Sunday Supplement 05 Oct 25 - Viable?

“Many leaders are tempted to lead like a chess master, striving to control every move, when they should be leading like gardeners, creating and maintaining a viable ecosystem in which the organization operates.” - Stanley A. McChrystal, retired US Army General This week’s quote goes straight to the deep dive and provides some suggestions to the very top, as well. Before we crack on - I wanted to recognise one more great Property Business Workshop held in London this week, about Investment and Investment Metrics, and Scaling your Property Businesses Safely. Rod Turner was once again on fire and I managed to fan the flames from the sidelines - some fantastic feedback and our next date is set for Thursday January 22nd 2026 (!). Next time out we will be talking about goalsetting, productivity and also accounting and bookkeeping where we regularly see some consistent mistakes being made within property businesses - alongside, as always, real life case studies about our own experiences and businesses. Save the date - the link will be with you next week! Trumpwatch - where are we at as we get into Q4? The circus of the debt ceiling is the biggie this week, as markets start “flying blind” without (for example) September payroll data. The technical line is that “the visibility gap complicates rate-path assumptions”. Black market data would have its own market here I tell you! The manufacturing ISM numbers were 49.1, so contracting (not as badly as the UK numbers!). Tariffs got some very chunky numbers in, though, topping up tax revenue by $62.6bn - lifting it from the margins of businesses and the pockets of consumers, in variable ratios depending on the end products. We are a month or so away from the first arguments being heard in the Supreme court over the tariffs. The number is around $1300 per household in terms of estimated costs on the consumer side. Traded volumes were down on future interest rate cuts, but the lean is still towards another cut this year (which has been the case for a good month or so anyway). As you’d expect - conviction is down, but there’s been no reason to change direction (because there’s no data!) Large-scale workforce cuts on non-statutory Government departments are what’s been floated - DOGE rides on as the Senate failed to advance competing bills around funding. As you’d expect, Mr Trump has been accused of “leveraging the shutdown” - if there’s one thing he is a master of, it is leverage, let’s face it (not with great consequences for all, mind, but with great consequences for him, usually). There were $187m in cuts to counter-terror grants in New York - but this was u-turned in the same week, as there was major Republican blowback. A quieter week, all in all, and my favourite piece of rhetoric this week was “AI writes good - maybe better than FAKE NEWS!!!” which was “the Donald’s” response to the leak of an internal memo showing that his comms team have used GPT-based drafting for recent rally remarks. There was also a proposed Trump Liberty Tower slid into planning in New York. Without city consultation. Straight to court first of all, then!? A lettuce, placed outside the Treasury, also caught my eye - it had a mini MAGA hat and a sign saying “still outlasting fiscal policy” - a comment on the number of changes this year that will no doubt continue, particularly when it comes to tariffs of course. The lettuce goes international! OK - over the pond to the real time UK property market. Chris Watkin delivers as always - Week 38 in the can. Listings printed 35.3k in the last full week of September. My “10% more stock than a normal market” ready reckoner is still working on the back of circa 2 years of overperformance in listings compared to historical averages. There have been 1.38m homes listed this year so far! We are 10.5% ahead of the 9 year average, but that does include 2020 which pollutes the figures somewhat. We are really inching back towards the 2024 numbers now, week by week, having been 6-7% above them at various points in the year - but we are still listing more than we are selling (as always), so it is all eyes on the withdrawal rate as a general rule. We are only 2.6% ahead of the 2024 listings YTD now, but are still 10%+ ahead of the 2017-19 average. Price reductions in week 37 - 25k. August’s completed number was only 11.1% for reductions - much lower than the 14.1% reduced in July, 14% reduced in June, compared to last year’s 12.1%, May’s 13.4%, and the 5-year average of 10.7%. 2025’s average is 13.1%. More stock, more reductions - absolutely and relatively. 22% more reductions than the 5 year average, if you take the difference between 13.1% and 10.7%. “25% more reduced properties than a normal market” also works as a ready reckoner, or is likely to even be an underestimate just because of the amount of stock out there. We’ve still had more than 100k price reductions in the last month. Can’t find a deal? Just keep the legwork up and you’ll get there. You don’t tend to see 13%+ of stock being reduced in strong markets, by any stretch. Holidays slowed things a little but sideways pricing is continuing. As usual we won’t read too much into August’s activity. September’s concluded figures will be next week. 25k homes sold subject to contract, healthy enough. The 2025 average is 26.1k. Week 38s on average print 24.8k (over the past 9 years). SSTCs are up 5.6% year on year and 13.4% on 2017-19, and still nearly keeping pace with 2022 (as we near the “day of the lettuce” in historical context, because these figures run a week behind, remember). With SSTCs up 5.6%, whereas listings now are only up 2.6% on last year, this signifies more “intention to transact” than 12 months ago, to this point in the year, for sure - or, put a different way, comparatively this looks like a more functional year than 2024 was (even though stock numbers have continued to rise throughout the year due to relentless listing). We went into September with 736,333 homes on the market - a reduction of over 25k on 1st August’s number. I have been waiting for this month, but am loath to draw conclusions given that it was after August. However - if we look back at the past years, September 1st’s number is not usually a drop - and certainly not a large one. It does look like we might well be past peak listings, but it will take 2-3 months to really establish a trend (and will there be a consistent one?). We need more sales agreed for that to happen, and in a week like this with only 25.3k gross sales but 35.9k gross listings, you wouldn’t expect that number to go down just yet. It’s all about the clear-out. For context, as the market got stickier before the pandemic that number was c. 660k, a sellers’ market is more likely to be under 600k. At the end of August 2024, 710k were on the market. September’s figure will be interesting as we don’t watch the number of properties withdrawn from the market week-on-week. Chris also looks at the per square foot on sold STC properties - it has a very strong correlation with prices that hit the land reg in 5 months’ time. This time round - August was at £338.78/sqft and that was 1.41% higher than August 2024 and 14.25% higher than August 2020 - but down 2.2% on June’s SSTC number of £346.45 and down 1.75% on July’s number of £344.78. This is a pretty dramatic drop and may well revise our number for this year, when the figures hit the land reg, down into the 1.5%-2% region for 2025 (it isn’t quite an exact science, although these figures are the most helpful of all of them out there). I think this can be put down to August plus stamp noise, potentially, but if you saw Halifax or Nationwide revise by that sort of number, all hell would break loose (bearing in mind what happens when they talk about prices going down 0.1%!). The increase of only 14.25% since August 2020 with the backdrop of what wages and prices have done since then signifies a big real-terms haircut in property prices over that 5-year period. Never judge by one month, especially when it is August! Fall throughs stayed slightly above the long-term average of 24.2%, printing 24.6% - there’s still been very little volatility around the long-term average for many weeks now, and that one is a bit noisier than most, but perhaps because of bank holiday “catchup”. The net sales are still there or thereabouts - 18.9k, 4.8% up on last year and 10% higher than 2017-19 - not quite at 2022 levels (about 8k behind, now, total, edging closer week-on-week, with there soon to be a big catch-up with the 2022 post-mini-budget market meltdown coming up) - there’s now no doubt 2025 will outstrip 2022 with it being so close and the last quarter of 2022 being quite so poor post-lettuce. Chris offered up yet one more interesting graph last week which I’ve re-analysed in case you missed it - he pitched it as average rental prices versus number of available properties. I’m less interested in the former - best adjusted for inflation, or wages, in my view - but much more interested in the latter. The numbers that keep things “straight” - pre-pandemic, there were around 350k rental properties brought to market in an “average” month. About 6.3% of all UK PRS stock, if you work on 5.5m being the size of the sector. In August 2025 that number was 299k - very similar to 2024’s number, and much better than 2023’s August number of 243k. So - at a base level - you’d suggest that a “normal” market looked like 350k, the new normal looks like 300k so down about a seventh or 14%, and constricted (with rocketing rents) looks like 250k or thereabouts, and indeed that’s what the graph shows. 350k was a very steady number for 3+ years before the pandemic. Anyone saying the PRS hasn’t shrunk in the past few years is not looking at these figures objectively in my view, but we will wait for the long-outdated (by time of release) English Housing Survey to “confirm” this politically - and there will still be many on the left who see the shrinking PRS as a good thing, without giving too much thought to the tenant during this transitionary period to corporate ownership of property, which is likely to be decades-long. I always give Chris a weekly shout out here because he’s more prolific than “just” this epic tome he releases weekly on the UK property market - he comes up with some great stats on a regular basis. Drop him a like, subscribe, and all the rest of it and some kind words for his content creation. If you are in the industry and want support in growing your business or to be a more effective communicator/be more in touch with your local market - that’s his core business - give him a shout. The article gets published on the Property Industry Eye website, and the video on his YouTube channel - @christopherwatkin

Over to the macro side of things - Macrofog is the word of the week because this is a week where things became less clear, not more. We had the Bank of England Money and Credit Report, including mortgage approvals and some money supply data; The Nationwide House Price Index; We then had the final PMIs and - bad news - the data was quite a bit worse than the flash numbers I reported on last week. Gulp. In position 4? Gilts and swaps, yes of course.

On the Money and Credit Report from the Bank - overall, what looks like “business as usual” news at the moment. These are August’s numbers, and the now-expected 65k mortgage approvals per month were pretty much hit (we were down 500 on the month to 64,700 but that doesn’t feel too bad for August). Remortgages stayed in the high 30ks, printing 37.9k (down 900 MOM). Large business borrowing increased by 8.6% year-on-year - small businesses borrowed 1.2% more in the past 12 months, which is the best print for 4 years (really). In the details: The drawn rate (the effective interest rate paid on newly drawn mortgages) slid down a couple more basis points to 4.26%, and the outstanding stock ticked up just one basis point to 3.89%. Convergence is 37 basis points away, and looks like it is within the year if the trend of slow base rate cutting continues (and that’s where the market’s money is, without it being able to make up its mind whether the bottom rate looks like 3.75% or 3.5% at the moment). Personal loans were more expensive at 8.32%, interest-charging credit cards were down 23 basis points to a mere 21.42% (just remember to use 0% cards if you use credit cards!). Household deposits went up by £5.4bn in the month, down from a net increase of £7.1bn in July. This money went into instant access accounts and ISAs at an almost equal quantity. Large companies are paying 5.68% on average, compared to 6.35% for SMEs, for their new debt. The money supply was up 0.4% month on month (measured by M4) - the expectation was 0.2%, and this smells inflationary - it’s now up 1% in the past 3 months, very congruent with the expected September CPI print around 4% (or a little over). There’s no “calm” coming particularly soon from that side of the fence. The Nationwide House Price Index - fanfare as the print was 0.5% up for the month, based on an expectation of 0.2%, as it continues to be hard for the consensus to predict anything correctly month-to-month. This is September remember, as Nationwide makes a concerted effort to stay “real time”. Nationwide’s adjective of choice? Steady. The annual number is 2.2%, compared to 2.1% last month. Northern Ireland presses on at 9.6% year on year. Their chief economist comments on stability, and the close parallel of mortgage approvals to before the pandemic (in spite of the large changes in interest rates in the interim). A lot of his rhetoric sounds recycled to be honest - unemployment is low (no focus on how much it is rising), earnings are rising at a healthy pace (sure, but so is inflation, and they are trending down whereas inflation is trending up), and borrowing costs “will moderate a little further” - true on the 2 year, I remain sceptical or more accurately fixated on what already looks like a relatively stable 5-year rate (and has been for 18 months or so). His conclusion - gradual strengthening - which I do agree with, in fairness, even if his economic chat is a little over-positive/light on reality. The quarters also signify a new quarter of data on Nationwide’s “hidden” “real house price index”. Houses got cheaper by a little over a couple of thousand quid, on average, in real terms on this Index - adjusted by RPI. The same stats that I have analysed a number of times over recent years still hold of course - cheapest in real terms since a little blip in 2013, but realistically we are at 2003 prices in real terms. We remain 20%+ below Nationwide’s trend line, but a more accurate “flat” line reflects the post-2000 market in my opinion (which we are still nearly 10% below). In terms of “mean reversion”, houses are, in spite of what everyone says, cheap in real terms right now. A few numbers to bring that to life a bit: £272,819 is the Nationwide value of a house right now at the end of Q3 2025. Notable peaks: £330,809 was the number at the end of Q1 2022. Inflation was so high that that was down to £300,930 by the end of Q4 2022. We crossed £300k “real” on the upside in Q1 2015, after crossing it on the downside in Q4 2010. Peaky McPeakface was Q3 2007, at £361,487 which provides some good historical context. At the turn of the millennium house prices were still £181,895 in real terms; They were £220,253 at the end of Q2 1989; they were as low as £123,114 at the end of Q2 1982 (please bear in mind how many right-to-buy transactions were going on at the time, skewing house prices downwards as there was such a lot of volume at discounts). Still - that was some 7 year period to own a property! This is always best looked at in the context of the prevailing interest rate, as well, of course, and indeed sometimes the interest rate seriously affects the price of property (not so much, these days, as you can see, although it is still a factor). Still you see just how much temporal volatility there is, and also why I am bullish on house prices. The 20 year average Nationwide real house price is £305,204; the 10 year is £304,132; the 5 year is £298,584. £300k or thereabouts is a fair yardstick without wheeling out linear regression models etc. If you prefer to use the 20-year average, we are currently 10.6% below that 20-year average. At some point over the next decade, that 10.6% will in my opinion be made up and indeed blown past, because that’s how cycles tend to work; if you add that to expected RPI inflation (3% by anyone’s money, surely) the likely increase over the coming decade looks like around a c. 50% capital growth increase which looks like a fair estimate. The other Nationwide quarterly stats? The usual pattern repeats - the bottom 3 regions in terms of performance in the past quarter are the South East, London and the South West. The best in England are the North, then Yorks, then the North West (Nationwide do things slightly differently). Then the Midlands alongside Wales and Scotland. The same old story that we’ve been seeing for some years. Which types of properties did best according to Nationwide? Semis first of all (3.4% annualised), then detached (2.5%) and terraced (2.4%) almost tied, and flat prices actually went downwards (-0.3%). In the past 10 years, flats are up only 20%, less than half the rise in the price of terraced houses over the same period. The quarterly reports are always quite rich, and a welcome change from the monthly ones that are fairly light on info. Next up - the PMIs. Only 10 days between the flash numbers and the finalised ones - and recently a nice run of improvements between the flash numbers and the final prints. Not so, this time. Q3 has ended with a whimper - services printed 50.8, down from 51.9 on the flash number, and that’s crashed down from the 16-month high in August of 54.2. This dragged the composite print down to 50.1, from the flash print of 51 and from the August print of 53.5. Unusually, the headline didn’t make as much of this as I thought it might. They simply went with “Service sector growth eases to a five-month low”. Now, it is fair to say that since September 2024 when “budget fear” gripped the nation - a fear that’s likely back, a bit, although the sensible business decision makers know that all the pressure is on the consumer this time around, they are also still reeling from the employees NI shift. Where are the sub-straplines? Slower increases in output and new orders. Employment in services falling at a faster pace. Strong input cost inflation persisting. Pretty bad. How about the expert commentary? This was badged as a disappointing end to Q3, weak consumer confidence, delayed business spending decisions, and falling exports. They quite literally use the words “flash in the pan” for the past 3 months. This is the return of political and economic uncertainty. Next up - the deferral of spending decisions until after the budget. I find it unlikely they will then be made in December - much more likely January 2026 before the trigger is pulled by many. Lacklustre demand was reported “across Europe”. There has been 12 months of falling employment. We already know that the only expansion in employment is in the public sector at this time. The analysis wraps by saying that there will be more support for rate-cutting on the back of this sort of print. The story was the same in Manufacturing, yet worse because it started from a weak base. UK industry isn’t well. The JLR cyber attack was also meaningful enough to have an impact. Production volumes might be boosted soon, however, because firms reported that they are working on very lean inventories. Costs in manufacturing were slowing in their rise, unlike in services. We don’t have the construction numbers until Monday - but the best guess for September GDP solely based on the PMIs would be 0.00%. It feels terrible writing off a quarter, but it does appear that the next 2 months at least from a business perspective will be cautious at best, and probably very flat on the PMIs. Will the gilts cheer us up then? Do they ever? The 5y opened at 4.149% yield and closed at 4.125% so let’s be thankful for small mercies. Basically - NOTHING really moved the needle at all, and it was the tightest trading range (around 5 basis points top to bottom all week) that I can remember. Thursday’s close at 4.14% on the 5y corresponded to 3.79% on the 5y swap yield - 35 basis point discount rides on, and best guess for the next swathe of mortgage products will be 5.8% including fees amortised. The longs? The 30y opened the week at 5.526% yield and closed at 5.503%, almost identical in pattern to the 5y. The yield curve therefore got no steeper nor shallower for the week. The most boring gilt update in over 3 years - and personally I’m delighted about that. Can we just go down 2.4 basis points each week for a year, please? That would be lovely. Time to dive, then. Zoopla released a bit of a slobberknocker which I wanted to discuss - about homebuilding viability - they also released their house price report for the month. I also want to squeeze in a data snapshot, as this was one of the more interesting weeks of the calendar and it couldn’t all fit in the macro section. There’s one further report from the Resolution Foundation about how much change - or not - delivering 1.5m homes over the course of this parliament would make. I have no idea why anyone is pretending that still might happen, as we know it will be at least 300k off by any sensible measure, and likely worse than that (most think 500k-650k short of that number). Data blast, then - 93.63k residential transactions for August according to HMRC, 6% below the 2013-2019 pre-pandemic average, but 1.7% higher than August 2024 (and 1.7% down on July 2025). Scottish housing data showed completions down 6% from Q2 2025, and starts down 3% year-on-year. Brick deliveries were 5.2% lower in Great Britain compared to August 2024. Some more Scottish data too - registered properties to let in Scotland are down 0.9% since March 2025 which was the recent peak - and the number of registered landlords is down 1.8% over that same time period. Registered landlords are down 3.1% since the data series began in January 2022 in Scotland; properties to let are up 2.5% over the same time period, but down in 2025. Scottish landlords were at 1.42 properties per registered landlord - now they are at 1.5. The trends are there for all to see. Zoopla’s price index? Houses up 1.4% YOY for August 2025. However - as always - some interesting stratification from them. -11% buyer demand for homes over £1m. +2.8% average house price inflation for houses sub-£200k. What else do they see? Stable mortgage rates (yup), a widening in the north-south divide (advantage North as it has been for a few years now), and they also find the time to blame the speculation about the budget for a worsening of activity in the £500k+ section (and I think this is a solid argument; the easiest thing to do in the world is wait/do nothing, unless you REALLY need to move). Stock levels are 20% higher than the average agent from 2023, and up 8% year on year. Demand for properties >£500k is down 4%. Sellers are not bothering listing a lot of this sort of stock either - listings are down 9% on £1m+ and 7% on £500k+. This is why London and the South East are performing so poorly, of course. Zoopla has, of late, been the most bearish of all of the indices about the quantum of house price rises. They have undercooked the ONS numbers by around one percentage point a year, roughly. However - this might just indicate a compression between Zoopla asking prices and prices achieved, of course - and that might well be consistent with the market in the past 4 or 5 years, based on how it has played out. Their 1.4% rise in prices breaks back to under 0.5% in the South, and 7.9% in Northern Ireland (the best performing region in England is the North West, according to Zoopla, at 3.1%). SDLT is mentioned as a drag on pricing (of course, as taxes go up, the pie is being redistributed towards the Government, and the difference is most certainly there, even though it would be fractions of a percentage point). That drag plays out more in Southern England as well, so it has not helped as affordability has been hit harder with higher, more normalised rates, in the South than it has in the North. Where local markets average over £500k, prices are barely moving at all and if you break the data down, the usual pattern is emerging. It isn’t so much that the prices aren’t moving - it is that people are stopping putting such houses up for sale, because they don’t want to sell at a discount. When you get into individual postcode areas, some cheaper areas of Scotland and Oldham are doing the best, and the South West seems to be struggling the most alongside London, while Bournemouth tops the list of asking price cuts. There’s no doubt in Zoopla’s mind (and I’d agree) that double council tax for second homes is causing a big shift in attitude and behaviour. There’s a sideways reference to the mortgage affordability rule “clarification” from earlier in the year that cites homeowners being able to borrow 20% more than 6 months ago on the same mortgage rate. A seismic shift which Zoopla seems to just mention in passing. They are the one source that seems to recognise that “mortgage rates have stabilised but they are not falling” - as I’ve been saying for some time now. Liverpool tops the English cities at 3.7% up on the year according to Zoopla, followed by Manchester at 2.7% - for one of the only times I can remember, Aberdeen (-0.5%) is not bottom, but Bournemouth is at -1.7%. Following on from this, Zoopla released a bit of a bombshell report this week on the viability of housebuilding that has received a reasonable amount of coverage. The headline number was that building homes is not viable across 48% of the country, and is “challenging” across 64% of it. The disconnect - which makes sense - is that in places where it is affordable to buy, it is not viable to build. The report is a front end for a sales pitch - investing in Zoopla’s “new homes” product shows a 30% uplift in “quality leads for housebuilders” (they say). There is some stark data in the report. Build costs are 17% up on 2022, whereas sale prices are up 1%. Taylor Wimpey - a company that historically worked on 1 sale per week per site, and in more recent years have come to accept that 0.8 sales/week is more palatable, have been achieving 0.65 sales/site/week on new builds in the past 9 weeks, down from 0.7/week last year for the equivalent period, 0.64 excluding bulk deals. Pricing remained flat, according to the recent Investor report from TW. The YTD sales rate looks a little better - 0.74/week compared to 0.72/week for the whole of 2024, but they are still knocking 10% slower than they used to be in “new money”. This is not a pace of sales that encourages housebuilders to do more. Back to Zoopla, anyway. With only 36% of the country viable for starter and family housing-led development, you get a picture of the scale of the problem. They make an obvious yet true statement - to improve viability is to lower the cost of delivery, or raise the price of the end product; but in the near future, this isn’t happening as costs increase faster than house prices. So what? Well, Zoopla tells us what many have been saying since the start of the Government’s rhetoric (which has now become “build baby build” under Steve Reed). Planning reforms help but on their own they are not enough to boost supply. They also drop the truth bomb that higher prices aren’t the answer either - meeting targets means new build doubling its market share of sales - higher viability via higher prices just prices out more buyers. They mentioned that land values have softened and builder margins have narrowed, but that regulatory and policy costs are set to keep rising (take note, Mr Reed). There are multiple mentions of the withdrawal of help to buy, even though the deeper dive evidence presented by the Joseph Rowntree Foundation a couple of weeks back did not show a strong impact after the withdrawal of Help to Buy. Zoopla correctly identifies the uncertainty in demand around corporate buyers and housing associations as well - in this same week, the Home Builders Federation has released a report referring back to their October 2024 report which detailed the 17,432+ Section 106 homes that were as yet uncontracted by RPs - which meant that 139 home building sites were delayed at that time. Those figures have been refreshed and extrapolated to 900 completed unsold s106 units, 8,500 under construction or due to start in the next 12 months that are not currently contracted, and 700+ sites stalled or delayed in the past 3 years due to the inability to secure an RP to acquire the affordable units, as of mid-2025. The 8,500 isn’t an improvement on the 17,432 because the latter figure was not time-bound, whereas the 8,500 is just the next 12 months or already under construction. Zoopla prescribes targeted action and is clear that there are no quick fixes. Well of course not, this is property after all! So - there are ultimately four recommendations: 1) Keep up momentum in planning and devolution reforms. I’m skeptical about both, to an extent - the former isn’t showing results and politicians don’t have a deep understanding of it, the latter is handing more power to the Reform party assuming next May’s elections look like this May’s elections. The wider world doesn’t seem to have twigged that yet but I suspect an election in Wales - if it does “go turquoise” will really give Westminster a reality check. 2) is to perform a regulatory review. This badly needs to be listened to. The chat from Rachel Reeves about cutting regulation - which has taken place in both the Finance sector, and the mortgage affordability and lending sector leading to a 20% rise in what borrowers can borrow, which is obviously meaningful - needs to be applied here. The problem (as I see it) is turning around legislation to be more careful about high rise buildings - brought in under the Conservatives and only relatively recently passed (Building Safety Act, Fire Safety Act) is optically not a good look, regardless of how much it needs to be done to save the skin of urban development. Rachel did promise as far back as last year to look at the “bats and newts” situation, and was quoted in August as being “about to roll it back” - but we still wait, as we always do in politics! The Planning and Infrastructure Bill is supposedly going to get Royal Assent before Christmas, but timelines are never brought forward in these situations unless there’s an election (oh, how we wish). 3) is “targeted new funding” for affordable supply. Put the money where it makes the most impact - easy to say, not so easy to do. This is likely a polite way of saying “spend what’s actually been allocated” - local authorities for example return tens of millions to the Central Government each year based on unspent Right to Buy receipts alone. 4) is targeted demand support - which likely breaks back as money for the areas where prices are higher. They put the National Housing Bank in the crosshairs here as having a large role with respect to providing guarantees and the likes. Politically less palatable, that’s for sure - but you can see the logic - target supply support where viability is marginal, first of all, and then where it is more challenging - target demand support where viability is OK but affordability is the problem. Active market intervention - great on paper, Governments don’t tend to have the best track record in that area though. It is a long report and I won’t continue line-by-line but will instead highlight some of the most interesting parts. Annual private housing starts are down 40% since the start of 2022. They have increased off a low base in Q1 2025. There’s a long way to go. The HBF 2024 analysis also showed that on the back of the 17,432+ affordable home starts, over 100,000 private homes are currently stalled. One of the things that leaps out at me is that the percentage of affordable homes (with a 10% minimum expectation set in the NPPF) may well need standardising across the country based on metrics, rather than individual council “preferences” that might well lead to a lack of viability, accidentally or deliberately. Zoopla are working from £307/ft on the all in cost of delivery for a typical 1100 sqft new home. That’s as useful as a national number ever is - but this leads to the following conclusions. Birmingham? Unviable. Leeds? Marginal. Bristol? Viable, of course. Manchester and Sheffield? Unviable. Liverpool? Unviable? Leicester? Marginal. Some big economic engines there and some scary words next to them. Zoopla takes a political line and says that viability is “finely balanced” in many areas. There’s an obvious north-south divide that plays out there. Obviously - there ARE houses being built in those areas, but the average sale price is above the 75th percentile for houses in those areas. What are the predictions for build costs over the next 5 years? Zoopla quotes the BCIS numbers which are 2.5%-3% over 2025 (I bet that’s been breached to the upside) and 2026, and then 14% in total by 2030 driven by higher labour costs (I’ll go “higher” on that one please Matthew). Whilst the likes of myself (and Savills) are expecting higher house price progression than that, Zoopla are more bearish. I refer you back to my points around housing being, in recent historical context, pretty cheap. The Building Safety Levy has been delayed (but not scrapped). That’s helped a very small amount, you’d think, because it is still coming. The Future Homes Standard (the press impact here was “all homes having solar”) will of course cost more in percentage terms versus a sale price in cheaper areas, making them even more unviable or marginal. Zoopla do quote 10% drops in average greenfield land values since 2022 on the back of all of this, but as you can see - 10% is likely nowhere near enough. Alongside this, home builders have been operating on 17% operating margins for the past 2 years (this was 30% in the good old help to buy days, long run targets are 20%). Zoopla argues that higher prices are not the answer, but that’s only a couple of breaths after pointing out that prices haven’t moved in the past few years on new builds and that hasn’t helped. It is a fine balance, but I see their point - don’t target price repair, but it will happen and it won’t be a negative factor. Zoopla sees 1%-3% house price inflation in the near term, and 1.1m-1.2m sales per year which is pretty functional (and they are always bearish on house price inflation). They do point out, in their conclusion, that the demand is there from both renters and buyers - and believe they have laid out from a strategic perspective what needs to be done to help achieve the goal. All in all, a pretty good report which I hope has the eyes of the Secretary of State for Housing. OK - the final report I wanted to look at this week was the Resolution Foundation’s Q3 Housing Outlook. They look at the 1.5m homes without saying what we all know - it isn’t happening - and look at the impact. Their conclusion - a real step-change but not a game-changer. This is self-evident really when you consider that 300k new households in a nation of over 30m households is only 1%, and 150k new households instead is only 0.5%. I am not sure there is a mature, developed economy where this wouldn’t be the case. There’s some surprising figures out there, remember. Albeit rounded to the nearest percentage point, population in the UK was up 7% 2013-2023 whereas the number of homes increased by 9%. Most people would deny that was the case, or would expect that at least it was the other way around. However - those figures running to fiscal year 2023 - there has obviously been the very largest net migration figures the country has ever seen, alongside a real slowdown in building, since the 2022 budget. ResF tells us that 300k homes per year for the next 5 years would only arrest the downward trend, and get us back to where we were in 2021. 10 years would make a difference - if we built 3m homes in the next decade, we would move from 535 homes per 1000 adults in 2024 to 554 in 2034. Now I know what you are thinking. It won’t happen. I’m inclined to agree, of course. There’s years of repair coming to the housing starts, and still far too many obstacles in the way (and Future Homes Standards just layer on more and more costs). However - if we did have a year (say 2027) where prices were up 6% nationwide, and there were a lot of bullish forecasts about the next 5 years of the housing market - money to build would appear from nowhere and flood the market, believe me. ResF like this metric of homes per 1000 adults - and there were 88 affordable homes per 1000 adults in 2024, an all-time low. Right to Buy was the trigger for the slide, of course, and lack of replacement has been the killer. The £39bn commitment sends this number to 91 by 2034, simply arresting the decline and moving the needle ever so slightly. I wonder if ResF will consider or know just how tough urban development is at this point in time - but we will find out…… The key points they want to get home - 300k homes a year needs to be delivered and then sustained. They recognise this is unprecedented, and that we’ve only hit 250k+ once since 1971, but they are positive about the National Housing Bank and planning reforms, and council mandatory target increases. The graph since 1971 that ResF produces around dwelling stock per 1,000 adults is perhaps one of the least intuitive that I’ve seen for some time, but I thought it was worth sharing as it likely flies in the face of many assumptions. Just bear in mind people per household has been shrinking for a long time due to societal change, longer lifespans, and a cultural shift away from multi-generational households that was never that strong in the UK anyway. In the real world, I’d expect we will be under 525 dwellings per 1000 adults by 2030. It might also be a good time to point out that the ResF assumptions are that there are 1.5m NET additional dwellings, so no buildings are knocked down in the making of this chart! You can think about this in the same way that Zoopla did when it comes to viability. What are the variables here? The number of people in the country, and the number of dwellings. With far more people (net migration figures released recently have been tempered, of course, from the 2023 and 2024 highs) AND far fewer housing starts, there is a double bubble effect on this metric of homes per 1000 heads. If you consider a population increasing 1.4% in one year when it increased 7% in 10 years, that metric alone shows you that that year realistically had the impact of 2 years. ResF refers to the high number of people on LA waiting lists, 1.3m in 2024 (the highest number since 2014), and the record high in temporary accommodation in March 2025 (131k households). They estimate that moving the ratio of dwellings per adult from 550 per 1000 to 570 per 1000 would decrease monthly rent by £34 per property (that would be better as a percentage, of course, because it would make a much larger difference in Westminster than in West Bromwich). Where is this metric lowest? Oxford, when it comes to larger areas, at a little over 425 homes per 1000 adults. It performs poorly, perhaps, due to the high per capita rate of students. Likewise, in Westminster and Kensington there are plenty of dwellings per 1000 people, but if MPs need to live there (and not just MPs of course, I am being a little tongue in cheek) then the fact there are 725 dwellings per 1000 heads is not that helpful. The rent correlation is pretty questionable - in reality, this is a scatter graph with the very biggest cities sitting at fewer than 500 dwellings per 1000 heads apart from London, but showing far higher rents in London of course. ResF wants to push for building in the most productive areas of the country, but can’t seem to decide between the cart and the horse. Their analysis on the back of this fairly weak correlation is not convincing. They end up suggesting building in areas of the country where we “need to be more productive” - I’m not sure that’s the correct approach. They then come up with another conclusion that would raise some eyebrows. There is more affordable (small “a”) housing relative to population in high-rent areas than in low-rent areas. London’s affordable stock ratio is 113 units per 1000 adults, compared to the national average of 84. London also has 20 households per 1000 (2%) in temporary accommodation, though - the national average is 0.5%. On average, 49 households per 1000 (4.9%) are on social housing waiting lists. That’s 30% (yes, 30%) in Newham, and in Newham more than 5% are in temporary accommodation (mind-blowing). Birmingham and Manchester both have 1.2% in temporary, and 10% in Bristol are on social waiting lists. ResF don’t touch the fact that the 1.5m can’t possibly happen by 2029, or forecast what will happen based on the more credible numbers (haven’t seen a better fist of it made by anyone other than Savills 840k estimate). This will, of course, make the current situation worse, not better. If the Government doesn’t listen to Zoopla, or other meaningful recommendations (they are currently busy reading reports about how to raise taxes, of course, not spend more money) then these situations will instead simply have deteriorated further by the end of the decade. Always interesting considering metrics that are used in some of the think-tank output. I did have a flick through one Demos report about how and where taxes should go up - they were a highly influential think tank during the Blair years, and so may well be being listened to by the more central members of the Labour Party - but unsurprisingly, very little thought was given to tax fairness, tax the rich (more) was popular, and there’s little else to report from it. I see very limited point in doing too much budget forecasting, especially as with the loose lips around Westminster these days. By mid/late November we will know most of what’s going on before it happens and gets announced, and no long-term planning should be considered in the next 7 and a half weeks anyway! Above all - please remember to Keep Calm, ALWAYS listen to or read the Supplement, and Carry On; there will be opportunities abound this year and towards 2030 and beyond - the landscape has been set for a surefire bull run. It will be slow(ish), and take a little while longer to get off the ground - and the amount of stock around is still keeping things suppressed at the moment - but as the market continues to improve slowly, it is a case of “here we go” in my opinion.

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