Slightly later than planned, last week’s UK property news recap, was full of politics, forecasts and spats. Soaps are progressively looking more probable and optimistic against the current drama unfolding in our day to day lives. Welcome to another update on everything UK property related.

 

The Labour Party Conference

The labour party conference decided to fill the void the conservative conference left on housing with a plethora of promises to bulldoze through the nimbys objections, tightening UK’s green and pleasant scrublands. 

 

Rachel Reeves and Angela Rayner peppered their speeches with tantalising morsels on housing to get the crowd salivating in time for Keir Starmer’s, main stage appearance.  Some housing policies landed better than others – Reeves promised discounted bills if you live next to offshore wind farms and pylons which I doubt will “charge” anyone up. While Rayner left a bitter aftertaste with an otherwise encouraged crowd of developers, when she alluded to “accountability and responsibility.”   

 

The list of housing promises was extensive and included but wasn’t limited to: 1.5m houses, with emphasis on 50% being social and affordable accommodation, first dibs to first timers in new developments, increased stamp duty on foreigners and new towns built by state backed development companies with CPO powers. To accommodate the extra housing needed, greenbelt lines would be redrawn. Meanwhile, the reams of red tape currently leaving many developers in a holding pattern with no scheduled build times, would be ceremoniously cut enabling foundations to be laid. Passports would be issued for approved developers to build on brownfield sites and a mortgage guarantee scheme introduced to help buyers on the ladder.

 

Whilst new housing is much needed, the reality is that none of this will be visible for years to come and there is the small issue of builders. Without more of them, these election promises may be hard to deliver on.

 

IMF forecast scrap

Mid-week the IMF released its World Economic Outlook Report which predicted the UK was likely to have the weakest growth of the G7 next year, and interest rates would peak at 6%, staying higher for longer…5 years longer. This provoked the Bank of England to dispute their calculations and figures saying they hadn’t accounted for recent falls in rates. The IMF defended their position causing the Bank of England to adopt their best playground voice, retorting – their previous growth predictions were wrong so why should anyone believe them now!

 

The Bank Of England

The Bank of England, keen to assert their status, released information in their Systemic Risk survey that reported surveyors  concern’s  around inflation & cyber attacks being at the forefront of their minds. This came alongside another release about the uptake of 35 year mortgages; from 4% in the first quarter of 2021 to 12% in the 3 months to the end of June. This is hardly surprising given current affordability issues but does expose a lot of borrowers to increased debt payments over the long term.

In the Credit Condition Survey there was further doom laden news with Q3 showing demand for mortgage lending to continue to wane and further defaults expected over the winter season. 

 

                                                           

Travis Perkins

Building merchant Travis Perkins operating forecast profits for the year continued to spiral downward from £240mn in August to between £175mn & £195mn, which reminds me of Estate agents pricing in regions of…guess where the offers generally land. The problem here is if no one can afford to buy, build or renovate, prices tumble on property, commodities and construction shares. 

This was also reflected in the ONS’s August 2023 construction output release, which reported a 0.5% decrease in volume terms,  largely driven by  a -1.5% drop in new work. 

For private commercial and new housing sectors, it was a particularly damp summer decreasing 4.1% & 1.4%, respectively. Construction taking timeout along with buyers.

 

RICS UK Residential Survey 

Lastly there was the RICS monthly UK Residential Survey for September 2023  which showed sales volumes remain in the doldrums but there is tepid optimism for improvement past a stagnant Christmas. Meanwhile national house prices continue to decline but at a slower pace over the next 12 months. However the rental outlook remains grim with surveyors forecasting further growth over the next year, averaging 5% nationally, as a result of the persistent demand & supply imbalance.

 

                                             

 

And that concluded another UK property news recap.

 

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