UK Housing

UK Housing Market Update

UK Housing Market Update

300,000 supply target remains out of reach

The most comprehensive statistics on housing supply confirmed that the pause in construction in Q2 2020 caused completions of new homes to drop back. Housebuilding activity has since recovered but materials shortages, the end of the Help to Buy Equity Loan scheme, and a cooling market suggest that the high water mark for new housing supply has already been and gone.

29 November 2021

UK Housing Market Update

Where is all the stock?

Estate agents undoubtedly have a very limited number of homes on the books. But the idea that the lack of supply is due to few homes being put up for sale is a misconception. High numbers of transactions inevitably mean that listings are higher than usual, but they are being outstripped by even stronger demand as large numbers of first-time buyers look for homes.

24 November 2021

UK Housing Market Update

Increase in mortgage rates to be limited

Anticipation of higher interest rates has pushed up fixed mortgage rates. And with scope for banks to absorb higher costs in their margins now exhausted, future changes in interest rate expectations will be fully passed through to mortgage rates. But as we think the forthcoming rise in interest rates is already priced in, we are not expecting mortgage rates to jump much higher.

12 November 2021
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UK Housing Market Update

Dovish surprise reduces housing market risks

The indication from the Bank of England that Bank Rate of 1.25% would be too high for the economy suggests that the forthcoming rise in interest rates won’t be anywhere near large enough to topple the housing market. Rather, we expect house prices to rise by a further 5% in 2022.

5 November 2021

UK Housing Market Update

Materials shortages restrain construction

Shortages of construction materials are unlikely to ease for at least another 6-12 months, restraining activity in the renovation sector and among smaller housebuilders That is likely to cap housing starts for the next year or so at about 40,000 per quarter.

21 October 2021

UK Housing Market Update

Modest rate hikes won’t prevent house price gains

We doubt that a larger rise in Bank Rate over the next two years than we previously expected will put much upward pressure on mortgage rates. Low interest rates and increased spending on housing costs will continue to provide a supportive environment for house price valuations. So we retain our above-consensus view that house prices will rise by a further 5% in 2022.

1 October 2021

UK Housing Market Update

Is the rise in house prices becoming a concern?

It is an under-statement to say that house prices have weathered the pandemic well; housing markets are positively booming. Yet the drivers of this rise in prices are rather different to those of the pre-2007 housing boom, meaning that we do not seem to be heading for a repeat of the housing-driven financial crisis of 2007/08. Nonetheless, there are pockets of concern, and we would get more worried if it looked like interest rates were about to rise sharply.

UK Housing Market Update

Can large deposits continue to support house prices?

A jump in deposit sizes has been a key driver of the rise in house prices over the past 18 months. While saving is now dropping back, households have built up a large stock of cash assets which will prevent a rapid reversal in deposit size. While not providing any additional boost to house prices, that will help support them at their current level.

27 September 2021
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