Introduction: Signs of spring revival in UK housing market
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Spring has sprung in the City of London this morning, and there are signs of green shoots in the housing market too.
House sellers lifted their asking prices by the largest amount in 10 months in March, new data from Rightmove shows, as demand from buyers picked up in the traditionally busier spring selling season.
The average price of newly marketed properties on the market rose by 1.5%, or £5,279, this month to £368,118.
This rise in asking prices suggests the property market is heating up after a slow 2023, with the number of sales being agreed now 13% higher than a year ago.
Buyer demand is now 8% above last year, Rightmove reports, led by the larger homes sector and London, which are less mortgage-rate-sensitive than the rest of the market.
Indeed, asking prices for “Top of the ladder” properties rose almost 3% this month.
Confidence is seeping back into the housing market, reports Tim Bannister of Rightmove:
“March is typically a strong month for asking price growth, as both buyer and seller activity levels rise and the spring selling season gets underway.
However, the stronger than usual price growth this March indicates that new sellers are feeling much more confident, with some perhaps being over-optimistic, that there is enough buyer activity and affordability in their local market to achieve a higher price.
Buyers’ affordability has increased since mortgage rates began to fall back from their peak last summer.
But, asking prices are still £4,776 below their peak in May 2023; some sellers realise they need to be realistic with their pricing, given mortgage rates are still much higher than a couple of years ago.
Bannister adds:
For those who can afford to buy and have yet to take action to move this year, this may provide a window of opportunity to buy as we now seem to be past the bottom of the market.
Rightmove adds that the “lacklustre Spring Budget” didn’t help the market, as there was no direct help for first-time buyers or mortgage market innovations.
Matt Thompson, head of sales at Chestertons, says:
“In March, the property market witnessed steady demand from buyers although some house hunters decided to pause their search in the hope for major incentives to be announced in the Spring Budget. As this wasn’t the case, the majority of these buyers have since begun resuming their property search.
As a result, we expect for March to conclude the first quarter of the year with a busy property market – particularly in the capital where demand continues to outstrip supply.”
The Times reports today that OnTheMarket, Rightmove’s smaller rival, has found that 65 per cent of active buyers were confident they would buy a property within the next three months.
Its latest survey also found a rise in sellers’ confidence, with 60% expecting to sell within three months, up from 57% in January.
This comes at the start of a busy week for the world’s central bankers; the Bank of England is widely expected to leave interest rates on hold on Thursday, after its next meeting.
Also coming up today
Prime minister Rishi Sunak is promising to create up to 20,000 more apprenticeships as part of a series of reforms to support small businesses.
Sunak is expected to announce £60m of new government funding, to pay the full cost of apprenticeships for people aged 21 or under at small firms from 1 April.
The government is also pledging to cut red tape for small businesses, and shaking up the apprenticeship levy. That levy makes large organisations set aside 0.5% of their payroll for apprenticeships; from April, firms will be able to pass on 50% of their unused funds, up from 25% today.
And one of the UK’s most successful tech entrepreneurs will go on trial in San Francisco later today, over what US prosecutors have called “the largest fraud in the history” of Silicon Valley.
Mike Lynch, once dubbed “Britain’s Bill Gates”, is accused of artificially inflating the sales of his software company Autonomy before its takeover by Hewlett-Packard in 2011, and misleading auditors, analysts and regulators. Lynch, who has always denied the allegations of wrongdoing, was extradited from the UK last year after a five-year battle.
The agenda
Key events
Although China’s property market is struggling, the rest of its economy seems to be doing better.
China’s National Bureau of Statistics reported that industrial output rose 7% from a year earlier in January-February, beating forecasts.
Fixed-asset investment, or spending on factories and equipment, was up 4.2% year-on-year, while retail sales grew 5.5%.
This data indicates that “the Chinese economy is performing better than expected helped by extra demand during the Lunar New Year period”, says Jim Reid, strategist at Deutsche Bank.
Those who overprice their homes risk being dragged into a long selling period, and could be forced to cut prices to find a buyer, warns Emma Fildes, founder of the buying agency Brick Weaver.
She says today’s Rightmove data shows owners of larger properties are particularly optimistic about getting a high price – but this can backfire.
Fildes explains:
Sellers misinterpret a 13% increase in sales and renewed buyer interest, up 8% on last year, by applying an average 1.5% increase on newly marketed asking prices in March 2024.
Optimism is highest amongst those with bigger properties, who hope to regain some of the value promised in 2022 after 2023 rates chipped away at their price. Sellers in this bracket increased their initial asking price by 2.9% on February listings. This misplaced confidence could lead to a drawn out marketing period, with numerous price reductions, before securing a buyer. This is demonstrated in the average time to agree a sale, currently sitting at 73 days in London and 71 out of the Capital.
For those looking to move, realism is best applied to asking prices when hoping to secure a buyer.
Based on @rightmove House Price Index. Sellers misinterpret a 13% increase in sales and renewed buyer interest, up 8% on last year, by applying an average 1.5% increase on newly marketed asking prices in March 2024.
Optimism is highest amongst those with bigger properties, who… pic.twitter.com/hFoNxSg3wH
— Emma Fildes (@emmafildes) March 18, 2024
China’s property sector is still in the doldrums
Conditions continue to look shakier in China’s property market.
New official data shows that property investment in China fell 9.0% year-on-year in the first two months of 2024.
National Bureau of Statistics spokesperson Liu Aihua told reporters that the property market is “still in a state of adjustment and transition” but policies outlined at China’s annual legislative session earlier this month will promote “stable and healthy development.”
This drop is actually an improvement on the end of last year; real estate investment in China fell by 24.0% in December 2023.
China’s property sector has, understandably, struggled as authorities moved to curb excess borrowing by property developers.
This led to turmoil in China’s property sector, with suppliers unpaid and homebuyers left without apartments – prompting mortgage boycotts in hundreds of cities.
Last month, major developer Country Garden Holdings was hit with a liquidation petition from a creditor over a loan non-repayment.
Introduction: Signs of spring revival in UK housing market
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Spring has sprung in the City of London this morning, and there are signs of green shoots in the housing market too.
House sellers lifted their asking prices by the largest amount in 10 months in March, new data from Rightmove shows, as demand from buyers picked up in the traditionally busier spring selling season.
The average price of newly marketed properties on the market rose by 1.5%, or £5,279, this month to £368,118.
This rise in asking prices suggests the property market is heating up after a slow 2023, with the number of sales being agreed now 13% higher than a year ago.
Buyer demand is now 8% above last year, Rightmove reports, led by the larger homes sector and London, which are less mortgage-rate-sensitive than the rest of the market.
Indeed, asking prices for “Top of the ladder” properties rose almost 3% this month.
Confidence is seeping back into the housing market, reports Tim Bannister of Rightmove:
“March is typically a strong month for asking price growth, as both buyer and seller activity levels rise and the spring selling season gets underway.
However, the stronger than usual price growth this March indicates that new sellers are feeling much more confident, with some perhaps being over-optimistic, that there is enough buyer activity and affordability in their local market to achieve a higher price.
Buyers’ affordability has increased since mortgage rates began to fall back from their peak last summer.
But, asking prices are still £4,776 below their peak in May 2023; some sellers realise they need to be realistic with their pricing, given mortgage rates are still much higher than a couple of years ago.
Bannister adds:
For those who can afford to buy and have yet to take action to move this year, this may provide a window of opportunity to buy as we now seem to be past the bottom of the market.
Rightmove adds that the “lacklustre Spring Budget” didn’t help the market, as there was no direct help for first-time buyers or mortgage market innovations.
Matt Thompson, head of sales at Chestertons, says:
“In March, the property market witnessed steady demand from buyers although some house hunters decided to pause their search in the hope for major incentives to be announced in the Spring Budget. As this wasn’t the case, the majority of these buyers have since begun resuming their property search.
As a result, we expect for March to conclude the first quarter of the year with a busy property market – particularly in the capital where demand continues to outstrip supply.”
The Times reports today that OnTheMarket, Rightmove’s smaller rival, has found that 65 per cent of active buyers were confident they would buy a property within the next three months.
Its latest survey also found a rise in sellers’ confidence, with 60% expecting to sell within three months, up from 57% in January.
This comes at the start of a busy week for the world’s central bankers; the Bank of England is widely expected to leave interest rates on hold on Thursday, after its next meeting.
Also coming up today
Prime minister Rishi Sunak is promising to create up to 20,000 more apprenticeships as part of a series of reforms to support small businesses.
Sunak is expected to announce £60m of new government funding, to pay the full cost of apprenticeships for people aged 21 or under at small firms from 1 April.
The government is also pledging to cut red tape for small businesses, and shaking up the apprenticeship levy. That levy makes large organisations set aside 0.5% of their payroll for apprenticeships; from April, firms will be able to pass on 50% of their unused funds, up from 25% today.
And one of the UK’s most successful tech entrepreneurs will go on trial in San Francisco later today, over what US prosecutors have called “the largest fraud in the history” of Silicon Valley.
Mike Lynch, once dubbed “Britain’s Bill Gates”, is accused of artificially inflating the sales of his software company Autonomy before its takeover by Hewlett-Packard in 2011, and misleading auditors, analysts and regulators. Lynch, who has always denied the allegations of wrongdoing, was extradited from the UK last year after a five-year battle.
