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Business Sentiment Index reveals a cautious return to confidence for SMEs

Close Brothers Asset Finance’s Business Sentiment Index (BSI), which measures SME business confidence, has risen for the first time since September 2021 following three consecutive falls, and a low at the end of 2022. These were caused, in the main, by rising inflation, energy cost increases and higher interest rates.

Despite the headwinds still being faced by small and medium-sized firms and inflation stubbornly remaining in double digits, wholesale energy prices have fallen from their summer 2022 peaks, and there appears to be more certainty about where interest rates rises are headed, all of which is helping firms plan with more assurance.

This change in confidence is better understood when looking more closely at businesses’ priorities, which are achieving growth (28%) and managing costs (26%), well ahead of issues like paying down debts (9%) and business consolidation (9%).

Neil Davies (pictured), CEO of Close Brothers’ Commercial business, said: “After well over a year of declining confidence – according to our data – it’s encouraging to see an element of positivity returning to the market, no matter how tentative.

“What business owners want, almost more than anything, is an element of consistency, which gives them the ability to plan and forecast effectively. Many of the recent challenges have been entirely unexpected, and after the difficulties of the past few years, it’s impacted their ability to grow.

“But what it has again demonstrated is the continued resilience of the UK and Ireland’s SMEs, and we’re looking forward to working with them in the coming months and years.”

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Appetite for investment. Overall, the appetite to invest remains strong, as it was at the end of 2022, with three-quarters of UK firms looking to seek funding for investment in the next 12 months, up from 67% in July 2022.

This is reflected across all key sectors, with the most notable rise coming in transport & haulage, where the number of firms planning to seek funding has risen by 9% to 81% (from 72%), while manufacturing & engineering remained very strong at 83%; services saw a fall of 13%, from 76% to 63%.

Missed opportunities. The number of companies that have missed business opportunities because of a lack of available funding fell from 51% at the end of 2022 to 45% in May 2023.

While this is an improvement, these are historically ‘high’ figures – for example, in May 2022, 37% of respondents answered ‘yes’ to the question ‘have you missed a business opportunity in the last 12 months, due to lack of available finance?’.

It would appear businesses are concerned about impacting their cashflow by dipping into their reserves or taking out a standard loan and adding to their debt burden.

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

Economic outlook. Businesses continue to be more negative than positive about the macro-economic outlook but the gap between positive and negative sentiment narrowed significantly since the start of 2023.

That being said, this indicator that has contributed most to the decline in the overall BSI; for example, in November 2021 75% of respondents were positive about the economy – by December 2022 this had fallen to just 36%.

From a sector perspective, transport & haulage again saw the biggest swing towards the positive.

Predicted business performance. Predictions about future business performance remained stable, with the majority expecting their prospects to remain unchanged. Overall, fewer firms predict they will contract than earlier in the year (10% against 15%).

The most notable rise in positivity is the print and packaging sector, which saw an increase of 20% (19% to 39%) of firms expecting to expand.

Score calculation. The BSI is based on the views of 911 business owners and senior members of the UK’s business community and calculated from data charting their appetite for investment in their business in the coming 12 months; access to finance and whether they’ve missed a business opportunity through lack of available finance; views about the UK’s economic outlook; and thoughts on their likely performance in the coming 12 months.

By Lisa Laverick

Source: Asset Finance International

house prices
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‘Business as usual’ as housing market stabilises

The UK housing market is “back to business as usual”, after a welcome level of stability returned to the market following a period of unprecedented uncertainty created by September’s mini-Budget, which sent the price of fixed-rate mortgages soaring.

The property portal reports that a level of stability has returned to the market after a period of unprecedented uncertainty created by September’s mini-Budget, which sent the price of fixed-rate mortgages soaring.

Inflation seems to be on the way down, albeit more slowly than hoped, and while another interest rate rise cannot be ruled out, market forecasts suggest that we are nearing the end of these increases.

All in all, the fundamentals are encouraging for the property market, according to the latest housing market update from OnTheMarket (OTM).

The latest data provided by the property portals shows that 70% of UK buyers are confident that they would buy a property within the next three months, compared to 71% in March.

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As well as continuing confidence among buyers, OTM’s figures also reveals that seller sentiment remains stable, with 64% of vendors confident they would sell their property within the next three months in April, compared with 63% in March.

“There are usually regional variations as there’s no such thing as a uniform property market but even so, this time around there was little fluctuation across the country in April,” said OTM CEO, Jason Tebb.

Meanwhile, almost half – 43% – of all properties were SSTC within 30 days of first being advertised for sale in April. While this is less than last April’s 63%, Tebb points out that market conditions were very different then with double-digit price growth and the ‘race for space’ in full swing.

He continued: “Now, a welcome element of stability has returned, with the numbers perhaps impacted by the Easter holidays and the traditional seasonal dip in the market when families are away and house hunting isn’t a priority.

“While Nationwide building society reports that house prices rose by 0.5% in April after seven consecutive months of falls, of more interest to agents are transaction numbers, as these are a much better indicator of the overall health of the market.

“Encouragingly, transaction numbers are also on the rise after months of declines, according to HM Revenue & Customs. Meanwhile, the Bank of England’s mortgage approvals for house purchases, an indicator of future borrowing, are also rising, although they remain below the monthly average for last year.”

Some volatility is still evident when it comes to mortgages. Mortgage rates, which soared in the autumn before falling back in the early part of this year, have recently edged upwards again as Swap rates, which underpin the pricing of fixed rates, have risen once more.

“There’s good news for first-time buyers however,” said Tebb. “Lenders have been cutting rates on higher loan-to-value(LTV) mortgages, suggesting they’re confident about the prospects for the market.”

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

He added: “A period of relative normality and stability will be extremely welcome after all the ups and downs of the past few months. People move for different reasons and are steadily getting on with the business of moving.

“Despite the recent upheaval, soaring inflation, the rising cost of living and higher mortgage rates, things are settling down and instead of peaks and troughs, the market has transformed into something more consistent. It would be fair to say that the market has rebalanced and looks as though it’s set for ‘business as usual’ going forwards.

By Marc Da Silva

Source: Property Industry Eye

SME
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Average SME plans to invest £321k to grow their business

New research from Aldermore’s SME Growth Index has revealed the investment and growth plans of small and medium-sized enterprises (SMEs) in the UK. Despite the ongoing cost-of-living crisis, SMEs plan to spend an average of £321K on growth strategies over the next year. One in eight (12%) SMEs plan to spend over £1 million investing in growth.

SMEs plan to grow online but curb talent spend

A third of businesses want to expand their customer base (33%) and grow their current products and services (29%) in 2023, while also reducing costs to combat the cost-of-living crisis (30%).

To reach their goals, business leaders plan to invest in their online presence. One in four SMEs (26%) will put money into improving or building websites and apps over the next year. This is in addition to investing in digital marketing (24%).

Interestingly, following the ‘Great Resignation’ fears that saw SME-leaders prioritise talent spend in 2022, talent acquisition and increases to employee salary and benefits are likely to see the least investment (17% each respectively) over the next year.

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Business leaders continue to put hands in their own pockets to invest

SMEs will often turn to business savings (27%) or various forms of business finance (e.g., asset finance – 11%) to meet their goals. However, nearly two out of five SMEs (18%) will turn to their personal savings and over one in ten will use their own overdraft (12%) to meet business costs.

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

Barriers to growth

Despite optimistic plans to invest heavily in the coming year, the biggest concerns SMEs are faced with are high energy costs (24%) and double-digit inflation rises (24%). This will represent the biggest barrier to business growth in 2023.

Those concerned about inflation costs estimate it could lead to delays in existing projects (19%), missed opportunities for growth (21%), and difficulties securing new deals (20%).

Tim Boag (pictured), group managing director of business finance at Aldermore said: “SMEs are the backbone of our business community and their ambitious growth plans over the next year bodes well for the economy, however they also face challenges brought about by high inflation and soaring energy costs.

“At Aldermore, we’ve supported SMEs through challenging times. It’s great to see from their plans that a digital presence for many has become a major priority, as consumer expectations have evolved post-pandemic.

“For business leaders, there are many sources of investment, be it utilising savings or accessing a range of specialist finance products; and at Aldermore we remain fully committed to backing businesses to realise their ambitions.”

By Lisa Laverick

Source: Asset Finance International

Interest rates
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UK interest rate rise: how will it affect you?

The Bank of England has yet again hiked interest rates, in the 12th consecutive rise since December 2021. This time the increase is 0.25 percentage points – taking the base rate to 4.5%. So what does that mean for your finances?

How will mortgage payments be affected?
Thursday’s move is yet more bad news for the 2.2 million people on a variable rate mortgage. Roughly half are either on a base rate tracker or discounted-rate deal, with the remaining 50% or so on their lender’s standard variable rate (SVR).

A household with a tracker mortgage currently at 5.25% will see their pay rate rise to 5.5%. These deals directly follow the base rate. This means their monthly payments will rise by £21 a month, assuming they have a £150,000 repayment mortgage with 20 years remaining. Their monthly payments rise from £1,011 to £1,032.

The increase may not sound much, but as recently as last June that same household would have been paying £776 a month, meaning their payments have risen by a third in just under a year – equivalent to a £3,000 annual increase.

A household with a £500,000 tracker mortgage with 20 years to go will see their monthly payments rise by £69 to £3,439 a month as a result of the latest increase.

SVRs change at the lender’s discretion, but most will go up, though not necessarily by the full 0.25 percentage points. Some lenders may take some time to announce their plans, but householders can similarly brace themselves for higher payments.

If you are one of the 6 million-plus households with a fixed-rate mortgage, you are unaffected by the latest rise. This group of borrowers will only feel the pain when their current deal expires and they have to renew, which might be in anything between a few weeks or a few years.

And it could be about to get even more painful. The US investment bank Goldman Sachs warned this week that the Bank of England could be forced to raise interest rates to 5% this summer.

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What about new mortgages?
The last few months have been a fast-moving and stressful time for anyone looking for a new fixed-rate home loan, whether it’s to buy their first property or to replace a deal that is coming to an end.

The mortgage market has settled down a lot after the chaos of last September’s Truss government mini-budget, as witnessed earlier this week with the news that Skipton building society has launched a 100% mortgage deal, albeit one where you have to fix for five years at a higher-than-average rate of 5.49%. Standard no-deposit mortgages have not been available since 2008, in the immediate wake of the financial crash.

While new fixed-rate mortgage pricing is not directly influenced by the Bank of England base rate and is largely dependent on money market swap rates, Chris Sykes, technical director at mortgage broker Private Finance, said these have been “slowly edging up lately and are now around 0.3% higher than they were a month ago in April”.

On Thursday morning, the Principality Building Society was offering a five-year fixed-rate mortgage at 4.05% aimed at buyers not looking to borrow more than 75% of the property’s value. Meanwhile, for a first-time buyer of a £200,000 home with a £20,000 deposit, First Direct was offering five-year fixes at 4.44% for those looking to borrow 90%. Several other lenders have similar deals around the 4.45% mark.

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

This is good news for savers, isn’t it?
When the Bank started raising interest rates back at the very end of 2021, the very best easy access savings rate was paying just 0.67%. The succession of interest rate increases have made things better for savers, but the highest-paying instant access account (offered by Chip) is still only paying 3.71% when the current rate of inflation is 10.1%.

In anticipation of Thursday’s increase in the cost of borrowing, several of the online savings providers have been upping rates in a bid to lure in customers. Those happy to lock their money away for a year can now receive 4.91% from HTB. Rates of around 4.9% can be found if you are happy to invest in a fixed-rate bond of two to five years’ duration. By contrast the highest paying five-year fixed-rate savings bonds in March were paying 4.6%.

In the past few weeks, the Commons Treasury select committee has been campaigning to get the big high street banks to increase the savings rates offered to loyal customers. While the online accounts above are paying fairly attractive rates of interest, easy access accounts at many of the big banks are still offering pitifully low returns.

Will more people now get into arrears?

Frankly, yes. On Monday the consumer group Which? warned that an estimated 700,000 UK households missed or defaulted on a rent or mortgage payment last month. Which? said 3.1% of the home loan borrowers it surveyed had missed a mortgage payment last month.

Alastair Douglas, chief executive of the site TotallyMoney, says: “The advice is that if you are struggling, contact your lender and ask for support – and remember this won’t impact your credit rating. However, missed payments can – and they could stay on your credit file for up to six years. If these persist, you might end up in mortgage arrears, leading to court action and even repossession.”

What about credit cards and loans?
Expect higher interest rates on credit cards and pricier personal loans for new applicants. However, most unsecured personal loans have fixed rates, so if you already have one, your monthly payment will not change.

By Miles Brignall

Source: The Guardian

house prices
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Sellers are ‘pricing their properties accordingly’

House price growth dipped last month, ending three consecutive months of growth, the latest Halifax’s house price index revealed on Tuesday.

According to the data, annual price growth dropped to 0.1% in April compared to an increase of 1.6% in March.

The average price of a home in the UK is currently £286,896, down almost £1,000 month-on-month.

The current figure is around £7,000 less than last summer’s peak, although £28,000 higher than two summers ago.

Kim Kinnaird, director, Halifax Mortgages, said: “The economy has proven to be resilient, with a robust labour market and consumer price inflation predicted to decelerate sharply in the coming months.

“Mortgage rates are now stabilising, and though they remain well above the average of recent years, this gives important certainty to would-be buyers.

“While the housing market as a whole remains subdued, the number of properties for sale is also slowly increasing, as sellers adapt to market conditions. While the housing market as a whole remains subdued, the number of properties for sale is also slowly increasing, as sellers adapt to market conditions.

“Alongside a market-wide uptick in mortgage approvals, these latest figures may indicate a more steady environment.”

Industry reaction:

Nicky Stevenson, MD at Fine & Country, commented: “Annual house price growth slowed in April, as sellers are proving increasingly realistic about the current economic picture and are pricing their properties accordingly.

“However, there are signs that lower prices and better negotiation prospects for buyers is leading to a resurgence in activity, with mortgage approvals rising significantly in March.”

Iain McKenzie, CEO of The Guild of Property Professionals, said: “House prices are in a state of flux across the country, with the picture changing from month to month. Clearly we are seeing a slowdown in house price growth, but it is more modest than initially expected.

“There has been a £7,000 fall in the average cost of a house since last summer, but this is still much higher than pre-pandemic levels.

“Sales are holding steady for the time being and many estate agents are now able to offer more choice after spending the winter trying to replenish their stock.”

Contact us today to speak with a specialist Commercial Finance Broker to discuss how we can assist you.

Jason Tebb, CEO of OnTheMarket.com, commented: “With annual house price inflation slowing to 0.1% from 1.6% in March, prices are largely flat compared with this time last year, suggesting a level of stability has returned to the housing market. After the unprecedented uncertainty of the autumn when mortgage rates soared, this is welcome and our own data supports this, with buyer and seller sentiment resilient as the busier spring market kicks into gear.

“While there may be another rise in interest rates this month and although inflation continues to exert pressure on household finances, there is an expectation that both are close to their peak, if not there already.

“As committed buyers continue to get on with the job of moving, sellers must price realistically with the assistance of an experienced local agent in order to achieve a timely and successful outcome.”

Carl Howard, Group CEO of Andrews, said: “Despite a slight dip in house prices in April, it’s still a much rosier picture compared with last autumn.

“Fears of a sustained property slump appear to be being dispelled as other measures of house prices point to an increasingly busy spring.

“With mortgage approvals rising significantly in March, buyers who were previously sitting tight are now feeling more confident and committing to a move.

“Sellers are also willing to be flexible with house prices, which is generating more activity and pushing more sales over the line.

“For prospective first-time buyers hoping for a slump, the market’s resilience may not come as welcome news, particularly while inflation remains stubbornly high. Many will still be putting their property searches on hold to see how the economy springs back.”

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

Tom Bill, head of UK residential research at Knight Frank, said: “The UK housing market is regaining its footing after being knocked sideways by last September’s mini-Budget. You can quibble about whether prices are up or down but the big picture is that annual growth is broadly flat and transactions clearly hit their low-point in January.

“It should be a steady year, with the impact of a recovering economy kept in check by mortgage rates that are notably higher than 18 months ago. It will also be the most predictable year for the housing market since 2018. As the political temperature rises and a 2024 general election moves onto the radar, switched-on buyers and sellers are acting while the backdrop remains relatively uneventful.”

By Marc Da Silva

Source: Property Industry Eye

mortgage
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Skipton launches deposit-free mortgage aimed at renters

A deposit-free mortgage specifically aimed at people currently renting has been launched by a UK building society.

While a handful of other no-deposit deals are available, they all need the financial backing of family or friends.

Skipton Building Society says while its deal requires 12 months of on-time rental payments and a good credit history, it does not need a guarantor.

However, at 5.49% the interest rate is more expensive than the average five-year fix of 5%.

Generation Rent, which campaigns on behalf of private renters, says the shortage of affordable properties within the budget of first-time buyers is still the main stumbling block for those struggling to get on the property ladder.

“It’s not necessarily going to help all the people who are looking to buy a first-time home if there aren’t more houses available to buy,” says Will Barber Taylor from Generation Rent.

Currently there are 15 other zero-deposit products on the market, according to financial data firm Moneyfacts, accounting for just under 0.3% of the UK market.

First-time buyers are facing an uphill battle. Rapidly rising rents have made saving for a deposit increasingly difficult, at the same time that the government’s flagship Help to Buy scheme, aimed at helping first-time buyers, is no longer open.

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The Skipton, which is the UK’s fourth biggest building society, says it recognised a “gap in the market”.

Stuart Haire, the society’s chief executive, told the BBC that “until now there has been no solution for them [renters] to buy a property due to a lack of savings or access to family wealth”.

David is renting with his partner and new baby in North Yorkshire. “It’s getting that deposit together that’s really difficult with rent prices,” admits David.

“If I can prove I’ve been paying rent for the last 10 years of my life why can’t I have a mortgage.”

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

The government’s Help to Buy scheme saw the Treasury lending homebuyers between 5% and 20% of the cost of a newly-built home, and up to 40% in London.

The scheme closed to new applicants in October 2022, but there are rumours that something along similar lines could be re-introduced.

But a rise in zero-deposit mortgages may not be welcomed by everyone, as riskier mortgages with a high loan to value were a root cause of the 2008 financial crash.

Mortgage expert Andrew Montlake says then lenders were just interested in volume rather than quality.

“The world is very different now,” he says, and adds that his opinion has changed over the past 15 years, as long as the 100% loan value mortgages are “underwritten sensibly”.

By Colletta Smith & Nicky Hudson

Source: BBC News

fixed and variable mortgages
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Leap in mortgage approvals signals market recovery

Bank of England statistics show that agreed mortgages climbed to 52,000 in March, up from 44,100 the previous month.

The total number of mortgage approvals has bounced back after hitting a new low at the end of last year, Bank of England figures show.

Mortgages agreed jumped to 52,000 in March, from 44,100 in February, as the market recovers from the damage caused by the Mini-Budget.

The overall total though remains below the monthly average for 2022 of 62,700.

LOWEST SINCE 2009

Approvals for remortgaging with a new lender also increased, to 32,200 in March from 28,200 in February. The ‘effective’ interest rate on newly drawn mortgages increased to 4.41% in March.

Gross lending increased slightly from £20.4 billion in February to £20.6 billion in March, while gross repayments fell from £19.9 billion to £19.3 billion.

Statistics from the Bank of England released in January showed mortgage approvals fell to the lowest level since 2009 if the slump during the Covid pandemic period was excluded.

Approvals for house purchases dropped to 35,600 in December, from 46,200 in November. This was the fourth consecutive monthly decrease, and the lowest since May 2020.

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INDUSTRY REACTION

Tom Bill, head of UK residential research at Knight Frank, says: “The UK housing market continues its convincing rebound following the chaos of the Mini-Budget.

“Price declines appear to be bottoming out and transactions clearly hit their low-point in January.

Buyers have accepted the new normal for mortgage rates as stability returns to the lending market. Boosted by savings accumulated during the pandemic, record levels of housing equity and a strong jobs market, we expect sales activity will be solid without being spectacular this year.”

Tomer Aboody, director of property lender MT Finance, says: “Higher mortgage approvals in March show that there is slightly more confidence in the market, which is cemented by the Prime Minister’s push for lower inflation, and the markets predicting lower long-term rates than first indicated.

“However, while rising, transactions are down compared with before the pandemic so some assistance from the government to try to push volumes is now required.”

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

Mark Harris, CEO of mortgage broker SPF Private Clients, says: “With mortgage approvals picking up again, it appears as though buyers are shaking off recent concerns about the wider economy and getting on with moving.

“The worst of the pain may not be over with another quarter-point rate rise expected next week as inflation proves to be more stubborn than the Bank of England expected.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “We regard mortgage approvals as a very useful indicator of future direction of travel for the housing market and these figures are no exception.

“Lending was in the doldrums, reflecting the quiet period between the Mini-Budget and the end of last year, whereas the approvals figures illustrate that stabilising mortgage rates and inflation is prompting an increase in activity.”

By David Callaghan

Source: The Negotiator

Residential Purchase
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UK property remains one of the most reliable investments in tough times

The economic turbulence of the past few years has proved to be a challenging time for many investors. Yet while traditional asset classes such as precious metals or stocks have failed to weather the storm, property has gone from strength to strength.

Research by peer-to-peer real estate investment platform, easyMoney, reveals that during a period of uncertainty or a global crisis, property is among the most reliable investment assets as it continues to deliver good returns even when the wider economic situation is going through a difficult time.

And while looking forward, the outlook isn’t dire, things haven’t really started picking up in 2023. As such, easyMoney has looked at which investment classes performed best during these recent tricky years to understand the options available when navigating the potentially uncertain times ahead.

The research reveals that one of the best investment classes for amateur investors during times of crisis is property.

In 2021, the UK was still in the midst of the pandemic, while in 2022, things got even more complicated with the Russian invasion of Ukraine and Liz Truss’s disastrous mini-budget.

Despite this, the value of property increased significantly, with the average house price rising by 10.1% from £258,430 in 2021 to £284,407. Even in London, where the market failed to match the nation’s wider success during the pandemic, prices increased by 5.9% to hit a high of £530,807.

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The only other asset class to surpass the strength of property during this period was dividend payouts. Dividend aristocrats such as Coca-Cola and RELX increased by 15.2% and 13.3% respectively. However, such investments are often more difficult to access for the amateur investor, reserved mainly for professionals with massive amounts of money to play with.

For the amateur investor, therefore, property remains the best bet. Certainly when compared to other classes that such investors have relatively easy access to.

This includes precious metals. From 2021 to 2022, the value of silver fell by -13.3%; the value of platinum fell by -12.1%; and palladium declined by -11.8%. Only gold enjoyed a boost in value, albeit a modest one of 0.3%.

The stock markets are another reasonable option for amateur investors, but they too could not match the power of property. America’s S&P 500 declined in value by an average of -4.7% while London’s FTSE100 fared better with an increase of 5.9%.

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

Jason Ferrando, CEO of easyMoney, says:

“Property is a reliable investment class and resilient in the face of wider economic struggles, as has been proven since the start of the pandemic and throughout the current financial situation we find ourselves in. People expected house prices to plummet in early 2023 and that simply hasn’t happened.

“But, for amateur investors, it’s not just a question of great returns, it’s also about accessibility. For someone who doesn’t have in-depth knowledge of the stock market and its internal workings, for example, taking advantage of stocks and shares can be daunting and unnecessarily risky.

“Meanwhile, accessibility to the property market once required investors to have enough money to afford at least a mortgage but now, thanks to peer-to-peer investment platforms, this barrier has been removed.

“Peer-to-peer property investment platforms enable investors to get involved with property investment for much smaller amounts of starting capital by contributing their investment towards a larger pot which is then used to develop property.

“At a time when traditional financial institutes are struggling to provide reliable investments for everyday people, peer-to-peer platforms are offering a genuine way for people to make their money work for them.”

Source: Property Reporter

first-time buyers
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Housing market strengthened by influx of first-time buyers

The ongoing cost of living crisis, rising interest rates, and general market uncertainty aren’t enough to put off the nation’s first-time buyers according to the latest market analysis from Zoopla who report that, despite needing an extra £7,350 income to buy a home, first-time buyers continue to fuel the housing market.

According to the property portal, the housing market continues to rebalance as buyer demand for homes reached its highest level so far this year, after Easter.

Simultaneously, the stock of homes for sale continues to expand, boosting choice for homebuyers – now 66% higher than this time last year.

House price growth slows to 3% as the worst of price falls over

The latest data from Zoopla reveals that UK house price growth has slowed to 3% as the market continues to register small quarter-on-quarter price reductions across the entire UK. Set against the lowest annual rate of house price growth since July 2020, house price growth varies from region to region with annual growth recorded at +4.8% in Wales and +0.5% in London – approximately less than a third of the levels recorded this time last year.

House price growth is also strong in areas that provide easy access to urban cities. For example, house price growth remains above average (over 5%) in areas such as Oldham in the North West, which is accessible to Manchester, Wolverhampton in the Midlands, near to Birmingham, and Selby in Yorkshire which is close to Leeds.

If current trends continue, UK house price growth is expected to reach -1% by the end of the year as the ongoing repricing of housing continues. Greater realism amongst sellers is supporting improving sales numbers – one in four homes (24%) available to buy in 2023 registered an asking price reduction, a level that is much lower than earlier this year and more evidence of a soft landing for house prices.

Contact us today to speak with a specialist Commercial Finance Broker to discuss how we can assist you.

House price growth slows to 3% as the worst of price falls over

The latest data from Zoopla reveals that UK house price growth has slowed to 3% as the market continues to register small quarter-on-quarter price reductions across the entire UK. Set against the lowest annual rate of house price growth since July 2020, house price growth varies from region to region with annual growth recorded at +4.8% in Wales and +0.5% in London – approximately less than a third of the levels recorded this time last year.

House price growth is also strong in areas that provide easy access to urban cities. For example, house price growth remains above average (over 5%) in areas such as Oldham in the North West, which is accessible to Manchester, Wolverhampton in the Midlands, near to Birmingham, and Selby in Yorkshire which is close to Leeds.

If current trends continue, UK house price growth is expected to reach -1% by the end of the year as the ongoing repricing of housing continues. Greater realism amongst sellers is supporting improving sales numbers – one in four homes (24%) available to buy in 2023 registered an asking price reduction, a level that is much lower than earlier this year and more evidence of a soft landing for house prices.

Steep rental increases pushing first-time buyers into the housing market

With deals to be done, first-time buyers continue to remain an important buyer group for the housing market as FTBs using a mortgage accounted for over one in three sales last year (34%). This made them the largest group of home buyers after existing owners buying with a mortgage (31%) and cash buyers (25%).

With rental costs up 11% or £1,120 over the last year, as well as a third fewer homes available to rent than the long-run average, it’s no surprise that many are considering home ownership, provided they have the necessary deposit.

However, FTBs now need an extra £7,350 on their gross household income to buy a three-bed house (a total of £55,900) versus an additional £4,900 required (a total of £51,000) to buy a two-bedroom home. According to ONS figures, the average income has only increased by £4,800 since early 2020.

Naturally, the income needed is even higher in areas such as London and the South East, where first-time buyers need an additional £12,150 on their gross household income for a three-bed property, or an additional £7,300 for a two-bed property.

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

Richard Donnell, Executive Director at Zoopla, comments:

“Housing market conditions continue to improve as buyers return to the market and more sales are agreed. House prices are posting very modest falls and are expected to be just 1% lower by the end of the year. The worst of the pricing adjustment appears to be behind us.

“We expect first-time buyers to have another strong year in 2023 having been the largest buyer group last year. They need more income to buy but are starting to look for smaller homes and get away from rapid growth in rents.”

Mark Manning, Managing Director at Manning Stainton & Northern Estate Agencies Group says:

“We have seen the market across our regions in the North of England show great resiliency with buyers still out looking in good numbers. The overall number of buyers searching may have fallen since a year ago but deeper analysis shows that when comparing with a more “normal market” such as that of 2018 or 2019 there is little change, particularly in first-time buyers who remain out in numbers searching for that first step on the ladder.

“Any decrease in buyers is largely due to the fall in the volume of investors and those looking to downsize. Clearly, the increasing cost of finance affects those looking for the next buy to let and the lack of options for those looking to downsize remains a key concern but without government intervention, it’s unlikely that this will change in the short term.

“We have seen prices fall back since the Summer of 2022 but those falls seem to have been isolated to the final quarter of that year with the price indexes catching up as those deals are now completing at the beginning of 2023. The average sale price on those offers agreed in 2023 indicates we will see very little change in the average price of property as we move into the summer and barring any significant further hikes in interest rates we expect prices to remain generally stable through the remainder of this year.”

Source: Property Reporter

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House prices rise for the first time but analysts still expect a rough ride

The housing market showed “tentative” signs of recovery in April as the price of homes rose 0.5 per cent during the month, however prices remain four per cent below their August 2022 peak.

The Nationwide house price index showed that the annual rate of house price growth improved to -2.7 per cent from -3.1 per cent in March, as buyers remain cautious about their financial position due to rising inflation.

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The average price of a home in April is now £260k up slightly from £257k as the market continues to stabilise following the fall out from September mini budget.

As inflation remains above 10 per cent, Robert Gardner, Nationwide’s chief economist, said that analysts’ expectations that it could fall in the second half of the year would likely further bolster sentiment, especially if the labour market conditions “remain strong”.

He explained: “This, in turn, would also be likely to support a modest recovery in housing market activity.

“But any upturn is likely to remain fairly pedestrian, as it will take time for household finances to recover, since average earnings have been failing to keep pace with inflation, and by a wide margin over the last few years.”

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

House prices stabilise as Easter buyers emerge

Matt Thompson, head of sales at Chestertons, said: “Savvy house hunters used the Easter holidays to continue their search online and enquire about properties to arrange a viewing as soon as possible.

“April has therefore been a busy month; particularly as buyers are a lot more aware of today’s competitive market conditions. As a result, most buyers have also been preparing their paperwork as much as they could in order to make an offer and secure a property before the summer.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: ‘Average property prices fell again in April but not as far as in March as the spring market gets into gear and buyers and sellers start to see an end in sight with regard to high inflation and interest rates.

“Swap rates, which underpin the pricing of fixed-rate mortgages, have risen again on the back of short-term volatility. However, lenders continue to reduce their fixed rates, albeit at a slower pace than before, with bigger reductions seen on higher loan-to-value mortgages as they try to attract first-time buyers.”

By LAURA MCGUIRE

Source: City A.M.