earlier and higher interest rate rises in the UK now
there may be more opportunities around key city centres
seems more predictable. We are still looking at relatively small
and MMC modular construction is well suited to high rise.
interest rate changes but they will have a knock on effect on
There are of course various spin off issues arising from
mortgage rates.
this, not least lender acceptability and having a method
of recording the MMC build type for future generations. At the start of February it was reported that 550 of the 1,400
Hopefully the Land Registry will be aware of the potential apprentices at Carillion had received new job offers. This was
to link this sort of information to the more traditionally held partly due to the CITB having sourced a £1000 a head incentive
legal data that accompanies a property’s title deeds. The to companies taking on the affected staff.
Land Registry is actively looking to industry to advise it on
A report from House Simple has found a larger than expected
how to make its data more relevant and this type new build
increase in new sales listings in January so perhaps this is an
construction type ‘log book’ is one way.
indication that more sellers will be entering the market this
Current news year. If so then estate agents will be pleased as they have
reported a shortage of property coming to the market over a
The recent stock market corrections, in which some markets
sustained period.
have fallen by over ten percent, will be a source of confusion
or concern for many. As with the housing market, the value
of shares is determined by the trading of a relatively small
amount of them on any given day. And as with the housing
market, sentiment plays a key role. Ironically it was the
economic strength of America that seems to have caused the
market correction. A strong labour market has led to wage
growth which brings with it the likelihood of price inflation
which generally brings the desire to cool things down by
raising interest rates.
First Time Buyers - Affordability.
2 BED 70 SQ.M AVE ANNUAL EARNINGS AFFORDABILITY
HPE
STARTER HOME FULL TIME EMPLOYEES INDEX
East Anglia £252,560 £32,646 7.74 125
East Midlands £136,023 £27,507 4.95 80
Greater London £494,250 £38,559 12.82 206
North East £114,026 £26,602 4.29 69
North West £142,974 £28,446 5.03 81
Scotland £136,253 £29,442 4.63 74
South East £253,994 £34,151 7.44 120
South West £186,754 £29,721 6.28 101
Wales £121,402 £27,285 4.45 72
West Midlands £160,812 £28,329 5.68 91
Yorkshire and the Humber £139,954 £27,681 5.06 81
Average 6.21 100
This is based on a weighted calculation which reflects regional differences in sales volumes of flats and terraced property.
Ave annual earnings from ONS EARN 05: Average Gross Earnings of Full Time Employees.Powered by
Detached
Average New Home Prices
Flats
Semis
Period February 2017 to January 2018. Terrace
North/South Average % Change
SCOTLAND £ AVERAGE NORTH % AVERAGE SOUTH % AVERAGE
£280,006 4.58% 12.31%
£141,856 5.27% 17.55%
£194,876 9.19% 11.51%
£193,267 5.22% 14.30%
NORTH WEST £ AVERAGE NORTH EAST £ AVERAGE
£341,485 £300,627
£156,649 £128,110
£202,692 £184,741
£210,894 £167,924
WEST YORKSHIRE &
£ AVERAGE £ AVERAGE
MIDLANDS THE HUMBER
£374,271 £307,698
£182,396 £160,652
£239,194 £190,071
£232,217 £191,994
WALES £ AVERAGE EAST
£ AVERAGE
MIDLANDS
£247,808 £329,165
£163,134 £162,822
£187,911 £199,720
£167,273 £202,324
SOUTH WEST £ AVERAGE GREATER LONDON £ AVERAGE SOUTH EAST £ AVERAGE EAST ANGLIA £ AVERAGE
£381,886 £865,148 £535,549 £467,148
£218,837 £496,382 £268,996 £278,358
£255,511 £584,407 £368,535 £335,768
£259,461 £622,153 £354,908 £326,232Powered by
Notes
This Index has been prepared by e.surv using anonymised The business employs circa 450 chartered surveyors and
data based on a proportion of all new build valuations covers the entire UK.
provided for lending purposes. Figures represent 12 month
LSL Land & New Homes is a trading style for members of the
rolling averages for each period. The copyright and all other
LSL Property Services Group Estate Agency Division, one of
intellectual property rights in the Index belong to e.surv.
the leading residential property services groups in the UK. It’s
Reproduction in whole or part is not permitted unless an
strategy is to create partnerships with developers and builders
acknowledgement to e.surv as the source is included. No
to support their objectives and add value to their businesses.
modification is permitted without e.surv’s prior written
consent. It can provide integrated solutions for their benefit drawing
on the expertise of companies who are also under the LSL
Whilst care is taken in the compilation of the Index no
Group umbrella including valuation services (e.surv), rental
representation or assurances are made as to its accuracy
portfolio services, asset management services and estate
or completeness. e.surv reserves the right to vary the
agency services fronted by well-known high street estate
methodology and to edit or discontinue the Index in whole or
agency brands like Your Move and Reeds Rains. Services
in part at anytime.
can be tailored to suite individual needs from bespoke site
e.surv (www.esurv.co.uk) is the Valuation business of LSL sales and marketing, agency referral to the disposal of part
Property Services plc (www.lslps.co.uk) and is the UK’s largest exchange, assisted schemes and new build stock, land sales
residential valuation practice, acting for lenders, developers, and acquisitions.
Social Housing organisations and other stakeholders in the
residential property market.
For further information or enquiries regarding the underlying data of the
LSL New Build Index, please contact Shaun Peart via email
Shaun.Peart@lslnewhomes.co.uk or by phoning 07789 948411.
For further information about the LSL Property Services Group including
LSL Land & New Homes and e.surv, visit www.lslps.co.uk
Disclaimer: The data is provided by LSL Land & New Homes and is based on data provided as described above. While reasonable skill and care has been taken in the preparation of the data –
the copyright and all other intellectual property rights of which belong to e.surv limited - neither e.surv Limited nor LSL Land & New Homes can accept liability for the accuracy or completeness
of the data provided.
Reproduction in whole or part is not permitted unless an acknowledgment to e.surv Limited is included. No modification is permitted without e.surv Limited’s prior written consent.
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