Falling rates lift market activity but prices remain seasonally sticky. Barratt waves away the CMA dismissively to bask in their future turnover glory after consuming Redrow. HMRC interrupted any “Capital” getaways booked by Property118 leaving landlords no time to “stamp” a postcard home. Curtailing any further summer frivolity, Rachel Reeves promised social rent increases to afford the currently unaffordable. Welcome to another UK Property News Recap 23.08.2024.
Rightmove HPI August 2024
The housing market proved seasonally sticky in August; average asking prices fell -1.5% since July 2024 but remained up against last year by 0.8%. Buyers, distracted by the base rate cut, which chipped away at interest rates, broke away from their hols to contact estate agents about homes for sale. Enquiries since the 1st of August were up 19%, year-on-year, as opposed to 11% higher in July. Encouraged, some sellers expedited listing, hoping to secure a buyer before others joined for the autumn term; this increased listings by 5% on the same time last year. Given this change in momentum, Rightmove raised its 2024 asking price forecast from -1% to +1%, hopeful for a buoyant market to see in 2025.
Barratt merges with Redrow despite CMA
To reassure and eliminate doubt, Barratt waived a condition of the Competition and Markets Authority to complete its £2.5bn merger with Redrow this week, promising to smooth out any loss of competition issues in the Shropshire area. This sudden push is no doubt driven by the potential increase in turnover from £4.3bn to £7bn.
The UK leads in European commercial Real Estate Recovery
Across Europe, commercial real estate values fell by a quarter since their 2022 peak. According to Green Street, in the first half of the year, the UK outstripped France and Germany with a 1.4% gain and transaction volumes rose 7%, as they flatlined in continental Europe. Hotels, Warehouses and residential properties lead the recovery while offices, data centres and retail fell behind, continuing to shed their value.
Chancellor Rachel Reeves’s Social Rent Increases
Reeves giveth to councils and housing associations to encourage investment by taking more from tenants and taxpayers if housing benefits subsequently increase.
“Reeves intends to introduce a 10-year formula in October’s Budget that will increase annual social rents in England by the CPI measure of inflation — currently 2.2% — plus an additional 1 per cent, according to government insiders.”
HMRC investigates Property 118
HMRC’s distrust in Landlords who put their “trust” in Property118 could prove expensive. Property118 was served with a “stop notice” by HMRC which blocked further promotions of its schemes. This came alongside HMRC’s prior request to issue “reference numbers” to its arrangements. As a result of this action many landlords, who’ve previously used Property118 to advise them on how best to reduce or avoid their capital gain or stamp duty, are being pegged for investigation by HMRC.
More lenders drop their rates to attract business
Barclays, Halifax, HSBC and NatWest are among the lenders who followed Nationwide’s lead by offering five-year fixed-rate mortgages of under 4%. This has brought more buyers back to the market before the end of the summer, yet many first-timers must wait for further cuts.
Meanwhile, around 600,000 people are currently on an SVR rate; desperately hoping to “move” on, to move off it. Sellers, keen to bag a buyer to avoid remortgaging or capture better rates when they do.
The Parent Trap
New research from Zoopla revealed that over the past 5 years, two thirds (63%) of first time buyers had help from family members, with three quarters of this coming from parents. On average their contribution was £58,000 but surprisingly, sons received £13,000 more than daughters on average (£65k vs £51k)
First-time buyers who’ve received financial help from their parents feel a great sense of responsibility; they worry about losing their parents’ money on a bad investment (along with the parents!)
The financial imbalance could be due to some women feeling this burden more acutely, so displaying more hesitation and doubt. Given men tend to be overtly more confident, this potentially could instil more belief in the family provider that they are investing well.
Zoopla also revealed that those who receive financial help, tend to jump on the ladder six years earlier than others who need longer to save. This can also lead to guilt and embarrassment for some first-timers and division between friends which passes over time. Either way, the benefits far outweigh any emotional conflict.
Of the parents who contributed, around 50% wanted to have some involvement. Be it the choice of property, cost or how it’s decorated. This can lead to resentment from children trying to establish their independence. It’s hard for parents not to be involved as they will always be “invested” in their child’s well-being whether they want it or not.
Rightmove’s Weekly Mortgage Tracker
Rightmove’s Weekly Mortgage Tracker found interest rates had reduced at a leisurely pace after their intensive uphill hike:
The average 5-year fixed mortgage rate is now 4.76%, down from 5.69% a year ago
The average 2-year fixed mortgage rate is now 5.12%, down from 6.31% a year ago
The average 85% LTV 5-year fixed mortgage rate is now 4.82%, down from 5.71% a year ago
The average 60% LTV 5-year fixed mortgage rate is now 4.03%, down from 5.31% a year ago
“The average monthly mortgage payment on a typical first-time buyer type property when taking out an average five-year fixed, 85% LTV mortgage, is now £1,109 per month, down from £1,191 per month a year ago”
The £82 saving, unsurprisingly, isn’t quite doing it for first-timers.
Labours new intake of Landlords
The FT found that in the last parliament Labour had 18 landlord MPs and the Conservatives had 83. Since taking power in July, Labour more than doubled its presence. The parties new backbenchers total 44, which equates to 11% of its 404 MPs, while the Tory party has 28 — a quarter of its 121 MPs. The Liberal Democrats have eight among their 72 MPs.
And that concludes another UK Property News Recap -23.08.2024. If you have any comments or suggestions, please get in touch here.
