This week, rates held firm, asking prices wobbled, rents were forthright and targets appeared movable. Welcome to another UK Property News Recap – 20.12.2024
Making 1.5m new homes possible
Labour’s ambitious housing targets came up against a lot of pessimism from councillors, claiming they weren’t scared of direct control from the government should they not make their housing targets. Asserting this was merely lip service to appease the voting public if building them was always unachievable.
To enable local authorities, they were given the power to use CPOs without government sign-off, on derelict sites. This would allow them to purchase land at a discount to enable affordable housing.
For those who “invested” in the long term, they may find themselves short-changed, which could result in a series of lengthy court cases.
This mechanism to facilitate Labour’s aspiring housing target was offset by news that new homes’ sign-off times were taking twice as long as expected, adding to developer loan costs and delivery times.
Rightmove Christmas Asking Prices
Sellers hoped pre-Christmas discounted prices might attract buyers otherwise shopping elsewhere for others. New seller asking prices dropped 1.7% (-£6,395) in December 2024 to £360,197.
As the New Year beckons, the door to making the stamp duty threshold begins to close; as a result, first time buyer activity in higher-priced areas remains active while the top of the market continues to struggle to gain traction.
Despite the seasonal fall, asking prices remained 1.4% up on this time last year and looking through the 2025 “portal,” Rightmove predicts prices to rise 4% throughout 2025…rates permitting.
Developer Persimmon tots up the latest outgoings
Persimmon’s boss claimed planning reform is welcomed and remedial work essential but targets remain out of range, amid bitterness towards the actual cladding manufacturers who are yet to pay a penny.
When adding up the latest developer outgoings:
-Remedial work to existing buildings
-Residential property developer tax
-4% corporation tax surcharge on profits above £25m
-National Insurance hike
-Cladding levy on all new homes
The motivation to build more when making less was slim.
Nationwide predicts house prices to edge up in 2025
Relative to the year before, 2024 rates enabled more buyers to move while others remained constrained. House price growth was driven by increases at the bottom of the residential and buy-to-let market. First-time buyers pushed to get out of their rental and cash investors looked for a good return. Moving forward, lender Nationwide anticipates prices to continue to edge up by 2-4%, despite a market lull, post the stamp duty increase. All will hinge on rates, any further falls providing a much needed boost for buyers so long as prices remain stable.
UK Finance housing and mortgage market forecasts for 2025
After a surprisingly resilient 2024, UK Finance’s outlook for 2025 was one of gradual improvement in mortgage affordability, feeding into market growth. As interest rates slowly tick down, they expect arrears to continue to fall, with tailored forbearance helping those who need it. In the buy-to-let market, purchase activity is expected to contract modestly by 7% to £9 billion in 2025 as a result of the increase in stamp duty and legislative changes.
Mortgage rate cuts
Lenders trying to make those end-of-year mortgage targets tried to attract last-minute buyers by dropping rates this week but most will wait for the new year rate sale before committing.
Lender rate cuts last week:
Santander cut by up to 0.23pc
Natwest cut by up to 0.39pc
Barclays cut by up to 0.14pc
This made the average mortgage rate for fixed residential products 5.46% and the average five year fixed 5.23%.
A flood of insurance claims
The Environmental Agency released an updated analysis that showed 1 in 4 properties would be affected by flooding by 2050. The greatest threat is expected from flash floods which now threaten 4.6mn properties, a 43% increase on the 2018 assessment.
As a result, expect insurance premiums to soar and some homes to be deemed uninsurable.
The rate of change
The “rate” of change come New Year looks restrained. Wage growth data released this week showed a 5.2% increase, excluding bonuses, while inflation data reported a rise to 2.6% in the year to November up from 2.3% in October. The increase, though expected due to higher energy prices and service inflation, will keep the base rate steady aided by a Trump presidency. This will scupper hopes of more progressive interest rate cuts for buyers and existing borrowers facing remortgaging.
Buyer smells government desperation and makes a killing from those who are supposed to defend us
This week a deal was agreed between the government and billionaire Guy Hands to buy back stock that should never have been sold.
In 1996 the government held a flash sale, selling 55 military homes at a discount (£1.7bn). They then rented back the properties, for reduced rents for 25 years, while also agreeing to pay to maintain the properties.
The government was then made aware by the National Audit Office in 2018 of the shocking return on taxpayers money (£4.2bn loss) leading to this week’s agreement to buy back 36,347 properties for £6bn.
Prime Central London property sales fall
Higher taxation caused prime property prices and stock levels in central London to fall. Data from Savills showed residential sales above £5m tumbled 23% in the first three quarters from the same period a year earlier.
House prices move up
The ONS’s latest house price index for October showed the average UK house price increased 0.5% from September to October 2024 making the average house now worth £292,000, £10,000 higher than 12 months ago. Growth was predominately led by the North, leaving southern regions for dust.
Average house prices in the 12 months to October 2024:
England up 3.0% to £309,000
Wales up 4.0% to £222,000
Scotland up 5.6% to £197,000
Northern Ireland up 6.2% in the year to Q3 (Jul to Sep) 2024 to £191,000
No rental reprieve just further growth in an already strained market
Average UK private rents increased by 9.1% in the 12 months to November 2024, up from 8.7% in the 12 months to October 2024.
Average rent for England was up 0.5% on the previous month to £1,362 in November 2024 = a 9.3% increase from a year earlier.
The average rent for Wales was up 0.1% on the previous month to £772 in November 2024 = an 8.0% increase from a year earlier.
The average rent for Scotland was £980 in November 2024, up 6.5% from a year earlier. Annually though the rise was down 0.1% on the previous month
Councils were given additional funding
The Government released £1bn in funding to deal with and prevent homelessness. In reality, they were topping up existing funds by an additional £233m which will help prevent and pay extortionate temporary housing rents due to the lack of affordable housing.
The MPC hold firm
Growth, inflationary pressures post-budget, geopolitical tensions and trade policy uncertainty left 6 of the 9 members of the MPC sitting on their hands, maintaining the Bank Rate at 4.75% on Thursday.
It’s clear that monetary policy will remain restrictive until inflation stabilises to the 2% target, leaving many unable to move till the bank does first.
Top of Sadiq Khan’s Christmas list: a money awareness course
GLA Land and Property (GLAP) Limited, the London mayor’s property development vehicle, was reported to have repeatedly missed payment deadlines on their loan over the past six years, only making its first payment this year. The auditors’ report from this year said some management improvements had been made, including the TAKING OF MINUTES.
(There are no words)
And that concludes another UK Property News Recap – 20.12.2024. If you have any comments or suggestions, please get in touch here
