Introduction: House asking prices fall by £6,000 in November
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
The chill in the UK housing market isn’t letting up, as high interest rates continue to cool demand from buyers.
Asking prices for homes in Britain have fallen at their fastest pace in five years for the time of year, according to property website Rightmove this morning.
New seller asking prices dropped by 1.7%, or over £6,000, this month to an average of £362,143, Rightmove reported.
It’s common for asking prices to slip as Christmas approaches, as sellers price their homes more competitively to attract buyers.
But this month’s fall is the largest November drop since 2018, although they did drop by more in August and also last December.
Rightmove says 2023 has been challenging for the housing market, but more positive than predicted.
Its data shows that average asking prices are just 3% below May’s peak, while the number of sales being agreed has picked up in the last month, and more stock available than at the peak of the Covid-19 pandemic.
Tim Bannister, Rightmove’s director of property science, says:
Despite the turbulent end to 2022, the year to date has been better than many expected. Asking prices have eased from the unsustainably frothy heights seen during the pandemic markets, where many sales went to best and final bids.
However, new seller asking prices are now just 3% behind May’s peak and this relatively small fall in asking prices, coupled with stable numbers of new properties coming to the market each month, are strong indicators that forced sales are not widespread.
The number of sales being agreed is now 10% below the same period in 2019, improving from being 15% below 2019’s level last month. The pandemic-driven stock shortage also now appears to be over, with the number of available homes for sale now just 1% behind this time in 2019.
While there is certainly no glut of homes for sale, buyers across Great Britain are likely to see much more choice in their local area compared to a year ago.
The agenda
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8.15am GMT: ECB vice-president Luis de Guindos speaks at the Opening Conference of the Euro Finance Week “The Future of Banking”
-
9am GMT: Opec’s monthly oil market report
-
12pm GMT: India’s inflation rate for October
-
3pm GMT: IBD/TIPP index of US economic optimism
-
4.05pm GMT: Bank of England poliicymaker Catherine L Mann speaks at the University of Oxford Environmental Economics Seminar ‘Climate and monetary policy. In particular on transition policies and their macroeconomic effects and monetary policy’
Key events
UK business confidence falls to its lowest in 2023
Worryingly, business confidence in the UK has fallen to its lowest level this year, even though inflation expectations have eased.
The latest quarterly UK Business Outlook from Accenture and S&P Global has found that the net balance of firms expecting activity to increase over the next 12 months slid to +37% in October, down from +40% in June and +43% in February.
The survey found that firms expect cost inflation to slow, meaning they will raise prices less steeply. But wage growth expectations remain near record levels, as staff push for protection against rising prices in the shops.
Higher interest rates are weighing on investment plans too, with slightly more firms expecting to cut R&D expenditure in the upcoming year than to raise it.
But UK firms are still cheerier than international rivals.
The report says:
Despite the fall in confidence, UK business optimism still remained relatively high compared to global (+25%) and European (+16%) average, which fell by 3% and 9% respectively.
Rightmove: What the experts say
Tom Bill, head of UK residential research at Knight Frank, points out that weak suppy of houses has stopped prices crashing this year:
“Sales volumes will improve as buyers get used to higher rates and sellers become accustomed to lower asking prices.
The story of this slowdown is a double-digit fall in transactions rather than a dramatic price correction, which has been kept in check by weak supply. Unlike the pandemic or mini-Budget, there is no single reason that activity is weak.
Higher rates, the prospect of a general election, overseas conflict and ambiguity over when the bank rate will peak are all sapping sentiment. We expect prices and sales volumes to bottom out next year as the economic backdrop stabilises.”
Matt Thompson, head of sales at Chestertons, suggests the downturn in the capital could be bottoming out:
In London, many house hunters don’t expect property values to fall much further; particularly as prices haven’t decreased to the extent as initially predicted by some.
As a result, buyers are currently more motivated to continue their property search. This boost in buyer confidence is further supported by last month’s announcement that interest rates remain at 5.25% for the time being.”
Victoria Scholar, head of investment at interactive investor, says:
With prices coming down and expectations for further weakness in the housing market next year, this is very much a buyers’ market, particularly for individuals and families who don’t need to load up on debt. But many of those who need a mortgage have been spooked by the surge in borrowing rates, holding off until next year, hoping that borrowing rates will ease and mortgage affordability improves.
Plus sellers are less incentivised to list their properties at the moment given that they would most likely need to drop their asking prices.
On a more positive note, Rightmove said that the housing shortage is easing. And with the Bank of England keeping rates on hold at its two most recent decision meetings, there are expectations that with inflation coming down, the mortgage market could be shifting beyond its peak. In an optimistic sign, just last week Nationwide dropped its two-year fixed mortgage rate below 5% in what it called a ‘watershed moment’ for the housing market.”
Landlords sell up in Great Britain as buy-to-let market sours
Miles Brignall
The great property sell-off by landlords has continued across Great Britain this year, in particular in Scotland, where the buy-to-let bubble appears to have burst.
Estate agent Hamptons revealed that landlords were on target to have bought the fewest number of homes since 2010 – once the period of the first Covid lockdown is discounted from the data.
The upmarket estate agent said that while the 2023 sell-off had been less pronounced than over the last two years, it was continuing the trend started in 2021.
More here.
The market for smaller UK homes is more buoyant than for large ones, Rightmove’s data shows.
The number of sales being agreed for studio, one-, and two-bed properties is just 7% lower than 2019’s level.
But sales of four-bed detached houses and all five-bed plus properties, are 14% behind 2019’s level.
On a regional basis, asking prices are down year-on-year in the Midlands and all Southern regions.
But, in Wales, Scotland and the North of England, asking prices are higher than a year ago:
Asking prices could continue to drop for the rest of this year, Rightmove suspects, as more sellers price their properties “right the first time” to win a deal, rather than over-pricing and having to cut.
Rightmove’s Tim Bannister explains:
We’d expect to see a drop in new seller asking prices in the last couple of months of the year, as serious sellers start to separate themselves from discretionary sellers and cut through the Christmas noise with an attractive price to secure a buyer.
However, the larger than usual drop this month signals that among the usual pricing seasonality, we are starting to see more new sellers heed their agents’ advice and come to market with more enticing prices to stand out from their over-optimistic competition. Buyers are still out there, but for many their affordability is much reduced due to higher mortgage rates.
Introduction: House asking prices fall by £6,000 in November
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
The chill in the UK housing market isn’t letting up, as high interest rates continue to cool demand from buyers.
Asking prices for homes in Britain have fallen at their fastest pace in five years for the time of year, according to property website Rightmove this morning.
New seller asking prices dropped by 1.7%, or over £6,000, this month to an average of £362,143, Rightmove reported.
It’s common for asking prices to slip as Christmas approaches, as sellers price their homes more competitively to attract buyers.
But this month’s fall is the largest November drop since 2018, although they did drop by more in August and also last December.
Rightmove says 2023 has been challenging for the housing market, but more positive than predicted.
Its data shows that average asking prices are just 3% below May’s peak, while the number of sales being agreed has picked up in the last month, and more stock available than at the peak of the Covid-19 pandemic.
Tim Bannister, Rightmove’s director of property science, says:
Despite the turbulent end to 2022, the year to date has been better than many expected. Asking prices have eased from the unsustainably frothy heights seen during the pandemic markets, where many sales went to best and final bids.
However, new seller asking prices are now just 3% behind May’s peak and this relatively small fall in asking prices, coupled with stable numbers of new properties coming to the market each month, are strong indicators that forced sales are not widespread.
The number of sales being agreed is now 10% below the same period in 2019, improving from being 15% below 2019’s level last month. The pandemic-driven stock shortage also now appears to be over, with the number of available homes for sale now just 1% behind this time in 2019.
While there is certainly no glut of homes for sale, buyers across Great Britain are likely to see much more choice in their local area compared to a year ago.
The agenda
-
8.15am GMT: ECB vice-president Luis de Guindos speaks at the Opening Conference of the Euro Finance Week “The Future of Banking”
-
9am GMT: Opec’s monthly oil market report
-
12pm GMT: India’s inflation rate for October
-
3pm GMT: IBD/TIPP index of US economic optimism
-
4.05pm GMT: Bank of England poliicymaker Catherine L Mann speaks at the University of Oxford Environmental Economics Seminar ‘Climate and monetary policy. In particular on transition policies and their macroeconomic effects and monetary policy’