David Demos
Highlights:
- UK Housing demand stays weak due to mortgage affordability challenges.
- Bank of England halts interest rate rises. RICS foresee little deviation from current housing trends.
- Even with dropping house prices, the supply of rented homes must increase to meet demands.
Key Figures:
- RICS September’s survey showed a net reading of -39% for new buyer enquiries and agreed sales at -37%.
- The net balance in September was down by a significant -69%, showing minimal change from the previous month (-68%).
- Annual sales expectations have shifted, with a net balance of +3%.
Deep Dive:
Even as UK housing prices continue to tumble, housing affordability is still a primary concern for potential buyers. A recent Royal Institution of Chartered Surveyors (RICS) report underscores this issue. Despite lower housing prices, other factors like lack of supply, high interest rates, and mortgage costs keep housing out of reach for many.
Tarrant Parsons, a senior economist at RICS, commented on the situation. “With mortgage affordability still incredibly stretched, it’s unsurprising that buyer activity across the housing market remained subdued in September,” he noted. Although the Bank of England recently decided not to raise interest rates — a move that provided a brief sigh of relief — Parsons believes that interest rates are now set to remain stagnant for a considerable period.
This paints a somewhat gloomy picture for the immediate future. There may be hope on the horizon. The 12-month sales expectations have started to improve, moving into positive territory after several adverse reports.
Still, housing experts remain concerned about the declining sales volume. The latest net balance shifted to -24%, though it’s an improvement from the previous month’s -36%. The launch of RICS’ manifesto for the built environment, which advocates for increasing the supply of rented homes, further underscores the industry’s call for actionable solutions.
A Currie & Brown report highlighted challenges in the construction sector regarding achieving net zero targets. Adam Mactavish, the global director of sustainability at Currie & Brown, emphasized the need for clear sustainability standards and criticized the government’s decision to delay climate policies. He stressed the importance of reducing energy demand to mitigate potential future energy price shocks.
Notes on UK Housing Politics:
Sunak has still refused to tackle the housing shortages. Sunak prefers not to discuss it or use housing shortages as a deregulation excuse. When it comes to other more extensive projects, Sunak cancelled the High Speed 2 line.
Starmer has made contradictory promises of empowering local leaders when it comes to development and promises to override local vetos. His recent promise of “I won’t build homes without GPs and schools” could mean he will invest in the infrastructure, or considering history, he isn’t going to build the houses.
