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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 Chart Book

Little sign of momentum in prices abating

The end of the stamp duty holiday has had remarkably little impact on buyer demand. If anything, the imbalance between strong home purchase demand and limited supply is intensifying. Indeed, Rightmove reported that the average time to sell a home continued to drop in October. That’s consistent with strong competition between buyers bidding up prices further in the near term, although in London these pressures appear to be weaker.

19 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

UK Housing Market Data Response

RICS Residential Market Survey (Oct.)

Rather than representing a “rush before mortgage rates rise”, we suspect that the rise in new buyer interest in October will prove durable. With inventory very limited, that points to house prices rising by more than most other forecasters expect in 2022.

11 November 2021

UK Housing Market Outlook

Higher interest rates to dab on the brakes

We think it will take longer than most others expect for rising interest rates to bring down the curtain on the COVID-19 house price boom. A large stock of household savings, the ongoing adjustment to home working and very limited stock on the market will conspire to drive house prices up by a further 5% in 2022, much more than the consensus expectation of a 2% gain. But rising interest rates will cool house price growth and transactions come the second half of 2022 and in 2023. However, with the labour market in good shape, Bank Rate would have to rise to over 2% for the housing market to get into correction territory, which neither we nor investors anticipate.

8 November 2021

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 Data Response

IHS Markit/CIPS Construction PMI (Oct.)

Construction firms reported that activity strengthened in October despite higher costs and continued difficulty sourcing materials. The big picture is that until those constraints ease construction output will continue to languish.

4 November 2021

UK Housing Market Data Response

Nationwide House Prices (Oct.)

Yet another upside surprise in house prices last month confirmed that the end of the stamp duty holiday in September did little to cool the market. We expect house prices to continue to beat expectations in the near term before a gradual rise in mortgage rates applies the brakes in the second half of 2022.

3 November 2021

European Commercial Property Focus

How pandemic changes will affect European cities

Europeans are returning to cities, though the return to offices has been much slower and this has had negative effects on city retail. Looking ahead, weaker demand for office and retail will weigh on performance in cities with large concentrations of these assets. However, prospects are better for cities that are attractive to more than just workers and that can fill the gap left by excess office and retail with other property types where the outlook is more positive. The cities which we think will perform best in the coming years as a result are Stockholm, Paris and Berlin. In view of the wider interest, we are also sending this European Commercial Property Focus to clients of our UK Commercial Property service & UK Housing service.

2 November 2021

UK Housing Market Data Response

Mortgage Lending (Sep.)

Unsurprisingly, mortgage lending spiked in September as buyers rushed to complete before the stamp duty taper period ended. More notable is the resilience of mortgage approvals, suggesting that the dip in transactions following the tax break will be small and fleeting.

29 October 2021

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