Making sense of the housing market

Transcription

1 Making sense of the housing market CHC Annual Conference December 2016 Helen Collins

2 Market overview

3 Government priorities Reclassification and deregulation 20,000 homes Abolish RTB Home ownership Help to Buy Wales

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8 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 House pirce index (100 = 2007/08 peak) House price index Source: Savills using Land Registry 120 Wales South West North West England

9 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Rolling year on year transactions Transaction volumes Source: Savills using Land Registry 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 0

10 Performance against peak Source: Savills using land Registry

11 Brexit?

12 Sep-05 Feb-06 Jul-06 Dec-06 May-07 Oct-07 Mar-08 Aug-08 Jan-09 Jun-09 Nov-09 Apr-10 Sep-10 Feb-11 Jul-11 Dec-11 May-12 Oct-12 Mar-13 Aug-13 Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Net Balance of Opinion Brexit - The effect on sentiment so far a thin market probably happening anyway Source: RICS 70 Difference New Buyer Enquiries New Instructions

13 Brexit world? Uncertainty over exit terms and timing feeds into economic growth Potential fiscal stimulus we ll put off balancing the books More consumer debt and looser monetary policy (markets permitting) Stamp duty and tax relief on investment properties Weak productivity growth Inflation and depressed real income growth Base rate remains low for longer Squeeze on welfare Desperate need for new homes remains

14 Trump Does his rhetoric survive contact with reality? Unpredictable Tariffs on trade & protectionism helps no one Could accelerate populism across Europe? Period of uncertainty?

15 Informed investment

16 The challenge for HA s Threat of more austerity CHC Housing Horizons A government that gets social housing And wants 20,000 more homes Do more of what you do already? Yes. But will this be enough? No. Conclusion: we have to find new ways to create the housing we need

17 HAs: A significant moment... Are we a great business? Better run businesses house more people Clarity of purpose what is your offer? Efficiency Simplicity Transparency Data Reporting Return on assets? Capacity for new homes

18 HAs: at a cross roads? Clarity of purpose? Emergence of different models? Traditional HA minimal growth. Rent only please. Stick to knitting. Under used assets? Prudent risk takers - focused and actively driving efficiencies. Know their markets. Know their asset base. Up for tenure diversification. Asset optimisers growth oriented. Already delivering multi tenure. Emergent new class of developer. Clarity of purpose?? What is the business all about?

19 Results and Decisions 30 Year NPV per Unit by Asset Group OK to Invest Optimise Procurement Recovery and Improvement Plan Option Appraisal (15,000) (10,000) (5,000) - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Range of NPVs across portfolio

20 Not All About The Money Social Returns POOR NPV GOOD SUSTAINABILITY 3.3 GOOD NPV GOOD SUSTAINABILTY ( 20,000) ( 10,000) 0 10,000 20,000 30, POOR NPV POOR SUSTAINABILITY Comparing social and financial performance 1.7 GOOD NPV POOR SUSTAINABILTY

21 Additional Analysis Underlying Asset Value Red = NPV Blue = Open Market Values 200, Year NPV vs OMV High potential receipt value versus weak in current use. Decision at void? 150, ,000 50,000 0 ( 50,000) Red = NPV Blue = Open Market Values NPV OMV

22 Tenanted sale to RP Vacant sale to private investor/developer

23 50,000 70,000 90, , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 Number of Sales Wales depth of market Source: Land Registry 3,500 New houses New flats Old houses Old flats 3,000 2,500 2,000 1,500 1, Residential value (top of band)

24 Source: Land registry, OS

25 Average house prices in Bangor Source: Land Reigstry

26 Average house prices in Swansea

27 To Market Knowledge GAP

28 Welsh HAs: a new real estate sector? Blend of tenures range of price points and segments Non RP subsidiaries Partnerships and JVs But...skill and expertise shortages And market capacity... Opportunity for direct investment Finding the right partners: risk, skills and common objectives

29 Questions? Thank you! Helen Collins