The housing market remains fundamentally strong, with supply and demand maintained through recent market uncertainties.

Planning

The number of applications granted has increased for the fourth year in a row and is up to 386,000 applications granted in the year. The approval rate has been maintained at 88%, leading to an increase in the supply of residential land in the market (Chart 1).

Chart 1 
Planning application granted March ('000)

Chart 1
Source: Department for Communities and Local Government – District Level applications

Mortgage approvals

Mortgage approvals are a key indicator of the level of activity in the housing market. There was a slight drop in approvals in 2016 compared to the previous year, reflecting the greater uncertainty in the market following the Brexit referendum (Chart 2). However, approvals are still significantly above the average (667,000 approvals a year) since 2008. Seasonally adjusted figures for the first half of 2017 are relatively stable throughout the period (Chart 3), with an average of 66,200 mortgage approvals per month. This is consistent with the prior calendar year, which had an average of 66,700 approvals per month.

Chart 2
Mortgage approvals calendar year (‘000)


Source: Bank of England, CML

Chart 3
Mortgage approvals 2017 (seasonally adjusted) (‘000)

 
Source: Bank of England, CML

Housing supply

NHBC new build starts were 135,700 for the year to June 2017, a 1.8% increase on the previous year (Chart 4). However, in the three month period to June 2017 the NHBC data showed a 0.9% decrease in starts on the same period in the prior year.
There is a marked year on year variation in new build starts by region, with starts in London down 25% in the year to June 2017, compared to the preceding 12 month period, whereas Yorkshire & the Humber (up 21%) and the South East (up 14%) show the most significant increases.

In the three months to the end of June 2017, completions for all sectors in England and Wales were up 3.6% on the equivalent period in the previous year. Completions for the 12 month period to June 2017 increased across all regions against the preceding year, with the most significant increases shown in the North East (up 17%) and Yorkshire & the Humber (up 16%).

Chart 4
NHBC build starts, all sectors (England and Wales) (‘000)

Residential transactions

Residential transactions in England and Wales have continued to increase year on year, with 1.1 million residential property calendar year 2016 (Chart 5). This includes a spike in transactions in March, followed by a substantial decrease in April, most likely due to the change in SDLT rates around that period.

UK average prices per the Nationwide House Price Index increased by 2.8% in the 12 months to June 2017, down on the 5.1% increase in the 12 months to June 2016. The growth in London in particular was lower than the previous year, with prices only edging up 1.2%, compared to 9.9% in the preceding 12 months (Chart 6). The recent stamp duty tax changes and the Brexit vote have had a greater impact on Central London, with the pricing in the more affordable outer boroughs remaining much more robust.

Chart 5
Residential transactions calendar year (England and Wales) (‘000)


Source: HM Revenue & Customs

Isas

Lifetime ISAs were introduced in April 2017 to anyone aged between 18 and 40 and run alongside the existing Help to Buy ISA. Up to £4,000 a year can be saved in the account and the Government will add a bonus of 25% to any savings put in before the saver is 50. The savings and bonus can then either be used to purchase a first home, up to the value of £450,000, or saved towards retirement.

Chart 6
House Prices Nationwide House Price Index (’000)