The House of Commons Library has published its latest Housing market: Economic indicators, which can be seen here.

Here’s a breakdown of the key trends:

House Prices (UK House Price Index)

  • Annual Growth: Average house prices rose by 3.3% from November 2023 to November 2024.
  • Regional Variation:
    • Fastest growth: Northern Ireland, North East, North West.
    • Slowest growth: South East and East of England.
    • Decline: London saw a slight decrease (-0.1%).
  • Short-Term Change: A modest 0.1% increase in house prices (seasonally adjusted) between October and November 2024.
  • Trend: Prices have increased in most months since early 2024.

Mortgage Approvals (Bank of England Data)

  • Annual Change: November 2024 approvals were up 31% compared to November 2023.
  • Monthly Change: Approvals fell 4% between October and November 2024.
  • Volume: There were 65,720 approvals in November 2024, a significant increase from 50,167 a year earlier.
  • Context: Mortgage approvals are recovering from the pandemic lows but remain below late 2020 levels.

Housing Starts and Completions (England)

  • Completions (Q2 2024):
    • Seasonally Adjusted: 42,590 completions, up 12% from both the previous quarter and Q2 2023.
    • Trend: Completion rates continue to improve post-pandemic.
  • Starts (Q2 2024):
    • Seasonally Adjusted: 22,990 starts, up 2% from Q1 2024 but down 65% compared to Q2 2023.
    • Reason for Drop: A regulatory change in June 2023 prompted housebuilders to accelerate projects earlier, causing an unusual peak in Q2 2023 (66,060 starts) and a subsequent sharp decline.

Key Insights

  1. Energy Standards Impact: The introduction of new building regulations in June 2023 (focused on energy performance and EV charging) disrupted housing starts. This regulatory impact illustrates the challenges of implementing sustainability standards.
  2. Regional Housing Markets: Growth disparities show regional differences in demand and affordability. London, South East, and East of England lag in price growth compared to the rest of the UK.
  3. Mortgage Activity: The increase in mortgage approvals signals recovering demand for home purchases, although the monthly dip suggests some volatility.
  4. Construction Recovery: Completions are improving, but the drop in starts highlights uncertainty among builders regarding regulatory costs and market conditions.