This week seesawed between emotional and financial highs and lows. Hopes were high for lower interest rates but despite a base rate trim, swap rates rose. Harris was top trumped by the Con-Mander-In-Chief causing ripples in the UK of further inflationary pressure from tariffs imposed. As a result, New Year plans off the back of rate discounts were muted, leaving those unable to catch a “rung,” with no choice but to watch house prices continue to edge up. Welcome to another UK Property News Recap – 08.11.2024.
A 13-year prolonged cladding sentence
The cladding scandal looks set to haunt the living for another 13 years. As some developers & freeholders kick the can down the road by disputing responsibility or costs, those living with cladding are financially and physically drained.
The National Audit Office found that fixing all flats with flammable cladding will take until 2037, costing approximately £16.6 billion. “Of the 9,000 to 12,000 buildings over 11 metres that MHCLG estimates will need remediating, 4,771 buildings have been identified and included in its portfolio, leaving up to 60% of affected buildings still to be identified. Of those identified, remediation work has yet to start on half and has been completed on around a third. Of all the buildings that may be in scope, work has been completed on only 12–16%.”
Rightmove’s Commercial Insight
Rightmove’s new Quarterly Commercial Insights Tracker found demand to invest in commercial properties was up 11% overall and a whopping 34% for industrial properties compared with Q3 2023.
As conventional retail is evicted from our high streets, larger commercial spaces, on the outskirts of town, are being picked up to service consumers’ global interests.
Even the digital world needs a base to realise, produce, store and distribute from.
Base Rate Trim
The Monetary Policy Committee gathered again on Thursday and voted to trim down the UK base rate to 4.75%. This news may be good for those “tracking” it, but hopes of interest rates following suit were dashed as swap rates swung up following the budget. Fears of a resurgence in inflation are scuppering moves on the ladder and to a better fixed rate.
Currently, 2025 rates look less favourable than once was hoped, leaving many looking to the 2026 horizon for any significant reprieve.
Developer Persimmon’s costs rise along with sales
Persimmon’s road to recovery has moved forward; private forward sales for the developer increased by 40% to £1.45bn in the year to November 2024. Tickets to “buy” also rose, up 5% on this time last year to c.£291,400 with incentives ticking over, averaging around 4-5%. The outlook for the group remains “optimistic” for 2025 despite rising build costs and the rate of rate decline jitters.
Savills revisits house price forecasts
The discussion about when prices would have hit rock bottom in 2023 has about-turned to focus on the speed of their ascent and what obstacles could slow progress.
Savills updates its 5-year house price forecast with a sunnier outlook; predicting a 23.4% (£84k) increase in the average house price from now. In “real” terms this means house prices would only recover by the end of 2029 to their peak in 2022.
Without further rate reductions, affordability will remain an issue for those looking for a helping hand from the Government. As a result, the speed of house price growth will continue to divide, with prices rising in the North faster than those in the more expensive areas in the South.
S&P Global UK Construction Purchasing Managers’ Index
According to S&P Global UK Construction Purchasing Managers’ Index, the UK’s construction sector broke its 29-month high with output slowing from 57.2 in September to 54.3 in October 2024.
Civil engineering projects continued to perform well, powered by energy infrastructure projects but house building suffered under budget and rate uncertainty.
Halifax HPI October 2024
Against the cost of living and rate odds; average UK house prices, according to lender Halifax, increased 0.2% in October to £293,999 beating the previous peak set in June 2022 of £293,507. The increase in growth was again led by Northern Ireland and Scotland, the South trailing behind.
Taylor Wimpey makes up lost ground
Taylor Wimpey’s latest trading statement boasted of an increase in its net private sales rate from 0.48 in 2023 to 0.68 in 2024. Looking ahead, their aim of building 9,500 to 10,000 homes is on target and their outlook optimistic; the value of their orders is up c.£2.2 billion (2023: c.£1.9 billion), while their total order book excluding joint ventures is down to 7,716 homes (2023: 7,042).
Right to Buy reworked
Angela Rayner has hinted that new council housing in England may be removed from the Right to Buy scheme so they don’t lose the new stock as well as the old. This, along with plans to reduce the discounts offered, may put the dream of homeownership on ice but it will at least give more people a roof over their heads.
Rightmove continues to move on up
Rightmove’s generous operating margin of 70% takes a one-off £10m hit. Yet, the company remains set for 7-8% growth this year, approx £390m, despite membership numbers only growing by 1% as opposed to their previous guidance of 2%.
Estate Agents and New Homes, keen to get maximum exposure for their stock and boost their listing advantage, are spending, on average, an additional £85-95 more than last year.
Vistry Group’s Southern division continues to be a drag on the business
Undercosting and a slower market down south take their toll on revenue; the profit impact of the issues in this Division has caused a £165m dent to the company’s bottom line.
The Group now expects to deliver an adjusted profit before tax in FY24 of c. £300m.
And that concludes another UK Property News Recap – 08.11.2024. If you have any comments or suggestions, please get in touch here
