Lucian Cook's presentation at RESI 2014.

1. RESI 2014
Market Examination
savills.com

2. A little bit of revision
National house
prices up 10.6%
year on year
London house
prices 32% above
pre crunch levels
Housing
transactions up by
23% to 1.2m pa
Lending for house
purchase up 19%
y-on-y
Help-to-buy
supporting 24% of
new build sales
Average mortgage
rate at 3.15% but set
to rise
Private housing
starts up 26% to
111,340 pa
Prime central
London prices up
just 0.4% in Q2

3. Commoditisation of housing
Total Value £5,129 billion
Source: Savills
Annual Housing Costs £142 billion

4. Annual Costs of Housing
Source: Savills

5. Cost distribution
8,571
7,695
4,182
1,939
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
60
50
40
30
20
10
-
Age 34 and Under Age 35 to 49 Age 50 to 64 Age over 65
£ billion
Mortgage Interest Mortgage Repayment Private Rent Social Rent Per household
Source: Savills

6. The implications of a 2% interest rate rise
Housing Cost Per Household Current
England & Wales
Under 35 8,571
Aged 35 - 49 7,695
Aged 50 - 64 4,182
Aged 65 & Over 1,939
All Households 5,425
Mortgaged owner
occupiers
8,687
London
All Households 10,324
Mortgaged owner
occupiers
14,229
Source: Savills

7. The implications of a 2% interest rate rise
Housing Cost Per Household Current
Additional 2%
mortgage interest
% increase
England & Wales
Under 35 8,571 953 11.1%
Aged 35 - 49 7,695 1,391 18.1%
Aged 50 - 64 4,182 624 14.9%
Aged 65 & Over 1,939 108 5.6%
All Households 5,425 774 14.3%
Mortgaged owner
occupiers
8,687 2,447 28.2%
London
All Households 10,324 1,092 10.6%
Mortgaged owner
occupiers
14,229 3,972 27.9%
Source: Savills

8. Looking at cycles

9. Stretching affordability
Source: BoE

10. Stretching affordability
Source: BoE

11. Forecasts
Low
Risk
Some
Risk in
London
2014 2015 - 2018 Total 5 year
UK 9.5% 14.7% 25.7%
London 15.0% 8.2% 24.4%
SE 12.0% 17.5% 31.6%
NW 5.5% 13.6% 19.9%

12. Everyone wants to be a housebuilder

13. Higher development activity
110
100
90
80
70
60
50
40
30
20
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
2006 2007 2008 2009 2010 2011 2012 2013 2014
Index 2006/2007peak = 100
Source: DCLG & Scottish Govt residential starts, rolling four quarter total, all tenures.
London
South
Midlands
North
Scotland

14. Supply pipeline
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Pre-application Outline Plans
Submitted
Outline Plans
Granted
Source: Savills using Glenigan data and Savills pre-planning site data
Reserved
Matters
Detailed Plans
Submitted
Reserved
Matters Granted
Detailed Plans
Granted
Application process Full permission
Residential Units
Up to 50 Units
50-100 Units
100-250 Units
250-500 Units
500-1000 Units
1000+ Units
Planning pipeline by site size in England

15. Funding infrastructure
Delivering Land Value

16. Where are more
allocations required and
possible?

17. Income needed to obtain an 80% LTV
mortgage on a FTB property* at a 3.25
income multiple
* Based on lower quartile house price
Source: Savills using Land Registry,& ASHE

18. Expanding & Supporting Markets
Help to Buy

19. Expanding & Supporting Markets
Build to Let

20. Research
Partner
Slides available online at www.savills.co.uk/research
(follow the links to blogs in the residential research
section of the website)
Follow us on twitter @LucianCook @SAEmmett