This week rates thawed under the heat, developers faced a lot of heat and annual house pricing inflation took some heat. Construction company Sig’s profits couldn’t stand up against the base rate heat and Rightmove turned up the heat on the incoming government by demanding green incentives. Welcome to another UK Property News Recap – 28.06.2024
Developers pay themselves first
On Monday, The Times revealed that nine of the largest developers had awarded themselves a total of £789.1 million, 28% more than the £617.3 million their companies have spent on fixing fire-risk flats they had built.
Britain’s biggest developers demonstrated their priorities by investing in themselves but not in the safety of others, which they were responsible for putting at risk.
Rightmove Survey – first-time buyer home values and mortgages increase
A stamp duty holiday off the back of a pandemic drove prices up across the country, notably in areas that offered more space for less money. As interest rates rocketed, first-time buyers continued to look further afield to afford the 61% increase in mortgage payments due to the average 80% Loan-To-Value mortgage increasing from 2.24% to 5.09%. The result; the value of the average first-time buyer home has risen 19% since 2019: by 33% in the North West but only 6% in London, where prices are highest.
SIG couldn’t insulate their profits from base rate rises
SIG, a pan-European provider of specialist construction and insulation products, saw their profits dwindle as long-awaited base cuts stalled sales, notably in the French and German markets and the end markets of their UK Interiors business. The result: an H1 2024 LFL sales decline of c7%, and an underlying operating profit in the range of £10m-£12m, putting their full year 2024 underlying operating profit in the range of £20m-£30m, which is below the current analyst range.
Barclay, HSBC and Mpowered
Barclays was first out the gates to announce a reduction to its two and five-year mortgage fixed-rate deals, then lender Mpowered followed with HSBC nipping at their heels. After weeks of rate rises, lenders have enough room to enable rate trims to encourage buyers to borrow with them and not the opposition. As and when the base rate gets cut, so too will interest rates, providing long-awaited relief to those needing to remortgage or get on the ladder.
The Vatican’s day in Court
Raffaele Mincione sold the Harrods depository at 60 Sloane Avenue in Chelsea to the Vatican for £275m. When they later came to sell it they found that it wasn’t worth what they paid for it, selling it at a £95m loss. This resulted in the Vatican sentencing Mr Mincione to 5 years in prison for giving “a clear, unambiguous and false representation of the market value of the property” Now Mr Mincione is looking to appeal this in a UK court, claiming that he acted in good faith.
No one likes losing money and if there is someone else you can blame for it….God is watching….
Housing shortage is most acute in Britain’s most populated south
Bloomberg did some digging into new home completions using ONS and the Department for Levelling Up, Housing and Communities data to show that just one new home was built for every 10 extra people in the population from 2011 to 2021. As a result, they concluded that the “next government will need to build the equivalent of another city the size of London to make up for five decades of below-target construction.
Rightmove calls on Government to incentives homeowners to go green
Rightmove conducted a survey that showed 87% of renters and 83% of homeowners wanted to upgrade their homes to make them more energy efficient but the current cost of implementing this is prohibiting change. Due to this, Rightmove has called on the incoming government to “incentivise” homeowners and renters to upgrade their homes so they are more energy efficient, with the aid of government funding.
Saving money in the long term by spending in the short term makes sense…if you have the money.
The Bank of England warns homeowners of mortgage pain
According to the Bank of England, 3 million have, to date, been lucky enough to avoid the interest rate squeeze but by 2026 they will have realised others’ pain but to a lesser extent if base cuts are forthcoming.
Zoopla UK House Price Index June 2024
Rate increases and election speculation didn’t manage to dent house prices as much as anticipated, only slow the rate of sales. According to Zoopla’s HPI, annual house price inflation remained flat in May 2024 but they predict prices to increase by 1.5% by the end of the year, and the volume of sales to tick up to 1.1 million if the “base” kicks in.
Growth is being driven by the north of the country where prices are more affordable while the south, under the current weight of lending, continues to struggle to achieve asking, causing asking prices to reduce.
Those who can still afford to buy are pressing ahead as others wait for “change” to give them the “freedom to buy” improving affordability.
GDP quarterly accounts Q1 2024 show a return to growth
Scientific and technical services along with transport and storage boosted growth but construction lagged as new work was sidelined in favour of maintenance and repairs. GDP is estimated to have increased by 0.3% in Quarter 1 2024 compared with the same quarter a year ago. Services increased by 0.8% and production by 0.6% while the construction sector fell by 0.6%. Household savings & disposable income also grew by 11.1% & 0.7% respectively.
And that concludes another UK Property News Recap – 28.06.2024. If you have any questions or comments please get in touch here.
