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House Prices Growing at Fastest Rate in nearly Two Years

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House prices are now growing at the fastest annual rate in nearly two years, the UK’s largest building society has said, with rises expected to continue.

In the year up to August, houses became 2.4% more valuable with the average property costing £265,375, according to Nationwide.

But prices are still below the all-time highs recorded in the summer of 2022 by about 3%. During that time people were spending lockdown savings as COVID-19 restrictions were unwinding and borrowing rates had not reached the current highs.

The annual increase and associated increase in buying demand is still “subdued by historic standards”, Nationwide said.When the broader economic conditions of high interest rates and house prices costing many multiples of wages are considered, the price increase demonstrates resilience in the sector, the lender added.

What next?

Prices will continue to rise, Nationwide forecast.

“Providing the economy continues to recover steadily, as we expect, housing market activity is likely to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth,” Nationwide’s chief economist Robert Gardner said.

Tom Bill, head of UK residential research at estate agent Knight Frank, said: “The UK housing market is in a better place than it was last summer as inflation comes under control and lenders trim their rates.

“Financial markets are pricing in another cut this year and as mortgage rates fall this autumn, it should underpin transactions and modest single-digit price growth.”

Iain McKenzie, chief executive of the Guild of Property Professionals, added: “Estate agents across the country are telling us that the market conditions in their areas are improving and there is a strong demand for good-quality housing.”

Source: Sky News

UK Property Market Set for Busy Autumn as Listings Hit 7-Year High

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Britain’s housing market is set for a busy autumn after the Bank of England cut interest rates this month for the first time since Covid-19 struck, with the number of homes listed for sale hitting a seven-year high.

The stock of homes for sale in the UK was 14 per cent higher over the past month compared with the same time in 2023, according to analysis published by property website Zoopla on Wednesday.

More buyers and sellers have been coming back to the market after almost two years of muted activity caused by higher borrowing costs, as the BoE raised its benchmark rate to a 16-year high of 5.25 per cent in a bid to tame inflation.

As interest rates fall — financial markets are pricing in about two more quarter-point cuts by the BoE this year — Zoopla expects the number of home sales to end 2024 roughly 10 per cent higher than 2023. But it warned that the surge of supply meant sellers should not expect high prices.

“With this level of supply, people have got to keep their feet on the ground on price,” said Richard Donnell, executive director at Zoopla. “Especially in the wider south of England, there is affordability pressure that means buyers will use that choice to keep negotiating price.”

The number of sellers cutting their asking prices by 5 per cent or more was at an elevated level of about 20 per cent, and these properties took more than 2.5 times longer to sell than properties that had not been discounted, Zoopla added.

House prices rose 2.7 per cent in the year to June, unchanged from May, according to official figures, leaving the average property at £288,000. The average five-year fixed rate mortgage with a 25 per cent deposit has fallen to 4.55 per cent from 5.55 per cent a year ago, with the cheapest rates now just below 4 per cent, according to Rightmove’s mortgage tracker. However, analysts do not expect a sharp fall in mortgage rates, meaning buyers’ budgets will remain squeezed.

A typical mortgage now costs 39 per cent of the median full-time salary, up from 30 per cent before the Covid-19 pandemic, according to Capital Economics.

Source: Financial Times

Interest Rate Cut Fuels Immediate Upturn in UK Property Market

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The first Bank of England rate cut in four years has triggered an immediate upturn in the UK property market, as cheaper mortgages prompt interest among buyers and drive up house prices.

Figures from the property website Rightmove show the number of potential buyers contacting estate agents about homes for sale since 1 August jumped by 19% compared with the same time a year ago. Contacts in July were up 11% on the previous year.

The Bank cut interest rates on 1 August for the first time since the start of the Covid pandemic, easing pressure on households after it had raised borrowing costs to the highest level since the 2008 financial crisis to tackle soaring inflation.

It cut its key base rate from 5.25% to 5%, after a fall in inflation back to more normal levels this year. Figures last week showed inflation rose to 2.2% in July, above the Bank’s 2% target. However, it remains significantly lower than a peak of 11.1% two years ago after the Russian invasion of Ukraine triggered a surge in energy prices.

Rightmove said the Bank cutting borrow costs had helped to accelerate the availability of cheaper mortgages from high street lenders, alongside contributing “significantly” to improved buyer demand.

It said future Bank rate cuts would establish a buoyant autumn property market, and it upgraded its house price forecasts from a 1% drop over the whole of 2024 to a 1% rise in new seller asking prices.

Financial markets widely expect that the Bank will react to fading inflationary pressures by cutting rates further, possibly to as low as 3.5% by the end of next year. The Bank is expected to keep rates on hold at its next meeting in September before restarting reductions in borrowing costs in November.

Source: The Guardian

UK Inflation Rate Rises – Will it Affect Interest Rates?

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The recent rise in the UK inflation rate to 2.2% could impact the timing and likelihood of interest rate cuts, but it may not entirely stop them from happening. Here’s why:

Inflation Remains Close to Target: While inflation ticked up slightly, it remains relatively close to the Bank of England’s 2% target. The Bank had anticipated a peak of around 2.75%, meaning the current rise isn’t seen as drastically high or unmanageable. As long as inflation remains within a range the Bank views as acceptable, it may still consider rate cuts if other economic conditions, like slower growth or easing wage pressures, support such a move.

Core Inflation and Services Sector: Core inflation, which excludes volatile components like food and energy, has actually decreased to 3.3% from 3.5%, and inflation in the services sector has also eased. These are important metrics for the Bank of England as they signal underlying inflationary pressures are cooling. If this trend continues, it could give the Bank more room to lower rates.

Market Expectations: Despite the slight rise in headline inflation, market participants are still pricing in a reasonable probability of rate cuts. Before the inflation data, markets estimated a 36% chance of a rate cut in September, which rose to 45% after the data was released. This shows that investors are still betting on a cut, albeit with some caution. Additionally, markets are expecting two rate cuts by the end of the year.

Broader Economic Considerations: Beyond inflation, the Bank of England also considers other factors such as economic growth, unemployment, and wage growth. If the broader economy shows signs of slowing or consumer demand weakens, the Bank might prioritize supporting the economy through lower interest rates, even if inflation remains slightly above target.

Inflation Outlook: The Bank of England has indicated that it expects inflation to peak soon and then start falling. If this outlook holds, the central bank may feel more confident in cutting rates later in the year, assuming inflation starts to ease after its expected peak.

In summary, the recent inflation rise could delay or temper the size of interest rate cuts, but it is unlikely to completely halt them, especially if inflation moderates and other economic indicators suggest a need for easing monetary policy.

Source: Property Notify

Rate Cuts to Fuel House Price Rises, Halifax says

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Lower mortgage costs and more interest rate cuts could fuel a rise in house prices for the rest of this year, Halifax has said.

The mortgage lender’s prediction came after property prices ticked up in July following a flat few months. Halifax said recent mortgage rate drops were “encouraging” for first-time buyers, those moving along the housing ladder or those refinancing. But it warned affordability challenges and lack of available properties still posed problems for buyers. “Against the backdrop of lower mortgage rates and potential further [Bank of England] base rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year,” Amanda Bryden, head of mortgages at Halifax said.

Last week the Bank of England lowered interest rates to 5% – the first cut since the start of the pandemic in March 2020, but its governor warned not to expect a flurry of further reductions. The Bank’s rate dictates the cost of borrowing set by High Street banks and money lenders for the likes of mortgages and credit cards. Higher rates over the last two and a half years have put pressure on household finances, although returns for savers have improved.

While mortgage rates have fallen, deals still remain much higher than a few years ago, meaning homeowners refinancing or first-time buyers are facing increased costs. On Wednesday, the average two-year fixed mortgage was 5.74%, while the typical five-year deal was 5.36%.

The UK’s largest lender said a typical property cost £291,268 in July, up more than £2,200 compared to the previous month, “following three relatively flat months”. Ms Bryden said annual house price growth in the year to last month was 2.3%, the highest rate since the start of this year.

Halifax said the Northern Ireland continued to record the highest house price growth last month – 5.8% – compared with any or nation or region in the UK.

The only region to record a fall was eastern England.

Source: BBC News

Report Shows Numbers Moving Home Increased in First Half of 2024

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The number of people moving home increased by 10% in the first half of 2024, according to the latest Lloyds Bank Home Mover Review.

In the first six months of this year the number of home moves recorded was 126,884, compared to 115,530 during the same period in 2023.

The South East had the largest number of home movers across the UK, as 28,828 moved home in the first half of this year, +13% more than the same period last year.

Detached homes are the most popular among people moving home as buyers seek more privacy and space, as this property type made up 33% of all home mover mortgages, compared to 29% ten years ago. In the East Midlands, this increased to half (50%) of all house purchases, up 10pp when compared to 2014.

Further north, semi-detached homes were the most common choice for movers in the North West (36%) and Yorkshire and The Humber (35%).

Over the last ten years, terraced properties have decreased in popularity for movers. People choosing a terraced home as their next house move declined by 5pp – from 24% in 2014 to 19% in 2024. Only in pricey Greater London are terraced homes (27%) and flats (46%) more popular than detached for home movers.

Home movers paid an average house price of £392,107, -6% during the last year but 20% more than five years ago (£327,112). Almost all regions within the UK saw a drop in prices over the last year, with Northern Ireland the only region or nation to see home mover house prices increase, as the average price tag in the country is now £257,611, 3% higher than in 2023 (and 38% more than five years ago).

The average deposit amount for a home mover has increased over the last five years by 22%, to £129,951 on average, largely in line with home mover house prices over the same period (+20%). This means movers have equity in their new home to the value of around 33% of the property price – in the South West, Scotland and Northern Ireland this rises to 35%.

The average age of a person moving home is now 40, a year older than 12 months ago, with the oldest home movers in the South West, at an average age of 41.

Source: Property Industry Eye

Summary of proposed UK Renters’ Rights Bill

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The proposed Renters’ Rights Bill aims to enhance tenant protections and improve living conditions in England’s private rental sector. Here’s a detailed summary based on the government’s statement and interpretations from other sources:

It’s purpose is to provide greater rights and protections to renters, addressing issues of insecurity and substandard living conditions.

Key Provisions;

Abolishing Section 21 ‘No Fault’ Evictions

– Ends No-Fault Evictions: Prohibits evictions without a stated reason, increasing tenant security and stability.
– Expanded Grounds for Possession: Clarifies and expands the grounds on which landlords can reclaim their properties, making the eviction process more transparent and fairer.

Strengthening Tenant Rights

– Challenging Rent Increases: Empowers tenants to dispute unfair rent hikes.
– Banning Rental Bidding Wars: Prevents landlords and letting agents from engaging in practices that inflate rental prices through competitive bidding.
– Pet Requests: Allows tenants to request permission for pets, with landlords permitted to request insurance to cover potential damages.

Improving Housing Standards

– Decent Homes Standard: Applies this standard to ensure that rental homes are safe and free from hazards. The standard is due for a rewrite, although the date is not specified.
– Awaab’s Law: Mandates timely repairs of serious hazards to maintain safe living conditions.

Digital Database and Dispute Resolution

– Landlord and Tenant Database: Establishes a digital platform for accessing key rental information, improving transparency.
– Ombudsman Service: Introduces a new service for resolving disputes fairly and efficiently, aiming to reduce the burden on courts.

Anti-Discrimination Measures

– Protection Against Discrimination: Makes it illegal for landlords to discriminate based on tenants’ receipt of benefits or presence of children.

Enhanced Enforcement

– Local Council Powers: Strengthens investigatory and enforcement powers of local councils to identify and penalize unscrupulous landlords.

Impact

– Scope: Affects 11 million private tenants, including significant numbers of families with children and older adults.
– Addressing Evictions and Rental Prices: Aims to reduce the frequency of no-fault evictions and curb rising rental prices.
– Income and Housing Quality: Strives to decrease the proportion of income spent on rent and improve the overall quality of rental homes.

Territorial Extent

– Primary Application: Applies to England, with certain provisions also extending to Wales.

To conclude, the Renters’ Rights Bill closely mirrors the proposed Renters’ Reform Bill, aiming to abolish Section 21 evictions, enforce stronger tenant rights, improve housing standards, and ensure fair treatment of tenants. The bill represents a comprehensive effort to balance tenant protections with landlord rights, ultimately seeking to create a more equitable and stable rental market

Source: Property Notify

How will a Base Rate Cut Affect the Autumn Market?

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Rightmove’s report states that one of the most pressing concerns in the current property market is the elevated interest rates, which are continuing to stretch affordability. Now, all eyes are on the Bank of England’s next meeting in August.

According to Rightmove, financial markets expect the first Base Rate cut to occur in August or September. This is encouraging news, but these forecasts may change in the coming weeks. The first Base Rate cut in four years, combined with the renewed political certainty post-General Election, could set the backdrop for a booming Autumn market.

Rightmove’s Director of Property Science, Tim Bannister, said: “A Base Rate cut is expected to lead to lower mortgage rates, which could be the game-changer for some would-be home-movers who are being held back by significantly higher monthly mortgage costs. The average five-year fixed rate is still nearly twice as high as it was before the first of 14 consecutive Bank of England rate increases in 2021, with rates staying elevated for much longer than many thought that they would. A first Base Rate cut for over four years, together with the new political certainty, could set the scene for a positive Autumn market, with improved affordability and a more confident outlook in the second half of the year.

Source: RW Invest

Labour Government and the Future of the UK Housing Market

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The recent shift in political power to the Labour government promises significant changes across various sectors, with the UK housing market poised for a substantial transformation.

Labour’s manifesto outlined a series of ambitious plans to address the housing crisis, emphasising affordability, sustainability, and community empowerment. Here’s a closer look at how the housing landscape is expected to evolve under this new administration.

One of Labour’s primary objectives is to tackle the chronic housing shortage that has plagued the UK for decades. The government plans to invest heavily in the construction of new homes, aiming to build at least 300,000 new homes annually. This ambitious target includes a mix of social housing, affordable homes, and homes for first-time buyers. By increasing supply, Labour hopes to ease the pressure on the housing market, making home ownership more attainable for a broader segment of the population.

A cornerstone of Labour’s housing policy is the significant expansion of social housing. The government has committed to building hundreds of thousands of council homes, reversing the trend of declining social housing stock. This move is designed to provide secure, affordable housing options for those on lower incomes and reduce the reliance on the private rental sector, which has often been criticised for high costs and poor conditions.

Labour’s approach to the housing market also includes measures to protect renters. The government intends to introduce rent controls to cap annual rent increases, ensuring that housing costs remain within reach for tenants. Additionally, Labour plans to enhance tenants’ rights, offering greater security of tenure and stronger protections against eviction. These measures aim to create a more balanced rental market, where tenants feel secure and landlords are encouraged to maintain high standards.

Sustainability is a key theme in Labour’s housing strategy. The government is committed to making all new homes environmentally friendly, adhering to stringent energy efficiency standards. This initiative includes retrofitting existing housing stock with modern insulation, heating systems, and renewable energy sources. By focusing on sustainability, Labour aims to reduce the carbon footprint of the housing sector and lower energy bills for homeowners and tenants alike. Ensuring these new builds meet high standards of construction quality, companies like Build Warranty Group can provide the necessary warranties and guarantees, giving homeowners peace of mind and protecting their investments.

First-time buyers are set to benefit from several targeted initiatives under the Labour government. The party has proposed the introduction of a new Help to Buy scheme, offering greater financial support and lower interest rates to those entering the property market for the first time. Additionally, Labour plans to introduce measures to curb speculative buying and investment in residential properties, ensuring that more homes are available for those who intend to live in them. To further support first-time buyers, partnering with organisations like Build Warranty Group can ensure that new homes are protected by comprehensive warranties, providing an additional layer of security for buyers.

Labour’s housing policy also includes a strong focus on community regeneration. The government plans to invest in the revitalisation of neglected urban areas, transforming them into vibrant, livable communities. This includes improving infrastructure, public services, and green spaces, making these areas more attractive places to live and work. By fostering a sense of community, Labour aims to enhance the overall quality of life for residents and stimulate local economies.

To fund these extensive housing initiatives, Labour has outlined a combination of increased public spending and tax reforms. The government plans to raise funds through higher taxes on the wealthiest individuals and large corporations, as well as closing tax loopholes. This approach is expected to generate the necessary revenue to support Labour’s ambitious housing agenda without placing undue financial burden on the majority of taxpayers.

The landscape of the UK housing market is set for a significant transformation under the new Labour government. With a strong focus on increasing housing supply, expanding social housing, protecting renters, promoting sustainability, and supporting first-time buyers, Labour’s policies aim to create a more equitable and sustainable housing market. While the success of these initiatives will depend on effective implementation and ongoing support, the proposed changes offer a hopeful vision for the future of housing in the UK. Companies like Build Warranty Group will play a crucial role in ensuring the quality and durability of new housing developments, contributing to the overall success of Labour’s housing strategy.

Source: PBC Today

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