Filtered by Subscriptions: UK Housing Use setting UK Housing
The recent surge in rental growth to a record high has been widely reported, but the usual explanations are unsatisfactory. Population indicators don’t suggest a sudden rise in demand, and there is little evidence of landlords selling up. Instead, we …
16th November 2022
Demand collapses The October RICS Residential survey showed that the spike in quoted mortgage rates to over 6%, a level last seen in 2008, has triggered a collapse in buyer demand comparable to that seen in the financial crisis. That’s consistent with our …
10th November 2022
Halifax confirms house price declines are now entrenched The 0.4% m/m fall in house prices reported by Halifax backs up the data from Nationwide that house price falls are becoming entrenched. Surging mortgage interest rates have flattened demand, as many …
7th November 2022
Improvement in headline index will not last long As was the case last month, an improvement in delivery times and subcontractor availability drove a surprise rise on the headline construction PMI in October. But a slowing economy and higher financing …
4th November 2022
House prices now falling as higher mortgage rates bite The jump in mortgage interest rates is now being felt in house prices, with Nationwide reporting the first month-on-month fall since July 2021. House prices are now set to stay on a sustained downward …
1st November 2022
Approvals begin to fall as rising rates take effect Mortgage approvals fell in September as buyers began to adjust to rising interest rates. With further rate rises likely in the coming months, we expect this downward trend to continue and for lending to …
31st October 2022
Overview – The jump in market interest rates following the ill-advised “mini” budget has forced quoted mortgage rates up to over 5%, a level not seen since 2009. That will turn the slowdown in demand already evident in the survey data into a collapse, as …
While interest rates are unlikely to rise as high as investors expected in the immediate aftermath of the “mini budget”, those hoping that the surge in mortgage rates since will be reversed are likely to be disappointed. Admittedly, the peak in Bank …
21st October 2022
Overview – The drag on the economy from CPI inflation being stuck at 10% for a year and interest rates rising to 5.00% will be enough to trigger a recession that involves real GDP declining by around 2.0% from its peak to its trough. What’s more, …
20th October 2022
The UK property market has a long history of either causing or worsening recessions. But that history has taught both banks and regulators a lesson. So while higher debt payments, falling property prices and a slump in construction will play a major …
19th October 2022
Credit conditions already tightening prior to market turmoil The Q3 credit conditions survey doesn’t capture the impact of the market turmoil of recent weeks, with the deadline for responses falling a week before the “mini-budget”. Nonetheless, it shows …
13th October 2022
Growing acceptance price falls are in the pipeline While optimists can still point to limited supply, a fifth consecutive drop in new buyer enquiries in the RICS survey in September has convinced a majority of surveyors that house prices are heading for a …
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
Its widely accepted that the jump in mortgage rates from 1.5% last autumn to 6% means that a significant fall in house prices is now inevitable. In this Update we set out how we came to our forecast that prices will fall by around 12% in nominal terms, …
10th October 2022
Halifax confirms that house prices have stalled The 0.1% monthly fall in the Halifax house price index in September echoed the message from Nationwide earlier this week that house prices have now stalled. Given the sharp rise in mortgage rates over the …
7th October 2022
The scale of the increase in mortgage rates means that a large rise in mortgage arrears and repossessions is probably unavoidable. But substantial capital buffers mean lenders will be able to absorb the resulting losses without causing lasting problems …
4th October 2022
Jump in approvals likely a rush to beat soaring rates The surprise jump in mortgage approvals in August probably reflected a rush to lock in mortgage offers as interest rates surged. There is a possibility that could be repeated next month, but …
30th September 2022
The stall that precedes the fall The stall in house prices in September was little surprise given the growing downward pressure on demand from rising mortgage rates. We suspect that, despite the reduction in stamp duty announced last week, this marks …
The rise in market interest rates that has already happened will push up mortgage rates to at least 6% and reduce the size of loans that lenders can offer. The resulting drop in buying power makes a significant drop in house prices inevitable. Many …
27th September 2022
Investors have revised up how far they expect the Bank of England to raise interest rates as they continue to digest the tax cuts announced on Friday. This Update examines what the impact on the housing market would be, and whether that could prevent …
The Chancellor took a rare, targeted approach to Stamp Duty in today’s vast package of tax cuts. The changes will remove the tax altogether for large numbers of buyers while retaining most of the revenue. But the bigger near-term implication of fiscal …
23rd September 2022
The upward revision to our Bank Rate forecast means that mortgage rates will rise further and faster than we previously envisaged, to a peak of 4.7% in March. The resulting higher cost of mortgage repayments will make the fall in buyer demand that has …
21st September 2022
Arrears will rise as lenders adjust to higher rates The detailed mortgage lending data for Q2 show solid lending volumes, growing leniency on deposit sizes and income multiples, and arrears at a record low. But the ongoing adjustment to higher interest …
14th September 2022
London house prices and transactions have proven resilient to the headwinds of the cost-of-living crisis and rising mortgage rates so far. House price growth in London rose to 7.2% y/y in Q2, the highest since 2016. But that was still below the national …
13th September 2022
PM Liz Truss’ fiscal package will limit the size of the forthcoming recession, but that may force the Bank of England to raise rates further to get inflation back to target in the medium term. As a result, it increases the likelihood that mortgage rates …
8th September 2022
Downturn becoming entrenched A further deterioration in demand in August has led surveyors to accept that a fall in prices is coming. The survey is already consistent with prices falling by 2% q/q in Q4 this year, and the headwinds to demand will only …
House prices rise while outlook deteriorates The modest 0.4% rise recorded by Halifax in August confirms that house prices have continued to increase despite the sharp increases in mortgage rates we have seen so far and growing pressure on household …
7th September 2022
Rise masks deteriorating outlook The surprise increase in the construction PMI is little cause for optimism given it was driven by the reversal of an idiosyncratic fall in civil engineering activity a month earlier. Indeed, the commercial activity …
6th September 2022
Don’t read too much into solid August gain The solid 0.8% m/m increase in house prices in August suggested that house prices managed to retain some positive momentum despite growing pressure on households’ finances. But the drag on demand from the …
1st September 2022
Rising mortgage rates will sustain downward trend in approvals While mortgage approvals ticked up in July, that only reversed a fraction of their previous decline. And the drag on buyer demand from the ongoing increase in mortgage rates and surging …
30th August 2022
Prime central London (PCL) house prices have underperformed even disappointing wider London trends over recent years. But the latest data have been more encouraging and with prime buyers less exposed to rising interest rates and the cost-of-living …
23rd August 2022
The latest figures suggest that Build to Rent (BTR) investment has continued to expand rapidly. Despite this trend, which predates COVID-19, the sector remains under-developed by international standards. But with plenty of opportunities for investors, we …
16th August 2022
Overview – Tight supply has supported house prices so far, but they now appear to be stalling. Demand will only deteriorate further over the coming quarters as rising mortgage rates, high inflation, and the recession weigh on buyers’ budgets and …
12th August 2022
Limited supply supporting pricing for now The RICS survey showed that weaker demand has not yet fed through to falls in prices, but sales volumes are beginning to wilt. We think it is just a matter of time before prices follow activity lower. The new …
11th August 2022
House prices stall Like Nationwide, Halifax reported that house price growth ground to a halt in July. As these house price indices are based on mortgage approvals, its possible that affordability rules put a temporary brake on prices. But equally it …
5th August 2022
Optimism misplaced as activity slows The fourth consecutive decline in the headline construction PMI took the index below 50 for the first time since January 2021. While driven by an idiosyncratic drop in civil engineering activity, the upbeat new orders …
4th August 2022
Increases in house prices slow to a crawl While the rise in the annual rate of house price growth from 10.7% in June to 11.0% in July will make most of the headlines that was driven by base effects. Instead, we think the main takeaway from the July …
2nd August 2022
We now think that the reduction in consumer real incomes due to high inflation will push the economy into recession this year. But the Bank of England is likely to have to keep on raising interest rates regardless in order to bring inflation back down to …
29th July 2022
Slip in mortgage approvals in June a sign of the slump to come Mortgage approvals slipped back to below 2019 levels in June supporting our view that higher interest rates will cause housing market activity to slump over the next two years. Indeed, further …
Although less widely reported than the house price boom, rents have been setting records too. The 11% y/y rise in the Zoopla rents index in Q1 was the fastest since the series began in 2006. That strength was driven by extraordinary factors related to the …
26th July 2022
Overview – A rise in CPI inflation from the 40-year high of 9.1% in May to a peak of 12% or higher in October will reduce real incomes by enough to mean that a recession now seems inevitable. Our forecast that real household disposable income will fall by …
18th July 2022
Lenders to tighten credit standards even as demand softens The Q2 credit conditions survey shows that lenders will not loosen credit conditions to keep the house price boom going like they did in 2004-2007. Indeed, despite the fact demand is expected to …
14th July 2022
Economic reality finally catching up with the housing market There was an unmistakeable cooling in the housing market in June as the new buyer enquiries balance slipped further into negative territory. With mortgage rates continuing to rise and the …
The impact of rising mortgage rates and the hit to real incomes from high inflation have given rise to fears of mortgage repayment difficulties when existing borrowers come to remortgage. But the widespread use of fixed-rate deals, higher levels of …
11th July 2022
18-year high house price inflation will mark the peak The substantial rise in the Halifax house price index in June was surprising given the softening in the Nationwide figures in the same month, and the deterioration in leading indicators of housing …
7th July 2022
Slowdown in construction activity intensifies in June The third consecutive monthly fall in the construction PMI suggests that that growth in development activity is slowing. The near-term outlook has also deteriorated, with growth in new orders easing …
6th July 2022
Weak approvals point to subdued lending demand ahead Mortgage approvals remained relatively weak in May supporting our view that higher interest rates are now starting to curb activity. As mortgage rates are set to rise further over the next year, this …
1st July 2022
More evidence of easing house price growth Monthly house price inflation slowed in June to its lowest since last September according to the Nationwide, while the annual rate continued to edge lower. That is consistent with our view of steady deceleration …
30th June 2022
After reaching a record-high in June, we think that inflation in builders’ costs will soon start to ease. But even as cost pressures subside, construction volumes will slump as the housing market slows. Construction volumes strengthened in the first half …
28th June 2022
Measures of housing market activity and prices tend to follow a predictable sequence in downturns. In this Update we highlight the key US and UK variables that clients should follow to track the housing downturn and identify turning points. With most …
24th June 2022
