This week was centred around the impact the base rate is having. Housing targets have fallen short as developers stall delivery until borrowing is cheaper for both them and potential buyers. Hopes for an early base rate cut in May came and went, replacing new year optimism with scepticism as lenders backtracked on deals, causing prices to stagnate just as sellers came out of their 2023 retreat. Welcome to another UK Property News Recap – 10.05.2024.
Halifax HPI – April 2024
Halifax house price index for April claimed the typical price of a UK home rose 0.1% on last month to £288,949. Annually, house price growth was up 1.1% but this was largely due to weak growth the year before.
Pulling up the annual average, Ireland led the charge increasing 3.4% on last year, followed by North west regions at +3.3%, Scotland at +1.5%, and Wales +1.1%. Pulling the index back was the south of England and east England which fell -1.1% under continued strained affordability issues.
S&P Global UK Construction Survey April 2024
In S&P Global UK Construction Purchasing Managers’ Index for April, accessibility to materials lead to shortened lead times – boosting civil engineering, new business and even commercial output. However the rate of decline for house building was the steepest since January 2024 due to continued rate uncertainty, stalling the market.
Rightmove trading update
Rightmove, who claims 80% of all consumer time spent on UK property portals is dedicated to their site, found that despite a bumpy 2023 membership was up as a result of a strong lettings market. Their underlying operating margin remained at 70% and expectations are for a better UK property market in 2024 than in 2023.
Savills looks on the bright side
Savills revisited its November 2023 house price forecast to reflect, in their opinion, a more rosy outlook for the next five years. They now expect house prices to increase 2.5% this year and 21.6% by the end of 2028, on the back of interest rates falling at the end of this year into next. The path to growth will not be smooth though, as the market ebbs and flows depending on base rate speculation and action along with election pontification.
Purpose-built student accommodation (PBSA) investment boom
The PBSA sector is booming as investors keen to secure long term returns, averaging 7%, turn to student accommodation. Given the exodus of HMOs and private landlords, student accommodation is very much needed, yet the mod cons and amenities that providers are selling to parents will cost them more (each year) and create greater division between those students who can afford to live in the blocks and those who can’t.
BNP Paribas puts Strutt & Parker up for sale
BNP Paribas tries to flip Strutt & Parker after only 7 years. Rumours are circulating that Foxtons are considering a bid…to be continued.
The Lib Dems crunch UK Finance data on mortgages
The Lib Dems sat down with UK Finance data and calculated that by the end of mid- November, when the next election is expected, “868,000 households will be paying an extra £240 a month on average for their mortgage.”
The longer the Bank of England takes to cut rates, the more homeowners are forced to stick to their original lender at a higher rate for longer. This may have lenders rubbing their hands in glee but existing borrowers will be wringing their hands with worry.
Lender rate baton
The lender relay continues as HSBC and NatWest increase their mortgage costs, yet again, passing the lower interest rate baton to Barclays. It’s almost like they are all on the same team ….
RICS Residential Survey April 2024
The Rics Residential Survey showed sellers arriving late to the party just as buyers take 5, Recent rate increases have curtailed some New Year resolutions to move till the “base” kicks in.
As a result, surveyor expectations for transactions in the next 3 months were downbeat, dropping to -1, their lowest level since October 2023, yet upbeat for the next 12 months, albeit with less conviction than they had a month ago. The most affected areas command higher price tags, namely London and the south, which means properties here are likely to remain on the portal shelf for longer.
For the rental market, demand nationally has slumped along with landlord instructions, yet the stock imbalance will continue to drive rental growth, albeit at a slower rate.
Mrs Elphicke
Mrs Elphicke finds a new home in Labour but not all the Labour camp are happy.
Citing failure by the government to control our borders and hit housing targets, Mrs Elphicke hot footed it across to the other side.
The MP for Dover is known for her Elphicke-House report, which looked at how councils can help boost housing delivery and for founding the industry group the Housing Finance Institute, which seeks to unlock barriers to housing delivery. Keir Starmer clearly hopes to utilise her housing skills to his advantage, but many wonder at what cost to the team morale.
Base Rate stays at 5.25%
The decision by the Bank of England was hardly a surprise but the 7 to 2 vote was. Cuts may be on the cards, but the consensus was clearly not until labour market conditions, wage growth and services play ball. For those tracking the base rate or facing remortgaging, hopes are pinned on a downward shift that will enable a much-needed cut when the Monetary policy committee next meets in June.
New-build completions nosedive
New-build completions hit 212,570 in the year to March 2023. Estate agent Savills projects this will fall to 201,900 in the year to March 2024, and then to 160,000 over the coming year.
Struggling housing associations claim private funding debt is now too expensive, so have turned to the Government to plug the hole. The issue is their debt is just the same. Shaking the taxpayer money tree may temporarily plaster over the problem but it won’t solve the issue. Getting inflation stable and rates reduced, will. Until then, the harsh reality is the volume of house building till 2025 will be dismal no matter what any party says.
Technically the UK exits recession
GDP growth came in higher than the expected 0.4% at 0.6% in Q1. This lifted the UK out of its technical recession but left some wondering how this would affect summer base cut hopes after Andrew Bailey made positive noises on Thursday.
For construction, output remained dismal as bad weather and rates continued to impact the sector. Output was estimated to have decreased 0.4% in volume terms in March 2024; this came from decreases in both new work (0.7% fall) and repair and maintenance (0.1% fall). It was not helped by high rates and yet another wet month.
And that concludes another UK Property News Recap – 10.05.2024. Should you have any comments or suggestions, as ever, please get in touch here.
