All posts from: January 2010
Local authorities are about to get extensive new powers over the private rented sector but are they equipped to use them?
Housing minister John Healey confirmed yesterday that new houses in multiple occupation (HMO) will need planning permission and that councils will be able to introduce new selective licensing schemes in areas with substantial numbers of substandard properties without permission from central government. Meanwhile a new national register of landlords will be part of a package of new reforms due shortly in the government’s response to the Rugg review.
The proposed new use class for HMOs - defined as properties shared by three or more people who are not part of the same household - has already drawn protests from landlords and cheers from local campaign groups.
The National Landlords Association (NLA) accused Healey of ‘taking a sledgehammer to crack a nut’ and warned that it would reduce the supply of shared homes (20% of the private rented sector and rising) and create no-go areas for students and migrant workers.
But they will be popular with resident groups and could be a big vote winner in towns and cities with large numbers of students. Communities secretary John Denham tells his local paper in Southampton today: ‘I’ve campaigned for these changes, alongside local residents, for years so am delighted they will now be made.’
The big question though is whether local authorities will be able to cope with the new system. The report on mandatory licensing of HMOs published yesterday confirms that that only 16,000 out of an estimated 56,000 licensable properties were licensed in the first two years of the schemes. By March 2009, 35,000 were still unlicensed.
Add possible new selective licensing schemes, planning permission for new HMOs and dealing with the landlord register and that’s quite a workload for town halls. The Rugg review described the planning permission idea as ‘an extreme response given the limited nature of the problem. Change to the use classes order introduces the need for additional activity that local authorities are ill-equipped to handle’.
John Healey acknowledged the problem in his statement. ‘I am therefore reviewing the support available to local authorities in relation to regulation of the private rented sector,’ he said, ‘including publishing draft guidance on licensing provisions, and will put in place any changes before the commencement of the new powers I am announcing today.’
However, with public spending cuts imminent, it’s a problem that won’t go away
It’s hard to get much past that startling stat about the median household wealth of social housing tenants (£15,000) and outright home owners (£411,000) but today’s National Equality Panel has some others that are just as eye-catching.
Income inequality has actually improved slightly over the last ten years - though with minimal impact on the deterioration that happened between the late 1970s and late 1990s. The median income of council tenants was 68% of the overall median between 2005/06 and 2007/08 compared to 67% 1996/97 and 1998/99.
That’s presumably the result of policies like the minimum wage and tax credits but it’s a real achievement given that allocations policy and the right to buy have encouraged greater concentrations of low and non-earners in social housing.
Although home ownership explains the greater part of the wealth inequality it’s not all about bricks and mortar. Even when property wealth is discounted, the disparity is still stark: social tenants still have £15,000 median financial and non-property wealth, or £18,000 when non-state pension rights are included; outright owners have median financial and non-housing wealth of £85,000, or £201,000 including private pension rights.
That inequality starts in childhood and carries on until death. A study of people aged over 50 found that 90% of men and 95% of women in the wealthiest fifth of the population survived over a six-year period. The equivalent figures for people in the poorest fifth were 75% of men and 81% of women.
And it is then passed on down the generations. By 2005 almost half of first-time buyers got help from family or friends with their deposit. Those receiving assistance were able to pay an average deposit of £34,000, those who didn’t paid an average £7,000.
That factor has become even more important since the credit crunch prompted the banks to demand much bigger deposits.
All the money invested in area regeneration has had little impact on inequality between areas. In 2001 the government’s vision was that ‘in 10 to 20 years, no-one should be seriously disadvantaged by where they live’. The panel concludes that ‘we are still a very long way from achieving this goal’ and argues that ‘the neighbourhood renewal agenda itself needs renewal’.
But there’s another big disparity too: the number of mentions housing gets in the panel’s report (244) and in the government’s response to it (12). Most of those are to do with what the government has done to address the problem so far. Helping people on to the housing ladder through Homebuy and tackling poor housing conditions through Decent Homes may have been laudable enough in their own right but they’ve clearly not done much to reduce inequality overall.
As to what should happen next, the panel chaired by John Hills of the LSE has some suggestions. First, in an echo of the other Hills report, it says ‘we need to be more successful in using the advantages of security and work incentives that social housing can offer to support tenants in moving towards and into employment’.
Second, it points out that most social tenants have very low levels of assets of any kind and ‘measures to support saving and asset-building by tenants are needed to address this.’
The government may have made limited progress on reducing inequality but by commissioning and publishing the report it has at least ensured that the issues continue to be debated.
Which is important because there is the looming issue of what happens in the wake of the recession. Will our response to it end up making inequality even worse? ‘A fundamental question is now whether the costs of recovery will be borne by those who gained least in the period before the crisis, or by those who gained most, and are in the strongest position to bear them.’
Mortgage approvals ended 2009 at double the level of a year ago and higher than at any time since the early stages of the credit crunch but the indications are of a slowdown to come.
December figures from the British Bankers Association (BBA) show 45,897 loans were approved for house purchase. The comparison with December 2008 (22,695) and September 2007 (54,913) shows the scale of the recovery but there are good reasons to think it may be about to run out of steam.
First, the total may have been distorted by the end of the stamp duty holiday on properties worth up to £175,000 at the end of the year. The rush to complete the paperwork means that approvals from January and Februrary were probably brought forward.
Second, the recovery has already been slowing down. In the eight months between the low point of November 2008 and July 2009 approvals rose by 131%. In the five months since they are only up 12%.
Third, approvals for house purchase had slowed down dramatically even before the credit crunch. The average monthly total between 2000 and 2006 was 71,000 - so approvals running at 40-45,000 a month are hardly exceptional.
Fourth, the average loan approved for house purchase actually fell between November and December from £142,200 to £141,100 - although that may have been distorted by a larger than normal level of cheaper purchases that were beating the stamp duty deadline but it was actually the first fall.
Fifth, High Street banks now control three-quarters of the mortgage market, up from two thirds before the credit crunch. That’s the result of takeovers, the exit of specialist lenders from the market and problems faced by building societies in keeping hold of savers’ deposits, but it leaves the housing market more dependent than ever on a handful of major companies.
None of which suggests that a broad-based recovery including large numbers of first-time buyers is going to happen any time soon.
Buy to let was meant to have been killed off by the housing market downturn. Instead the signs are that it is bouncing back.
The latest indications come in a new survey by the Association of Residential Letting Agents (ARLA), which reports a surge in the number of ‘reluctant tenants’ - people who want to buy but can’t find the right mortgage or property and people who were forced to sell due to financial instability or a job move.
That grabbed my attention as the reverse of what happened in the 1990s downturn, when thousands of homeowners who had to move but could not sell became reluctant landlords.
The proportion of ARLA members reporting that there were more tenants than properties surged from 24% in the third quarter of 2009 to 41% in the fourth quarter.
As the housing market crash started in August 2007, 51% of ARLA members said there were more tenants than properties but that the proportion fell to just 10% as the crash bottomed out in February 2009.
The first stages of the recession saw several thousand buy-to-let properties either repossessed or with a receiver of rent appointed (including two in my street alone). However, low interest rates appear to have come to the rescue of many landlords since then.
The results tally with anecdotal evidence from mortgage brokers that some lenders are targetting buy-to-let landlords because they see them as less risky than first-time buyers and from housebuilders, who report an increase in the number of people buying off-plan in new developments.
November’s third quarter survey by the Council of Mortgage Lenders (CML) showed that buy-to-let lending rose for the first time in two years but that volumes were still well down on 2007.
And a separate ARLA survey of landlords suggests that the recovery is still tentative. The proportion of landlords saying they expect to buy more buy-to-let properties in the next 12 months is still stuck at around 30%, compared to more than 60% at the peak of the buy-to-let boom in 2005. The proportion expecting to sell is still below 10% but has actually risen slightly this year.
Whether you believe decent homes was a success or, ultimately, a failure, you will find plenty of ammunition in today’s report on the programme by the National Audit Office. You’ll also find one big question: what next?
The case in favour is that the programme tackled an urgent problem - almost 40% of social housing non-decent - and rectified it in 92% of cases by the target date of 2010. That’s quite an achievement given the £19bn repairs backlog bequeathed by the Conservatives.
The case against is that it will take up to nine more years to get the remaining 8% of homes up to scratch. As of now, 305,000 homes are still non-decent and 124,000 will still be by 2014.
Meanwhile, as public accounts committee chairman Edward Leigh wasted no time pointed out, the department started the programme with no clear idea of how much it would cost and still does not know how much has been spent.
The story of decent homes is in many ways the story of the noughties. The Labour government elected in 1997 was packed with northern MPs who saw that their existing social housing stock was falling apart while there was low demand for the new ones being built. Only later did ministers realise that new homes were a major problem too and priorities abruptly changed.
The programme was also a key weapon in the departmental campaign to get rid of council housing that had begun under the Tories. Local authorities were given three options to meet the standard - stock transfer, arm’s length management (almo) or the private finance initiative.
The failure of that campaign in many ways explains the failure to meet the rest of the target. Some authorities and many tenants stubbornly campaigned for a fourth option and successive ministers stubbornly resisted them until doing a u-turn too late to find a way to fund the work. Meanwhile the almo programme was being dogged by delays and by the end of the noughties budgets earmarked for decent homes were being raided for new ones.
So what next? As long ago as 2004 the Office of the Deputy Prime Minister select committee called for a new, more ambitious standard - decent homes plus - to apply from 2010 onwards. Some landlords have independently applied a higher standard to their own stock.
In the meantime, environmental concerns have changed the agenda out of all recognition. Decent homes have to provide ‘a reasonable degree of thermal comfort’. But with zero carbon new homes on the horizon, and emissions from existing homes seen as a major problem, that has long sounded badly out of date. Surely something more ambitious is needed - both for social housing and the for the private rented stock accommodating vulnerable people that is also part of the decent homes programme.
In addition to higher energy efficiency standards, landlords and tenants also told the NAO they wanted to see higher standards for individual elements like new external doors and double glazing and new ones for things outside the home - lifts and communal and external areas.
The department and Tenant Services Authority seem to be making the right noises but so far there is no firm successor to decent homes. Reform of the housing revenue account is tantalisingly close but not there yet. But without both, and public spending cuts around the corner, it’s not hard to predict that maintenance problems and the repairs backlog will start to escalate once again.
The end of the outside toilet? The relentless rise in house prices? The right to buy? A fascinating snapshot of housing over the last 50 years is on offer in a new survey published by the Halifax.
None of it will come as a huge surprise to anyone working in housing now but it would have seemed inconceivable to the average housing officer in 1959.
It’s hard not to start with what’s happened to house prices. They’ve increased by 273% in real terms in the last 50 years, outstripping the real terms rise in earnings by 2.7% to 2%. That’s despite a significant fall in real house prices following each of the four big booms. The decade that saw the biggest real terms increase? No prizes for guessing it was the noughties.
At the same time the quality of our housing has improved dramatically: households without an inside toilet fell from 14% to 0.2%; households without a basic hot water supply fell from 22% to 1%; and households with central heating rose from 35% (in 1971) to 92%.
We’re living on our own more. The proportion of single-person households rose from 19% in 1971 to 33%. We’re living in bigger homes: just 10% of the homes built between 1945 and 1964 were detached; 36% of homes built over 1980 were detached.
Home ownership has risen and risen - and then fallen recently. Private renting has fallen and fallen - and then risen recently. Social renting has risen - and then fallen and fallen.
Connected with that, and perhaps underlying all the other trends too, is what’s happened to housebuilding. More than 280,000 homes were built in Great Britain in 1959 - a level that seems unimaginable in 2009, when the latest forecasts suggest the total will be less than 160,000.
Yet private sector housebuilding has not actually varied that much. There were 153,000 private sector completions in 1959 - and 151,000 last year. In between, completions fell in the 1980s and 1990s and started rising again in the noughties - to peak at almost 197,000 immediately before the credit crunch.
In contrast, public sector completions rose to almost 190,000 in 1970, slumped to little more than 20,000 in the early noughties and are a little under 40,000 with the public spending axe about to fall.
Little wonder that the last 50 years saw dramatic improvements in the condition of the worst housing and then a dramatic increase in housing inequality between owners and tenants.
What now looks like the inevitable takeover of Cadburys by the American food giant Kraft is another sad reminder of the end of the Quaker legacy to housing in Britain.
Not a complete end of course. Just as the Joseph Rowntree Foundation and Housing Trust have continued to go from strength to strength in the wake of Nestle’s takeover of Rowntree in the 1980s, so the Bournville Village Trust (BVT) will survive the £11.5bn deal to create a ‘global confectionary leader’. And there are still many local Quaker housing associations around the country.
Or even the start of the process. That began long before the dastardly yanks appeared on the scene - although the trustees of BVT still appear to include two members of the Cadbury family, unlike the board of the company itself.
But it is a sad reminder of what seems like the old-fashioned Quaker belief in the welfare of the workforce as well as of the bottom line - and what seems like the very contemporary notion of building communities rather than just homes and factories that nevertheless began in the 19th century.
Could that idea ever have survived late 20th/early 21st century capitalism? It’s all reminiscent of another Quaker invention - Monopoly.
Not the modern game in which players compete to buy up all the property on the board and then bankrupt everyone else but the original version invented by an American Quaker called Lizzie Magie before it was repackaged by Parker Bros.
It was originally called The Landlord’s Game and the whole point was to show how private renting, private land ownership and property speculation enrich landlords and impoverish tenants.
A century on, whether you play the Atlantic City, London or Simpsons version of Monopoly, the chocolate factory has proved to be worth rather more than the water works and the electric company but the landlords and the takeover specialists are still proving Lizzie Magie’s point.
The recovery in the housing market continues to be good news for house builders but not for house building, according to trading statements from the major companies.
Sharp reductions in debt and increases in forward sales and average selling prices were all features in the results for the six months to the end of December. Two of the biggest companies, Barratt and Taylor Wimpey, have cut their debt by a combined £1.5bn since December 2008. Forward sales were up 43% at Barratt, 28% at Taylor Wimpey and 40% at Persimmon.
But the emphasis is still firmly on controlling costs and improving margins rather than output. The increase in average selling prices is so far more the result of changes in the mix between flats and houses and between affordable and market homes than much underlying improvement.
And completion of new homes are still falling. Barratt completed 5,028 homes in the six months (27% less than in 2008). Taylor Wimpey completed 10,186 homes in 2009 as a whole, which was down 24% on 2008.
Given the extent to which house building depends on a few major companies, that does not bode well for the future and it makes the search for alternatives even more urgent.
Barratt chief executive Mark Clare said last week that he does not expect house building to recover to 2007 levels for another five to seven years. That makes a massive shortfall over the next decade between supply and demand from new households look inevitable.
Anyone who can get on the housing ladder has (almost) never had it so good, according to new lending figures out this morning.
The Council of Mortgage Lenders (CML) says the debt burden for first-time buyers is the lowest for five years while home movers are enjoying the best conditions since 1996 and the second best since records began in 1974.
Existing owners buying a new home typically needed just 10.6% of their gross income to cover their mortgage in November 2009, down from 11.1% in November. That compares with 10.2% in mid-1996 at the bottom of the 1990s slump in house prices.
First-time buyers needed 14.4% of their gross income, down from 15.1% in October and the lowest since May 2004.
The improvement is the result of the big fall in mortgage rates and a small improvement in incomes and came despite the fact that average house prices and mortgage advances have been rising since February.
Overall lending was down slightly on October but up by two thirds on November 2008.
Which sounds like great news if you can get on the housing ladder but not so good if you can’t. Some 19,300 first-time buyers got a loan in November compared to 11,900 a year ago and a low of 8,600 in January.
However, that’s still half the number seen in early 2007. True, the fall is most marked in the riskiest sounding mortgages - interest-only with no repayment specified made up 22% of the market in mid-2007 but just 7% now - but it is also part a longer-term disappearance of first-timers since the early noughties, when more than 40-50,000 a month were getting on to the ladder.
Ultra-low interest rates may have bailed out existing home owners - though their debt burden will rise rapidly if rates increase - but with banks only willing to offer average 75% mortgages the market looks less accessible than ever for those locked out.
Where does engagement stop and empowerment begin?
That’s the question raised this week by the National Housing Federation (NHF) in its response to the consultation by the Tenant Services Authority (TSA) on its new regulatory framework for social housing in England.
But it’s related to the deeper question underlying current attempts to redesign public services by putting citizens first and the even bigger one of how to revitalise democracy itself. Whether you call it localism, co-production or citizen empowerment, all the main parties are at it but none of them are very clear about what they actually mean by those fashionable buzzwords.
As for the NHF, it says it is ‘strongly supportive of engaging residents in decisions affecting the management of their homes’ but adds that it is ‘confused by the references to “empowerment‟ and the directions issued by the government in this regard. We are unclear about which powers the TSA will be rely upon to impose a standard relating to empowerment since we cannot find any specific reference to this in the legislation. It would be helpful if this point could be clarified.’ That sounds like a worrying lack of clarity given that we are already well into the consultation.
The TSA says its tenant involvement and empowerment standard will apply to all registered providers and require three outcomes: customer service and choice; involvement and empowerment; and responding to complaints. The requirement on involvement and empowerment says that ‘registered providers will offer all tenants opportunities to be involved in the management of their housing’ and that this must include opportunities to ‘influence housing-related policies and how housing-related services are delivered’ and to ‘be involved in scrutinising performance in delivering housing-related services’.
None of that seems controversial and many social landlords are already doing much of that - whether it’s at the top with landlords whose board is one third tenants or at the bottom with small supported housing groups that involve residents in decision-making. For others, particularly the larger landlords with complex group structures and business models, it’s far more difficult.
The NHF’s objection, as in many other areas recently, seems to be to being told what to do when that was not specifically laid down in the legislation. But if the limits of engagement are left up to individual landlords that sounds like the opposite of empowerment.
Which is a shame because if there is one public service in which engagement and empowerment ought to work it is housing. Compare it to, say, education and health and the difference is that the people who use the services have a constant and lasting connection to the organisation that delivers them. And, as Hyde Housing argues in a report out this week, the most involved tenants or ‘heartlanders’ play a crucial role in bonding their communities together.
The debate about empowerment also raises the issue of the future of the TSA itself. If there is one thing that really defines the difference between the new organisation and the old Corpie (apart from that camper van) it is precisely the emphasis on tenant involvement. But the extensive consultation that has gone into it has left the regulator vulnerable to Conservative criticism about how long the process has taken. The new framework is due to take effect in April - just weeks before the likely date of the general election.
The closely-watched RICS housing market survey reports the first slowing in house price rises and new buyer demand in almost a year today. Tentative evidence that the mini-boom is over?
Maybe - but it’s very tentative since this is a slowdown in the rate of increase rather than the market going into reverse. After a year of increases in the balance of surveyors saying that prices are rising rather than falling, the balance fell from +35% in November to +30% in December. Similarly the balance of surveyors reporting increases new buyer enquiries slipped back to +20, the slowest pace of increase since January 2009.
The slowdown is confirmed in the balance of newly agreed sales and sales expectations, which both show less growth, and perhaps even more significantly the recovery in supply into the market seems to be holding up. The balance of new vendor instructions increased for the seventh consecutive month and matched November’s +17, which was the highest since May 2007.
However, a balance of +13% of surveyors still expect price rises over the next three months. Granted they have a big vested interest in that happening but the triggers for a downturn - another increase in unemployment, more forced sales, rising interest rates - remain unprimed.
There’s not much good news for affordability and first-time buyers either in the DCLG house price index for November published today. The annual rate of increase went back into positive territory for the first time since May 2008 and the increase has been particularly marked in properties bought by first-timers rather than previous owner-occupiers.
A new forecast says housebuilding will still be 25% below pre-credit crunch levels in 2013. Just how bad is the next decade going to be?
The respected Construction Products Association forecast says private sector housing starts will recover from 80,000 in 2009 to 92,000 this year and rise steadily to 137,000 by 2013. Social housing starts will remain at 25,000 a year until 2013 as funding is cut back.
But what might seem like growth is only impressive when judged against the slump of the last two years. The longer term picture looks far worse and will have serious consequences for housing policy as a whole.
The forecasts are for Great Britain whereas the government target of 240,000 net additional homes a year is for England alone. The latest population projections imply that more like 260,000 homes will be needed. And the recovery in completions will lag behind the recovery in starts - total private and social completions across Britain are expected to be just 152,000 in 2013.
With Scotland and Wales accounting for about 30,000-35,000 starts, that means housebuilding in England will be running at less than half the level needed to accommodate a growing population. The shortfall looks like being a million or more by 2016.
Whatever you think about Labour housebuilding targets, or Conservative plans to scrap them in favour of local incentives to build, that makes worsening affordability and increased overcrowding and homelessness look inevitable whoever wins the election this year. Housebuilders will be more intent on rebuilding their balance sheets than building new homes and the government will be busy cutting public spending.
So what’s Plan B? The obvious starting point is for government to get serious at last about empty property, with real incentives for owners who bring it back into use and penalties for those who do not, but it’s hard to see what else can be done about supply.
But what about demand? The debate has begun about population and immigration - just look at the links being made with housing in parliament last week and the comments by David Cameron over the weekend - and on need in the social sector and our ageing population. It has barely even started about second homes and at a tax system that encourages the well-off to buy as big a home as possible and under-occupy it.
Can anything stop the remorseless increase in overcrowding?
This is another late entry that should have made it into my top lessons from the noughties - it was the decade that far too many of us got used to living like battery hens - but will it be one from the teens too?
I was already familiar with the stat revealed by Shelter last year that 565,000 families are living in overcrowded conditions. I knew that the problem could be even worse because that figure is based on the outdated, 75-year-old bedroom standard that takes no account of babies and counts children between one and ten as half a person. I knew that the problem was worst for social renters in London and for ethnic minority families.
But a written answer this week to a question by Karen Buck this week reveals just how much the problem has shifted between regions and tenures. Between 1994/95 and 1996/97 (the stats use a three-year period to compensate for small sample sizes) 2.6% of all households were overcrowded. By 2005/06 to 2007/08 that proportion had increased slightly to 2.7%.
That total for all tenures obscures big changes within them. The proportion of overcrowded owner-occupiers fell significantly from 1.7% to 1.4% (while under-occupation rose). Overcrowding in the social sector rose 20% from 4.9% to 5.9%. And in the private rented sector it shot up almost 60% from 3.1% to 4.9%.
Those trends may seem like the obvious consequences of supply failure, especially in the social rented sector, of soaring house prices and of increasing reliance on private renting, but they are still shocking.
Even more so when you consider that most of the North and Midlands saw overcrowding fall - and in the North West and East Midlands it even fell in social housing.
That meant the increases were overwhelmingly concentrated in the South. Among owner-occupiers overcrowding was little changed but it shot up among most renters.
The proportion of overcrowded social renters fell in the South West but increased by 15% in the South East and by a third in the East and London.
But the increases in the private rented sector dwarf even those. The proportion of overcrowded households rose 15% in the South East, 63% in the South West and 85% in London but trebled in the East from 1.3% to 3.9%.
What next? Falling immigration as a result of the recession may reduce some of the pressure but for how long? Boris says he’ll halve it in London by 2016. But the most recent annual stats showed an 11% increase in overcrowding and, with housing starts plumbing the depths and housing budgets about to be cut, it’s hard to argue that the problem is not going to get even worse.
If you think something sounds familiar about the Halifax’s prediction this morning that house prices will be ‘flat’ in 2010 you would be right.
That’s exactly what the bank forecast in January 2008. By April it envisaged ‘a modest (low single digit) decline. By June that was ‘a fall of up to 9%’. And by December the actual fall was, er, 16.2%.
The Halifax did not make a forecast for 2009 - hedging its bets with comments about the dislocation in the financial markets and improving affordability - but in retrospect perhaps it should have done. That’s because, according to its house price index published this morning, prices rose by a pretty flat-sounding 1.1% - when most commentators expected a continued fall.
But if the end result was flat the journey certainly did not feel like it. On a month by month basis, between January and the low point of April prices fell by 3.5%. Between April and December they rose by 9.4%. The Halifax annual change figures compare quarters and so tend to smooth out peaks and troughs - comparing December 2008 and December 2009 prices actually rose 5.6%.
That tallies with the 5.9% annual increase recorded last week by the rival Nationwide index. The building society predicted ‘no significant price movements in either direction’ but added that ‘the experience of 2009 demonstrates how unpredictable the market is at the current juncture and that one should always be prepared for the UK housing market to surprise’.
As it pointed out, that leaves more questions than answers about 2010. Will interest rates stay low all year or will the end of quantitative easing and rising government bond yields force an earlier than expected increase? Will demand continue to outstrip supply or will the recovery prompt more sales? Will the promising signs on unemployment continue or will public sector cutbacks prompt a new rise?
While prices still look over-valued in relation to earnings, as most economists polled by the FT earlier this week argued, at the moment it’s hard to see a trigger for a significant fall.
And it’s worth remembering that the Halifax and Nationwide indexes set the tone of the debate and are the most widely quoted they are not only ones. With some adjustments, they only reflect the prices of property that has actually been bought with one of their mortgages.
Rival indexes are, well, flatter. Hometrack says prices fell 1.9% in 2009 and will predicts they will fall by another 1% in 2010. The Land Registry index, which includes the prices of all property that sold, says prices fell 0.3% in the year to November. The latest DCLG index says prices were down 2.2% on October 2008.
The hounds are baying for blood over the cost of housing benefit after new figures showed total costs will hit £20bn this year.
A pack made up of the Telegraph, Mail, Express and Times variously reported both the total size of the ‘handout’ and the results of freedom of information requests showing that one family in Brent was paid £2,875 a week and a total of £279,000.
The government is already consulting on reforms including new rules excluding rents on more expensive properties from local housing allowance calculations. But despite that the clamour for action is likely to grow ahead of an election and a possible Conservative victory that could also appease the hounds with an end to the hunting ban.
Their problem is that it’s not at all clear what will reduce the total bill apart from an economic recovery and lower unemployment.
The latest Department of Work and Pensions (DWP) stats show that that the number of claimants has risen by 100,000 in the social sector in the last year but by 250,000 in the private sector. The average weekly award was £67.17 for council tenants, £75.82 for housing association tenants and £105.38 for private tenants.
The total bill is expected to increase by 14% from £17.2bn in 2008/09 to £19.6bn in 2009/10. Taking a longer term view, that’s an increase of £8.2bn or 72% since Labour took power in 1997.
However, housing benefit increased even more in the last recession. The total cost rose 27% between 1990/91 and 1991/92 and it almost trebled between 1986/87 and 1996/97.
Then, as now, the increase is the result of cyclical changes in the economy and structural changes in the housing system - the direct result of choosing to subsidise personal costs rather than bricks and mortar and failing to tackle soaring house prices and costs. And the right to buy, as columnist Ross Clark points out in The Times.
The hue and cry will get louder ahead of the election but the fox looks further away than ever. The more radical ideas coming out of think tanks like Localis would actually increase the housing benefit bill even more.
The noughties saw first-time buyers priced out by soaring house values, crowded out by buy-to-let landlords and finally locked out by mortgage lenders. Will things be any better this decade?
There are signs of hope in the first-time buyer annual review just published by the Halifax. The bank says that thanks to the housing market downturn prices are now affordable for first-timers in 39% of local authority districts compared to only 6% in 2007. ‘Affordable’ in this context is defined as the average price for a first-timer being lower than the price someone on average earnings in the area can pay based on an average house price to income ratio of 4.0 (the average over the last 20 years).
That national figure masks considerable regional variation, with no districts affordable in London and Northern Ireland and more than three quarters in the North East, North West and Yorkshire & Humber.
Meanwhile mortgage payments are looking much more affordable for those who can get a loan thanks to record low interest rates. The proportion of disposable earnings devoted to mortgage payments by a first-time buyer on average earnings has fallen from 50% in June 2007 to just 27% in November 2009.
And the Halifax says there are also signs that lenders are beginning to loosen up. The average deposit put down by a first-timer has stopped rising and the number of mortgage products available has risen 33% since April.
So far, so good except that the backdrop still looks pretty gloomy for anyone looking to get on the ladder. Yes, house prices are more affordable but they are now rising again. The Nationwide puts the increase in 2009 at 5.9% - way ahead of increases in earnings - and although 55 out of 70 economists polled by the FT believe that prices are still overvalued few believe that they will fall. Yes, mortgage payments look cheap but any recovery in the economy and in earnings will trigger an increase in interest rates.
The Halifax estimates first-time buyer numbers fell 4% in 2009 to 185,000. The annual average over the noughties was 388,000. The average mortgage advance now is 75% compared to 90% for most of the decade meaning that few can buy without family help with a deposit. Interest payments as a percentage of income may be much lower than in 2007 but they are still higher than they were between 1998 and mid-2004.
The fact that prices have started rising again without any growth in the number of first-time buyers - something that until recently would have been seen as impossible - suggests that the housing market and existing owner-occupiers have learned to get along without them. The teens look like being another decade of frustration for first-timers - and opportunity for landlords.