This week the Bank stalled for time, Gove set extra homework for Khan and sellers got over-excited while renters got relieved. Crest Nicholson got told off for submitting bad work and Banksy got excused for using up all the green paint. The cash-strapped board implemented increases to council tax, on the equally cash strapped owner occupiers, but hope for the next term increased as inflation slowed. Welcome to your weekly UK Property News Recap – 22.03.2024
Finsbury Park gets a Banksy
Finsbury Park was awash with Banksy fans post St Patrick’s Day, after the artist left his mark on a desolate wall next to an equally desolate tree, devoid of foliage. Now a toxic shade of Islington council green, the wall provides a backdrop for the tree, along with a paint-soaked girl brandishing a pressure sprayer, typically deployed to extinguish garden insects. In response, local residents of Hornsey road were both pleased and worried. The latter over fears rents would skyrocket as a result.
Rightmove HPI March 2024
Rightmove’s House Price Index for March suggests sellers have misinterpreted the 13% increase in sales and renewed buyer interest, up 8% on last year, by applying an average 1.5% increase on newly marketed asking prices this month.
Optimism was highest amongst those with bigger properties, who hoped to regain some of the value promised in 2022 after 2023 rates chipped away at their price. Sellers in this bracket increased their initial asking price by 2.9% on February listings. This misplaced confidence could lead to a drawn out marketing period, with numerous price reductions, before securing a buyer. This was demonstrated in the average time to agree a sale, currently sitting at 73 days in London and 71 out of the capital.
For those sellers hoping to agree to a sale, realism is best applied to asking prices when hoping to secure a buyer.
Marshalls’ end of year results
After a shocking 2023 for building merchant Marshalls, hopes for a more buoyant 2024 were dashed after it reported revenue in the first two months of the year was LOWER than 2023. Unperturbed, the board pinned their hopes on mid-to-long-term growth, based on the assumption “profit will now be at a similar level to 2023.” Clearly garden paths haven’t been the priority for homeowners while they struggle with the cost of living.
Lenders…again.
Now you see it, now you don’t. Lenders continue to play the magician, with lower rate offers disappearing before borrowers can master the trick. This has left many waiting for their return before paying for their ticket.
Gove vs Khan
Gove sets additional homework for the “current” London Mayor Sadiq Khan. Due in September, Gove has demanded a review of the London Plan which is to focus on the 736 hectares of industrial land which could be used for housing, but are stuck in the planning system. Alongside, 47 areas across London which have been identified as each typically having the potential to deliver at least 2,500 or 5,000 new jobs (or a combination of the two), but too many have made almost no progress and others appear to have plateaued.
Crest Nicholson share price wobbles
Crest Nicholson is paying for past mistakes. Shareholders are questioning if the £15m set aside to address building defects at four sites completed in 2019 is enough, and if potential other issues are yet to be uncovered, which could further dent returns. As a result, Crest Nicholson’s share price fell 9.1% to 203½p on Tuesday.
CPI vs OOH
Inflation has slowed but households are yet to feel any relief from being financially squashed and squeezed. CPIH inflation reduced to 3.8% in the 12 months to February 2024, down from 4.2% in January, which was largely driven by the downward effects of food and non-alcoholic beverages, restaurants and hotels. The owner occupiers’ housing (OOH) contribution however, rose from 0.86 to 0.95% points between January and February 2024. This was the largest contribution since January 2006 and a direct result due to the rise in rents and mortgages.
Zoopla Rental HPI
Over-extended affordability cools rental inflation but prices remain taut. Rental inflation slowed to 7.8%, down from 11% a year ago – the lowest rate for two years, making the average UK rent £1,223 per month according to Zoopla. London recorded the sharpest slowdown in rental inflation to just 5.1%, down from 15.3% a year ago, as demand receded 30% on last year while supply increased. Many renters are looking further afield while landlords look for new tenants who can afford the higher premium.
ONS – Private rent and house prices, UK: March 2024
The ONS, who continue to battle with their data lag, decided to merge their rental and house price indices for the first time this month. According to the current data, average rents increased 9% in the 12 months to February while average sale prices fell 0.6% in the 12 months to January. The largest annual house price falls were recorded in England (-1.5%), while Scotland (+4.8%) and Northern Ireland (+ 1.4%) continued to see prices rise. The North East had the largest annual and monthly falls at -3.1% and -1.7% respectively. Whereas, London made an impressive comeback, down -3.9% annually but up +2.5% on last month. This was echoed with rents too; the highest annual rent inflation spot going to London, prices up 10.6% while the North East was the lowest at 5.7%.
Council Tax Bills Increase
Cash strapped councils increase council taxes for the second year in a row to the maximum permitted while simultaneously reducing services. The Government, while keen to control the purse strings, puts the onus on councils so as not to further sully their already damaged reputation.
While the discrepancy between the amount paid by poorer areas in the north and richer areas grows.
The Base Rate Hold
The markets were keen to place their bets ahead of the Monetary Policies Committee’s vote on Thursday. Many were staking on three base rate cuts this year instead of the two previously forecast and the four before that….
Either way, the consensus to hold the base rate was strong – the MPC voting by a majority of 8–1 to maintain Bank Rate at 5.25% This will frustrate those tracking the base rate and penalise others who’ve been holding out for a rate change, once hoped for in spring, before remortgaging. Speculation is rife for June this year but a lot can happen in a few months.
Andrew Bailey signals Base Rate Cuts are incoming
Following the MPC vote on Thursday, Andrew Bailey stepped out to signal to the markets they are right to bet on more than one base rate cut this year but leaves them guessing as to when: “The fact that we have a curve that has CUTS in it for the year as a whole is not unreasonable to me.” He went on to claim the MPC are ready to move on policy; “all our meetings are in play. We take a fresh decision every time.” This will reassure some but will come too late for others.
And that concludes another UK property News Recap – 22.03.2024. Should you have any comments or suggestions, as ever, please get in touch here.
