Housing Market Conditions

1
Housing Market Conditions

• South East London Housing Partnership
• Carole Oliver, National Sales Manager
• 24th November 2009

2
Key messages

• Re-pricing of housing market still has at least
  12-24 months to run
• Slower headline price falls prices bumping
  along bottom
• Differential outlook for different segments
• Low turnover illiquid market here for next 3-5
  years
• Negative pent up demand for housing
• More price volatility
• New supply to remain subdued - adding to lack of
  liquidity
• Major viability problems have led to serious
  capacity constraints
• Rapid re-pricing of new build largely over now
• Very slow recovery in volumes over next 3-5 years
  
• Full recovery with normal liquidity and modest
  price rises requires
• Improved economic outlook and confidence
• First time buyers able to access finance and
  bottom rung of ladder

3
Low liquidity a support for pricing
Source Hometrack
4
compounded back lack of new housing
Rolling 12 month total starts
Monthly starts annualised
Source NHBC
5
Green shoots limited to the low LTV haves
Source Hometrack
6
Defining the size of the affordability gap
Source Hometrack
7
Intermediate market - 1.6m 20-39 yr olds
Source Cant Supply Cant Buy
Narrow IHM - Young working households aged 20-39
who are on incomes too high to get benefit but
couldnt access the lower decile end of the
market
8
price falls have had an impact
Source Hometrack
9
academic if you cant get a mortgage
10
Prospects for mortgage lending

• Negative net lending in 2009
• Banks re-structuring balance sheets - some still
  heavily constrained
• Fewer active players in mortgage market - no
  clear market leader
• Drag on lending through
• Restructuring mortgage books
• Focus away from market share to maximising margin
• Focus on low risk / low LTV lending
• FSA prescription on lending policy and risk
  appetite
• Gross mortgage lending in 2009 a third of 2007
  levels
• Resumption dependent upon
• Bottoming out in economic decline and greater
  stability in house prices
• More competitive pricing of loans recently but
  for less risky customers
• Future will be different to the recent past

11
must consider local market dynamics
Source Hometrack
12
Terrace Housing Catford South Ward
Source Hometrack
13
40,000 the income required for a LQ Flat in
Lewisham
Source Hometrack
14
Overall market outlook

• 2009 bounce back down to scarcity of housing
  for sale
• Affordability improving on lower interest rates
• ... but housing scarcity to remain a factor and
  keep entry prices relatively high
• Mortgage availability to remain a drag on demand
  well into 2010/11
• especially with uncertain outlook for
  unemployment (incomes growth)
• Drawn out period with prices tracking sideways
  until true recovery
• Opportunities exist as imbalances unwind . but
  how to minimise risk
• All about local market dynamics and pitching
  product accordingly

15
For further information

• Hometrack provides information solutions to
  the UK housing and mortgage industries. These
  services deliver accurate and reliable
  information which is vital for enhanced decision
  making and improved efficiency in highly complex
  and competitive markets.
• The Hometrack Housing Strategy Solution is a
  dynamic online system designed to empower today's
  housing strategists researchers working in the
  local authority sector, providing instant access
  to unparalleled insight, intelligence and
  customised analysis to elevate understanding of
  local housing markets.
• Carole Oliver
• National Sales Manager
• T 07889 995764
• E coliver_at_hometrack.co.uk
• W www.hometrack.co.uk