Labour’s plans to boost housing increased overall optimism among developers and lenders who’ve struggled to drum up business over August despite their various discounted offerings. Rayner’s enthusiasm to release her new Taskforce on wayward planning councils is applaudable, but those who continue to live surrounded by cladding would prefer her focus was on those at risk first. Welcome to another UK Property News Recap – 30.08.2024.
Hamptons find first-timers made up 48% of buyers in the city in the first half of the year.
The Capital reclaims first-time buyers as rates get trimmed. In the same way the office has clawed back remote workers, so London has reclaimed the young keen to make their way up the career ladder.
First-timers made up 48% of buyers in the city between January and June, up from 41% in 2023, but it cost them £39,360 more than last year on an average spend of £443,550 according to Hamptons.
Fire in Dagenham residential block of flats
Data this week revealed that work to remove dangerous cladding had started at 50% of the buildings, but only 29% of them had been completed, with 2,331 blocks still waiting for work to begin.
Given the fire this week that broke out in a residential block of flats in Dagenham, where work had been underway to remove non-compliant cladding on the flats, the scale of the numbers only highlighted the many who remain at risk.
Passing the “clad”-wrapped parcel, rather than unwrapping it, is paramount to preserving lives. Developers are stalling remediation works, hoping for revenue from new homes to foot their cladding bill rather than dipping into their 2023/24 downbeat profits. Given their overall “optimism” for 2025, there’s no excuse or ever has been not to start work. The music stops with them.
UK banks look to future lending with optimism
Three residential development finance lenders expressed optimism to Bloomberg for future lending due to Labour’s plans to boost housing. Despite this, the turnaround will be sluggish until the government’s promises of planning reform and additional planning officers are fulfilled. Implementation will take time, and all planning remains vulnerable to any upward shift in interest rates, but once underway development investment will gain momentum.
The reintroduction of mandatory targets has helped provide certainty to developers but initial investment will be focused on developments that guarantee consistent returns (Build-to-rent & student accommodation) before addressing the wider housing black hole.
Knight Frank Housing Forecast
Knight Frank clung steadfastly to its Housing Forecast from three months ago, but this resolve could shift after October‘s budget. PCL markets have suffered due to changes to non-dom taxation and VAT payable on school fees. Uncertainty around further increases to CGT, Inheritance tax and Pension tax is hitting prices and stalling transactions until Labour clarifies its position.
Meanwhile, Prime Country continues to struggle to ignite the same post-pandemic frenzy with increased interest rates while POL and Greater London strengthen as they offer more for less while remaining connected.
Zoopla HPI August 2024
Zoopla HPI August 2024 found that average UK house prices rose by 1.4% since the beginning of the year and are on track to be 2.5% higher over 2024.
As demand picks up and more stock hits the shelves, sellers shouldn’t “give it a go” at a higher price in the first instance unless prepared to not only lose money but time as well.
This is due to 1 in 5 homes listed for sale in August having to reduce their asking price by 5% or more to attract buyer interest. This increased the time it took to agree a sale by 73 days. Whereas for sellers who priced it right from the off, a sale was agreed within an average of 28 days.
Film studio goes again now Labour are in power
The developer behind the Marlow Film Studio development is “going again” after their planning application for a £750mn film studio “based in a former quarry and landfill site next to a motorway outside the town of Marlow” was blocked by the local authority, due to concerns over “the area’s road network and the use of greenbelt land for development.” The developer hopes that this “take” will be in the can, now Labour are in power.
Angela Rayner’s Planning Taskforce
Rayner’s planning “A-Team”, the “taskforce”, will be designed to respond to developers’ distress calls from sites that’ve been bogged down by restrictions or delays caused by understaffed council departments. This, Labour hope, will clear the backlog and enable them to hit their 300,000 new homes target but progress will continue to be sluggish until affordability for buyers and investors improves.
UK house-building starts fall 34%
Kick-starting planning is one thing but if there isn’t the money…According to the latest ONS figures, house-building starts fell 34% from 44,940 in 2023 last year to 29,820 this year.
Across the United Kingdom, the number of new dwellings completed in the first quarter of 2024 was down 17% year on year, to 38,400 units, compared to 46,440 in the first quarter of 2023.
In England alone, Q1 2024 completions were down 15% from 37,160 last year to 31,670 and new starts were down 39% at 23,730, compared to 38,610 in Q1 2023.
Rightmove’s weekly mortgage tracker – 28th August
The average monthly mortgage payment for a typical first-time buyer, with a 20% deposit, spread over 30 years, is now £949, compared with £1,096 in July 2023, a saving of nearly £150 (£147), or 13%.
This moderate saving is offset by an increase in the value of a typical first-time buyer home which increased from £225,552 in July 2023, to £227,191 today.
Lender desperation to draw buyers back to the market, after a slow summer, resulted in rate adjustments making the average 5-year fixed, 80% Loan-to-Value mortgage rate 4.76%, compared with 6.12% in July 2023
The Lloyds bank group raises borrowing limit
The Lloyds bank group, which includes Halifax brands, will allow new buyers, with an annual household income of at least £50,000 and a minimum deposit of 10%, to take out loans worth up to 5.5 times their household annual income to boost lending for those struggling to reach. Other lenders could mimic this move to increase business but it could leave buyers at the risk of over-extending themselves.
Nationwide HPI August 2024
In Nationwide’s House Price Index; August stripped back 0.2% from UK house prices compared with July, but the annual rate of house price growth was up 2.4% year-on-year. Despite this, prices are still around 3% below the sizzling peaks achieved in the summer of 2022.
As buyers and sellers return from their holidays, lower rates and increased borrowing thresholds could see prices regain some weight by winter.
And that concludes another UK Property News Recap – 30.08.2024. If you have any comments or suggestions, please get in touch here.
