Twindig Housing Market Index (HMI)

Our Housing Market index rose by 6.3% to its highest level (71.2) since 13 March 2020 as both estate agents and property portals reported high levels of housing market activity in both June and July. Both agents and portals are increasingly confident that the mini-boom has bigger legs than they initially thought.

Following rather bleak market assessments in the previous week from some of the UK’s major mortgage lenders, estate agents and portals are reporting that the increase in housing market activity since the re-opening of the housing market in May appears to not merely the outworking of pent up demand, but a sustainable recovery. Portals have reported record traffic levels. Rightmove said that its pre-COVID lockdown record daily traffic level has been exceeded 65 times since the market re-opened. It appears lockdown has made UK homeowners stir crazy and ready for a change.

The Twindig HMI measures investor sentiment towards the UK housing market. Digging deeper into the index an interesting picture emerges. Sentiment towards portals leapt by almost 14%, estate agents by c.9% but sentiment housebuilders was unchanged.

Portals and estate agents going up

We have been genuinely surprised at the strength and increasing depth to the home buyer and home seller activity and with staggering traffic growth at Rightmove it is no surprise that investor sentiment is rising. Estate agents are a beneficiary of increased housing transactions.

Housebuilders left behind

However, it seems as if the housebuilders have been left behind. This seems odd to us as they too will benefit from the increase in market activity and last week’s planning white paper if adopted, is very good news for housebuilders (and their shareholders). If the white paper’s prophecies come to pass and planning times are reduced we believe that the biggest UK Housebuilders could free up around £1bn each from their Balance Sheets which could either fund growth or be returned to shareholders.

Sentiment also increased at bleak house

As already mentioned the UK mortgage lenders have painted a rather bleak outlook for house prices this year. This is likely to impact both their appetite to lend at high loan to value (LTV) multiples and the pricing of high LTV mortgages. Investors, however, are more sanguine and sentiment towards lenders increased by 4.2% this week

Conclusion

As a former analyst, I will always seek to be led by facts and data rather than opinion and the data is so far much more positive than I thought it was. It could still be a false dawn, but it is looking more likely that morning has broken. The debate will now move on to how good or bad the housing market weather will be and whether the impact of COVID will pass or cause the climate of the UK housing market to change for good.