This week comprised a cacophony of sound bites that led to a disappointing yet somewhat predictable crescendo with the Bank of England holding the base rate at 5.25%. Politicians continued to attempt to outsing the other side with their repetitive policy choruses while house price indexes reflected on the past. Welcome to your weekly UK Property Recap – 21.06.2024.
Rightmove’s ASKING price Index – June 2024
In Rightmove’s HPI for June 2024 it was clear base cut delays had reined in sellers in more expensive areas from asking for more while more affordable areas pushed ahead.
The result; average ASKING prices remain flat at £375,110 (-0.0%) with first-time buyer prices falling the furthest, down -0.1% as a result of recent mortgage rate increases further squeezing affordability.
China’s sinking property market
China released figures from the National Bureau of Statistics on Monday which showed values of existing homes dropped 1% on the previous month and annually -4.3% on new-home prices and -7.5% on used-home values. The Government’s current bail-out measures are not going far enough to plug the financial black hole they are in.
Planning applications called in by the secretary of state plummet
As a result of the Government tiptoeing around the NIMBY vote, development has been restricted. By looking the other way they have helped facilitate the current housing crisis they claim they can now solve by expanding urban development despite the numbers not stacking up.
Bloomberg explains:
“Since the 2010-11 financial year when the Conservatives took power, the number of applications called in annually by the secretary of state has plunged 69%, while recovered decisions have more than halved.”
E.Surv HPI for May 2024
What a difference a year makes. In E.Surv’s HPI for May 2024, it was clear the north had continued to hold its own, house prices remaining largely stable, while the south had suffered a series of cuts in an attempt to enable struggling buyers to reach their goal.
Reform released its UK’s ‘housing’ contract
Terms set out below:
– Fast track planning and ‘loose fit planning’
– Incentivise developers to build on brownfield sites
– Social housing prioritised for ‘locals.’
– Scrap section 24 – restore landlords’ rights to deduct finance costs and mortgage interest from tax on rental income.
– Abolish the Renters reform bill in favour of increasing the monitoring, appeals and enforcement process for renters with grievances.
– Enforce Section 106 agreements.
– Ensure it is cheaper and easier to extend leases to 990 years and buy freeholds.
– Incentivise innovation to speed up building
Warrington Council loses credit rating
Missing audits leave Moody no choice but to withdraw the indebted Warrington Council’s credit rating, making it harder for the cash-strapped council to borrow unless they find an alternative credit rating from another EU agency that believes the excuses.
Owner Occupiers’ Housing Cost – ONS
Inflation may have slowed to 2% but the owner occupiers’ housing costs component of CPIH rose by 6.7% in the 12 months to May 2024, up from 6.6% in the 12 months to April. On a month-by-month basis; Council tax remained static but rents and OOH costs increased to 0.44% & 1.06% respectively from 0.43% & 1.04% in April 2024, further squeezing household budgets.
Private rent and house prices, UK: June 2024
In the ONS private rent and house price index for June, average rental inflation eased in England and Scotland annually, but Wales continued to be squeezed – rental inflation increased from 8.2% in April to 8.5% in May 2024 as opposed to a decrease in England, 8.9% to 8.6% & 10% to 9.3% in Scotland.
Overall though, average UK private rental price rises slowed from 8.9% in the 12 months to April 2024 down to 8.7% in the 12 months to May 2024.
UK House Price Index: report April 2024
UK house prices, back in April 2024, showed sellers got a boost before mortgage rates crept back up again. The average UK house price increased 1.1% to £281,000 in April 2024, £3,000 more than the year before.
Monthly, overall prices rose 0.3% but in Wales, Yorkshire and Humber, April 2024 wasn’t a good month. Prices in Wales slid down -2.1% on March’s figures, where incidentally rental prices were up, and -1.4% in Yorkshire and Humber.
Average house prices in the 12 months to April 2024:
England up 0.6% to £298,000
Wales up 0.4% to £208,000
Scotland up 4.5% to £190,000
Northern Ireland up 4.0% in Q1 to £178,000
Local Authority Funding for Housing goes begging
Resolution Foundation, the think tank, noted that “back in the 1970s, local authorities and housing associations played a crucial role in building new houses. They contributed 45% of all new homes built, however, neither political party has committed any extra funding to boost housebuilding numbers, which will make it difficult to reach the target.”
And neither can they when they can barely afford to keep the lights on.
Interest rates movers and shakers
First out of the big lender gates was NatWest who planned to cut up to 0.17 percentage points for those remortgagers opting for a five-year fix on Thursday making their leading rate 4.41pc. Other smaller banks have already made similar moves earlier in the week with further expected to follow suit as swap rate margins improve.
Berkeley turns part-time landlord
High interest rates played Pac-Man with developer Berkeley’s net reservation value. A third was consumed off the previous year’s figures leaving the developer to invest in themselves by becoming a landlord. Identifying around 4,000 homes across 17 of its sites as an initial portfolio for its own build-to-rent platform
Michael Gove opens his mouth
While on the campaign trail Michael Gove decided to back the Conservative’s claim of being the party of homeownership. When questioned about the party’s damning housing targets he replied; “Well, we’re all fallen creatures in an imperfect world… but I would say in football terms, we have been the Arsenal of housebuilding and Labour have been the QPR.”
Sometimes, just sometimes, it’s best to go quietly…
The Bank of England – holds rates at 5.25%
Borrowers remain in Groundhog Day as the MPC voted 7-2 to hold the current rate at 5.25%. As a result, many more will be forced to remortgage at higher rates or join the other hopefuls, now losing the will, as they track the base rate.
Expectations now turn to August, when the MPC next vote that they’ll be singing a different tune… “I Got You Babe.”
Zoopla breaks down first-time buyer income requirements across the UK
Zoopla revealed that the average first-time buyer needs an income of £60,600 to buy a home. Given this is the equivalent of two average UK salaries the reality is most first-time buyers, who don’t bank at mum and dad, will need to either wait till they meet a significant other or join forces with a sibling or trusted friend.
Depending on where you are in the country the amount of income required differs dramatically from East Ayrshire (£17,000) and Kensington and Chelsea (£193,000). Typically with prices rising the further south you go.
For those looking to upsize, they need to find an extra £72,600 down the sofa to buy an averagely-priced home. Tricky when the cost of living has already plundered the sofa crevices.
Keir Starmer sides with renters
On Thursday, Keir Starmer announced that he was going to stop rental bidding wars with legislation and scrap rental deposits. The last few years have been particularly brutal for renters not helped by the government neglecting to restock the right-to-buy shelves. Due to this local authorities have relied on private landlords to accommodate tenants. Perhaps if more social housing was built, which will only happen when it is cheaper to borrow to build, this problem will ease.
Similarly, as rates come down, more renters, who can still afford a deposit, will abandon the rental market, in favour of the property ladder, lessening demand. The issue comes from a lack of rental stock in the areas where they are most needed i.e where the work is. No one likes rocketing rents and everyone loves to hate a landlord but by disincentivising them further you run the risk of further depleting stock levels, and increasing prices. Compromise on both sides is needed to make a happy AST.
And that concludes another UK Property News Recap – 21.06.2024. If you have any comments or suggestions, please get in touch here.
