This week was a tough week for all. Inflation increased along with rates which had a knock on effect on asking prices and first timers’ hopes of escaping the rental market, where prices also rose. In the Labour camp, Rachel Reeves’s past creative skills got her in trouble, causing some to question her sums, while Matthew Pennycook was forced to admit Labour’s self-imposed housing target was “incredibly stretching.” Making up for the other two, Angela Rayner launched a consultation to amend Right to Buy, and leaseholders got a timeline, albeit vague, on when reform could be expected. Welcome to another UK Property News Recap – 22.11.2024
Asking prices fall in October for those looking to make the Rightmove
Those who were optimistic that 2024 would end on a high are now looking to 2025 for a rate change. As a result, despite stock levels increasing, up 6%, and agreed sales also rising 26% when compared with the same period last year, average ASKING prices skidded in October according to Rightmove’s latest HPI. They fell by an average 1.4% (-£5,366) to £366,592, which is a larger drop than is typical for the month but comes as a direct result of creeping rates and budget uncertainty.
For those at the top of the ladder, sellers made the biggest monthly “adjustment” by reducing asking prices by an average of 3.3% to close a deal.
Non-dom regime end, eats away at Stamp Duty gains
Rate uncertainty has confounded buyers and sellers looking to move on.
Despite it generally affecting those lower down the ladder, those at the top are also taking a hit from tax increases and the end of the non-dom regime. This estate agency Knight Frank have estimated resulted in “a shortfall of 107 deals between £5m and £10m and 35 transactions above £10m, leading to the theoretical loss in stamp duty revenue of just over £140m.”
Developers spread the financial risk
Despite Barratt and Redrow’s recent union, the development group opted to spread the risk further by onboarding Persimmon for a new site in Wiltshire that could develop 2,500 homes.
Mortgage rates creep further up
While you slept, rates crept up over the course of the week. At the start of the week, the average 2-year fixed residential mortgage rate was 5.51%; by Friday, it was 5.54%.
The average 5-year fixed residential mortgage rate also increased from 5.23% to 5.28%
Today, the average 2-year rate is higher than it was last year. As a result, eyes turn defeated to the New Year.
Inflation burst hopes for rate cuts
Gas and electricity rises fanned inflation causing the CPI index to rise by 2.3% in the 12 months to October. Owner occupier housing costs and rents continued to squeeze budgets, freezing the base rate and potentially, in the short term, further stoking interest rate rises. This stomped on movers’ and borrowers’ hopes of a more affordable fixed rate.
Average house prices continued to rise in September
According to the latest ONS figures, average house prices rose by 2.9%, to £292,000, in the 12 months to September 2024 but on a monthly basis, prices fell, on average, by -0.3% when compared to August 2024 levels.
Yorkshire and Humber was the worst hit, with prices down -1.7% closely followed by Scotland and London. Budget concerns this month began to cause house price jitters.
Rents continued to rise
Average UK private rents rose from 8.4% in September to 8.7% in the 12 months to October 2024.
The largest annual increase to October 2024 was in England up 8.8%, followed by Wales, up 7.9% and Scotland, up 6.6%. However, Northern Ireland top-trumped them all, increasing 9.0% in the year to August 2024.
Higher rates hit Crest Nicolson’s bottom line
Crest Nicholson’s updated trading statement showed the group’s adjusted profit before tax is now expected to be at the lower end of the guidance range of £22m – £29m, due to sales, predominantly being driven by affordable homes.
Overall the group’s sales rate was reported to be down on 2023 levels, 0.52 vs 0.48 in 2024, but in the last 10 weeks, activity picked up increasing the sales rate to 0.53. This was potentially led by first-time buyers looking to get a move on before the stamp duty threshold increases at the end of March 2025.
British Land turns a Retail Park Profit
British Land turned a £61m loss in 2023 to click and collect a £109m profit for the six months to the end of September as a result of an increase in rents at their retail parks, which rose by 3.7% between April and September. This offset losses in other areas of the group’s portfolio, which didn’t perform as well, namely offices and inner city warehouses.
Angela Rayner announces consultation on Right to Buy
New proposals around the Right to Buy include:
– Tenants to wait 10 years before they can buy old social housing stock
– New social housing stock to be protected for 30 years
– Discounts to revert to pre-2012 levels
– Discounts to be paid back if the property is sold within 10ys
The consultation concludes on the 15th of January 2025.
COO Earl Sibley gets pushed out of Vistry
A £165m miscalculation on southern development sites at Vistry, which resulted in the group’s share price halving in the past 6 weeks, has meant that COO Earl Sibley, who has worked for Vistry since 2015, is hanging up his hard hat, giving CEO Greg Fitzgerald complete control
Housing targets prove easier said than done
Minister of State for Housing and Planning, Matthew Pennycook, admitted to the Commons’ committee for housing, communities & local government, that the government’s plans to deliver its housing target of 1.5m homes was ‘incredibly stretching’. Blame was laid at the Conservative’s door but unfortunately, until rates shift and more planning officers and builders are found this target will be hard to hit.
Savills takes a look at the rental forecast
According to Savills, while demand continues to outweigh supply, rents will increase by 4% outside of London, where affordability thresholds have yet to be breached, in 2025. However, in the capital, rental growth will be less pronounced but continue to tentatively push boundaries, increasing by 2.5%.
This is due to tenants in London already struggling to manage on their wage leftovers after rent payments.
Leasehold Reform Timetable
The Ministry of Housing, Communities and Local Government outlined a table of events for Leasehold Reform but some key elements remain sketchy.
January – Government to bring forward the Leasehold and Freehold Reform Act – so leaseholders won’t have to wait two years after the point of purchase before exercising their right to extend their lease or buy their freehold.
Spring – Expand access and reform the cost rules and voting rights where leaseholders claim the ‘Right to Manage’
2025 Consultations – i.e. actionable date… unknown:
– New marriage value rates. This has been hanging over sellers who have waited, often too long, in the hope this will be significantly reduced.
Giving homeowners the ability to extend quicker is a positive step, but no one will take it if they think they could pay less in a few months. Some unable to wait any longer for fear of jeopardising a sale will pay more due to this inaction.
– Managing agents will need a mandatory professional qualification. This will take time – agents will need to find time out of work to train and sit exams.
– New consumer protection provisions for Freehold Estate charges and the right to challenge. This still needs to be set out.
UK Construction Statistics, 2023
Private commercial, private infrastructure and public new work boosted the value of construction new work by 4.2% to a record high of £139,029 million in the UK in 2023. The only sector to decrease was private new housing which fell by 8.4% (£4,224 million).
At the same time, new construction orders fell by 16.0% in 2023 to £67,885 million. The only sector that increased was public housing. This 27.3% “affordable” uplift demonstrates which sector remains viable in the current economic environment.
And that concludes another UK Property News Recap – 22.11.2024. If you have any comments or suggestions, please get in touch here
