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How Will the UK Election Impact the Property Market?

With the UK general election on the horizon, many are speculating about its potential effects on various sectors, with the property market being a significant area of interest. Historically, elections tend to bring a degree of uncertainty, and this one is no different.

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As the political landscape shifts, so too can the dynamics of property prices, buyer confidence, and overall market activity.

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Here, we delve into the possible scenarios and factors that could shape the property market in the wake of the upcoming election.

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Today’s Will & Probate

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UK House Prices Steady in May Boosted by Wage Growth

The latest figures from mortgage lender Halifax show that during the crucial spring sales period, UK house prices remained unchanged in May, supported by rising wages and a rise in economic confidence.

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However, the North West of England was the best performing region in the UK, with average house prices reaching £232,258 and annual price growth of 3.8% in May. In Northern Ireland, the trend of robust growth continued, with an increase of 3.2% in May.

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The latest information helps to prove that the housing market remains solid despite the Bank of England’s decision not to cut interest rates any further this month.

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Source: Econstrum

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Industry reacts to ‘disappointing’ yet ‘inevitable’ base rate rise

While coming as little surprise to most, today’s base rate rise to 4.25% has still been met with disappointment, along with some resignation as to the predicted direction of travel.

The general feeling is that, although less than the 50 basis points rise seen in February, a rise was inevitable given the inflationary uptick in February and the US central bank rise yesterday.

There’s concern for those on variable rates, but with a flurry of lenders having reduced fixed rates this week, it’s felt the predicted base rate rise has been factored in and little impact will result in that area.

Bluestone Mortgages sales and marketing director Reece Beddall says: “While today’s decision is clearly in response to inflation’s surprise jump to 10.4%, it will be a tough pill for consumers to swallow, nonetheless. Interest rates have risen consecutively for almost a year, pushing mortgage repayments higher still and putting a chokehold on people’s personal finances. Affordability challenges will no doubt remain for the foreseeable future.”

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Moneyfacts finance expert Rachel Springall comments: “A rise to base rate will come as disappointing news to borrowers who are not locked into a fixed rate mortgage. The incentive to fix is clear from the continued rise to the average standard variable rate, which is now above 7%, a level not breached since 2008.”

Also expressing disappointment, London estate agent and former RICS chairman Jeremy Leaf adds: “There is a close call between change and no change – this latest rise in rates is a huge disappointment for the housing market as we were hoping the bank would trust in its own data and leave well alone.”

Stonebridge chief executive Rob Clifford described the rise as a ‘racing certainty’ but doesn’t expect big changes to follow.

“Once it was revealed that inflation had risen to 10.4% in February, followed by the Fed’s decision to raise rates yesterday in the US, it seemed like a racing certainty the MPC would have to act today with a further bank base rate rise.

“The markets have already been reacting to that news with swap rates increasing, and by this morning that rate rise already seemed priced in. My feeling is that the search for business – particularly from the mainstream, high-street lenders – will continue to keep mortgage rates round about where they are,” he says.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

Just Mortgages operations director John Philips adds: “Although the base rate has gone up, we have seen mortgage prices falling in recent months and customer enquiries to our brokers across the country have been remarkably robust since the start of the year.”

A possible outcome could be more demand for rental housing, says IMMO real-estate platform co-founder Avinav Nigam.

“The result of this is more demand for rental housing, and therefore a greater need to put time, money and effort into improving our private rental sector housing stock,” he comments.

By Linda Ram

Source: Mortgage Strategy

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2023 could be the year of recovery for the UK

It might be a little too early to talk of spring buds but the green shoots of recovery may not be too far away.

When winter began, talk in the mortgage market was concentrated on the impact Kwasi’s Kwarteng’s disastrous “mini”-Budget was having on the UK’s financial stability.

Fast forward two months and the outlook has improved significantly. Five-year swap rates may have risen slightly over the last day or so, but at the end of January they dropped below 3.5 per cent for the first time since September 2022 – falling as low as 3.285 per cent.

Meanwhile, two-year swaps have fallen to 3.944 per cent, down from 4.357 per cent in December 2022.

These figures are evidence of increasing market stability and offer hope that rates will not reach the highs predicted last autumn.

So what has changed in recent weeks? Firstly, inflationary pressures are beginning to ease slightly.

Wholesale gas prices have fallen to below levels seen before Russian’s invasion of Ukraine.

And this should eventually feed through to lower bills for households. Petrol and diesel prices have also dropped sharply from their summer high.

Meanwhile, the latest figures from British manufacturers, show that factory output prices unexpectedly fell 0.8 per cent in December, the biggest decrease since April 2020.

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Although inflation remains more than five times above the Bank of England’s 2 per cent target, it has fallen for two consecutive months and there are signs that it is heading towards single digits.

As well as an improved inflationary outlook, the pound’s recovery and the performance of the London Stock Exchange are also signs that investors have more faith in the UK economy and its recovery than some sections of the mainstream media.

Lenders will be keeping a close eye on all these key indicators to get a sense of what is to come.

Clearly we are not out of the woods yet; household finances are still under significant strain with real wages falling and the prospect of higher interest rates.

But the good news is that the expected peak in interest rates may not be as far away as was predicted in the autumn.

Forecasts now put the ceiling for base rate at 4 per cent to 4.5 per cent. This means we may only be one, or possibly two, rate rises away from a levelling off.

My sense is that the outcome is already baked into swap rates, meaning mortgage rates may also have reached their peak in the current cycle.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

We are already seeing lenders start to reduce rates, with the best five-year deals for landlords back under 5 per cent, albeit with higher fees.

Renewed competition among lenders combined with improved swap rates and a less gloomy economic outlook should help to stabilise the market and could even push rates down further.

In turn this will help to improve affordability issues for landlords. Stress tests were tightened significantly as rates began to rise, which restricted buy-to-let borrowing, but they are now beginning to ease.

No one knows exactly what’s around the corner, but there is a sense that with spring on the horizon the most turbulent days are behind us.

Events of the past six months mean conditions are not going to return to ‘normal’, but the market and the UK economy is showing signs of resilience.

Let’s hope 2023 is a year of recovery.

By Phil Riches

Source: FT Adviser

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Confidence in UK Economic Growth Jumps by 21%

Investor confidence has surged into the Lunar New Year after China lifted its drastic Covid restrictions and hopes have risen that the end to interest rate hikes may finally be in sight while there have been signs economies may prove more resilient in the downturn.

Stocks on Wall Street rallied on Friday, spilling over into gains for the Nikkei, although many other Asian indices remained closed for the holiday.

Investor confidence has jumped 12% according to the Hargreaves Lansdown survey which tracks sentiment every month.

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The FTSE 100 has opened marginally higher, as quiet optimism continues to swirl.

Relief that inflation is finally past its peak is palpable, and there has been rash of data showing central bank policies aimed at dampening down demand appear to be working.

We’re in the era when bad news is good news, with the snapshot of a depressed housing markets in the United States showing home sales activity was at a 12-year low, helping set off a rally in equities on Friday.

Comments by Fed Governor Christopher Wallace were another salve for markets given that he indicated that falling prices combined with expected smaller rate increases, should do the trick of taming inflation, adding to hopes the end to the hiking cycle is close.

The comments also helped soften the dollar again, which will relieve further pressure on nations importing commodities priced in the greenback.

Guarded but slightly more upbeat analysis of the UK’s prospects by the governor of the Bank of England Andrew Bailey has also injected a shot of optimism.

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The HL survey shows confidence in UK economic growth has risen by 21% compared to last month.

Although it’s still down 24% compared to last January, it’s jumped by 75% compared to September when the Trussenomics mini-budget sparked market mayhem.

With financial stability returning and the forecast recession now expected to be shallower, optimism is returning that the economy will manage to tread water rather than sink in the year ahead.

Falls in energy prices over recent months have also eased some of the pressure on companies and consumers but there is still a note of caution from the European Central Bank that robust rate rises will be needed in the months to come.

ECB governing council member Klaas Knot indicated in a broadcast interview that the Bank would not be able to press pause on rate hikes any time soon given the risks inflation still poses.

This pushed the euro up sharply to 1.09 against the dollar, a level not seen since April 2022.

Crude oil ticked down a little but is still up around 12% since the start of the year with Brent Crude trading at $87 a barrel.

With fresh interest rates to come and energy prices staying elevated as hopes rise that demand in China will snap back, the months ahead may still prove tough for European companies, who may struggle to pass on prices to cash-strapped consumers.


Source: Property Notify

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UK inflation hits 41-year high following surge in energy prices

SOARING energy bills sent UK inflation to its highest level since 1981 in October as the cost-of-living crisis continues to hit households, according to official figures.

The Office for National Statistics (ONS) revealed that inflation jumped to a higher than expected 11.1% in October – the highest rate for 41 years and up from 10.1% in September, as gas and electricity costs rocketed.

That exceeds the 10.7% rise most economists had predicted. Chancellor Jeremy Hunt has claimed getting inflation under control would require “tough but necessary decisions on tax and spending to help balance the books”.

He is set to lay out his autumn Budget on Thursday.

The ONS said gas prices have leaped nearly 130% higher over the past year, while electricity has risen by around 66%.

The SNP have said the figures show households across Scotland “are paying the price for continued Westminster control”.

The party’s Shadow Chancellor Alison Thewliss said: “These latest figures must force the Chancellor to deliver meaningful financial support to households and businesses.

“Tomorrow’s budget must deliver a boost to incomes, energy bill support for low- and middle-income families, a real living wage, and extra investment in the NHS to help people weather this Tory-made cost of living storm.

“However, once again, households and businesses across Scotland are paying the price for continued Westminster control.

“With both the Tories and Labour hell bent on ‘making Brexit work’, there can be no doubt that independence is the only way to escape the long-term damage of Westminster and Brexit.”

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Families were also hit by rising costs across a range of food items, which also pushed up the cost of living to eye-watering levels.

Elsewhere, the Scottish Greens have slammed the “cruel and incompetent” Tory government for runaway inflation.

The party’s economy spokesperson Maggie Chapman said: “These are not just abstract figures; they represent people’s expenses and wellbeing.

“They can be the difference between a household or family being able to eat or not.

“With temperatures falling and bills increasing, millions of people are looking at a long, cold winter and, with even more cuts expected to be announced in tomorrow’s autumn Budget, things are set to get even harder.”

The jump in inflation – the biggest leap since March to April – comes despite the government energy support which had sought to limit Ofgem’s energy price cap at around £2500 a year.

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Chapman continued: “It is the cost of a reckless Tory Brexit and a cruel and incompetent government that is well aware of the pain it is inflicting but simply doesn’t care.

“If they cared, they would have spent the last 12 years investing in the infrastructure that would have prevented this situation.

“But they chose, instead, to re-inflate the housing bubble and impose austerity. The Tories are not the answer to this economic crisis.

“We must choose and then create a better future that does not have us shackled to the disaster that is Westminster.”

Hunt blamed the impact of the pandemic and Vladimir Putin’s war in Ukraine for the spike in prices.

Chief economist at the ONS Grant Fitzner said: “Rising gas and electricity prices drove headline inflation to its highest level for over 40 years, despite the Energy Price Guarantee.”

He added: “Increases across a range of food items also pushed up inflation.

“These were partially offset by motor fuels, where average petrol prices fell on the month, while the price for diesel rose taking the disparity in price between the two fuels to the highest on record.

“There was further evidence that costs facing businesses are rising more slowly, driven by crude oil and petroleum prices.”

By Adam Robertson

Source: The National

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Base rate rises by highest level for 33 years

The Bank of England’s Monetary Policy Committee (MPC) has increased the base rate to three per cent.
The 0.75 per cent jump from its level of 2.25 per cent marked the largest increase since 1989. This is also the highest the base rate has been since November 2008, when it was also three per cent.

The latest rise signifies the eighth consecutive increase to the base rate as the central bank works to tackle climbing inflation.

The base rate increased on a vote of 7-2, with one member – Swati Dhingra – voting for a softer rise of 0.5 per cent which would have taken the rate to 2.75 per cent.

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Dhingra said a “gradated approach” to monetary policy was warranted to avoid overtightening as the impact of the cost of living crisis was already taking hold of the economy. She argued that a smaller rate increase would protect the economy from a “longer and deeper recession”.

Another member – Silvana Tenreyro – voted for an even lighter touch of a 0.25 per cent increase, which would have put the base rate at 2.50 per cent.

Tenreyro said monetary policy had already been restrictive regarding the fall in real incomes and the economy was already possibly in a recession. She also said previous monetary tightening was yet to feed through to the economy,

Ultimately, it was agreed that a larger increase in the base rate now would bring inflation back to its two per cent target sustainably in the medium term, and reduce the risks of extended and costly tightening later.

The MPC also said if there were more inflationary pressures, they would “respond forcefully” if needed.

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The economic backdrop
The MPC said in the days leading up to the November decision, the UK financial markets had stabilised. However, it noted that other major economies such as Europe and the United States had tightened monetary policy since the September meeting, despite sharper falls in risky asset prices occuring in the UK.

The committee said in the week before the meeting market expectations predicted the base rate would peak at 5.25 per cent in Q3 next year, but in the immediate run-up to the meeting, it was implied that this would hit 4.75 per cent by the second half of next year.

Since its last meeting in September, monthly GDP was estimated to have fallen by 0.3 per cent in August and other market indicators such as retail sales and consumer confidence had declined.

The MPC’s projections for the UK economy were described as “very challenging” as it expects a recession to be prolonged and inflation to remain above 10 per cent in the near term, then fall sharply by mid-2023.

By Shekina Tuahene

Source: Mortgage Solutions

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UK lending figures point to cooling economy, market turmoil

LONDON (Reuters) – Lending to British consumers rose last month by less than expected and the number of mortgages approved by British lenders eased back, according to Bank of England data on Monday that point to tougher times ahead for Britain’s economy.

The BoE said net unsecured consumer credit rose by 745 million pounds ($861 million) in September, the smallest monthly increase since December 2021, following a 1.215 billion pound increase in August. A Reuters poll of economists had pointed to net lending of just under 1 billion pounds.

Mortgage approvals totalled 66,789 last month, down from 74,422 in August, the BoE said, broadly in line the forecast in a Reuters poll.

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“September’s money and credit figures point to further signs that consumers have been become more cautious in response to the weakening economic outlook,” said Ashley Webb, UK economist at consultancy Capital Economics.

The BoE figures showed a huge jump in the money supply, which on the M4 measure rose by 2.1% in September alone.

The last time there was a bigger increase was in March 2020, when financial market turmoil early in the COVID-19 pandemic led to a squeeze on money market funds which had to sell assets such as government bonds and Treasury bills for cash.

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September’s jump likely reflected a fire-sale of pension fund assets to meet collateral calls in the wake of the ill-fated Sept. 23 economic growth plan, from the government of former Prime Minister Liz Truss.

The sub-category of M4 which covers companies like pension funds and life assurance firms jumped by a record 67.8 billion pounds in September, more than double the previous record.

Source: UK Investing

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Graduates accelerate SME growth across the North East

Graduates are our future business leaders.

They play an important role in supporting the health and growth of our regional economy-encouraging them to stay in the region is vital to both.

The University of Sunderland has an excellent track record in delivering programmes of support with graduate employability and retention in the region at their heart.

One such pioneering scheme is the Graduate Internship Scheme. First launched in 2011, the University of Sunderland received European Regional Development Funding (ERDF) to run its Graduate Internship Scheme, connecting graduate talent with regional, Small to Medium Enterprises. It has since provided over 650 graduates the opportunity to work in a variety of small-to-medium private sector organisations across the north-east and delivered nearly £2.4 million in funding to those businesses.

By Autumn 2022, the internship scheme will have placed 250 graduates into full-time roles within growing SMEs, earning an average salary of £20,000.

Graduates typically bring fresh ideas into those organisations, as well as a new perspective, and often help deliver a new product, process or service for the business. After 12 months, employers can decide whether to extend the intern’s contract, and most do, with a high rate of graduates being offered full-time employment on completion of their internship.

Project manager Laura Foster says: “It’s been a well-documented difficult and uncertain time for businesses over the last couple of years, and our project helps SMEs in a really practical way with help towards graduate’s salary costs”.

There are many success stories to have come out of the project and the internships team regularly receives positive feedback from SMEs and graduates who have benefited. One such example is Blaydon-based HLF Group. They recently recruited BA (Hons) Graphic Design Graduate, Brooke Gerrens.

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Director Rachel Conroy said, ‘Brooke’s appointment has had a hugely positive impact on our business. Previously we outsourced a lot of this work (Graphic Design and Media Management) which took time, and they didn’t know our products as well. I believe we can clearly demonstrate we have grown the business through the work Brooke has produced’.

‘The future is very bright. We have three very large tenders going through at the moment with multi -national companies to refurb their stock across the country. We are also seeing steady growth into new trade sectors.’

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Brooke told us of her internship experience so far, ’I have always had a creative eye, in particular editorial design which feeds into designing brochures for customers, therefore the job fits into everything I have wanted to do.

The atmosphere working at HLF is fantastic, design is something I have always had a passion for, so to have the opportunity to be creative in my career is great.’

The scheme delivers European Regional Development Funding (ERDF) and supports SMEs with the cost of employing a graduate, providing up to £3,500 in subsidy payments. After 12 months, employers can decide whether to extend the Intern’s contract.

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Plans to build 750 homes on Carlisle greenfield site

Up to 750 new homes could be build on greenfield land near Carlisle.

Chorley-based property company, Northern Trust, agreed a planning promotion deal with the private landowner on land at St Cuthbert’s Garden Village, in Carleton, Carlisle.

The land, which extends to 176 acres, is currently a green field site in agricultural use.

The plans for the site will be promoted in two separate phases.

David Jones, senior land manager at Northern Trust, said: “We are actively looking for further residential and commercial land opportunities to purchase or promote throughout the UK, so we are pleased to be working with this private landowner on facilitating the plans for development of this strategic site to provide much needed new homes for the area and continue the investment for the benefit of the local community.”

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Northern Trust and the landowner are working alongside Savills’ planning and development teams in the North West to secure the planning and to agree a land deal, respectively.

Ed Rooney, Savills’ North West development director, said: “The Carlisle housing market is a huge opportunity for North West house builders with the shortage of land elsewhere in the region.

“Carlisle is set for significant economic growth aided by the high quality housing and environment provided by the Garden Village and our client’s land at Carleton is a key part of the overall housing masterplan to the south of the city.”

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Jonathan Ainley, associate director in the planning team at Savills in the North West, said: “We have worked on behalf of the landowner over the last five years to promote this site and now look forward to the next phase, working with Northern Trust to progress a Garden Village at Carleton in the short term.

“It forms part of the largest Garden Village in the country and we are confident it can deliver high quality new homes, with excellent public spaces and connectivity, whilst also supporting Carlisle City Council in its ambition to achieve economic growth.”

Northern Trust has a land bank of more than 5,000 acres.

By Neil Hodgson

Source: The Business Desk