Rightmove reports first monthly fall in house prices this year
Property website Rightmove has revealed that house prices fell by £82 (-0.0%) in June to £372,812.
Whilst a very slight fall, the drop in asking prices is the first recorded by Rightmove this year, and the first reduction seen in the month of June since 2017.
Reporting that “the delayed spring bounce in May has quickly turned into an earlier than usual summer price slowdown”, the firm also predicted that asking prices will likely fall in most months for the rest of the year, in line with usual seasonal patterns.
Rightmove also forecast a -2% overall fall in average asking prices by the end of the year.
Agents report that new sellers are sitting in two camps – those who still have overoptimistic price expectations following the buoyant pandemic market, and those who have adapted to the new conditions and are coming to market with a competitive price.
Tim Bannister, Director of PRoperty SCience, Rightmove
Meanwhile, a report by Capital Economics predicts that house prices will fall by -12% below current levels over the next two years, due to the recent increase in mortgage rates.
The research house also forecast that – if mortgage rates were to be sustained at around 6% for several years – then house prices could fall by around 25%.
HBF joins developer coalition in calling for Infrastructure Levy plans to be dropped
The Home Builders Federation (HBF) has joined a group of local authorities, developers, housing associations and charities in calling for Michael Gove to scrap plans for an Infrastructure Levy.
The coalition claims that the Levy, which would see Section 106 and Community Infrastructure Levy systems replaced, could reduce the funding available for affordable and social rent homes, as well as deepening the housing crisis.
In a letter to Government, the group of around 30 signatories urges Gove to reform the current developer contributions system.
However, having considered your proposals in further detail and responded to your department’s consultation where we’ve been able, we cannot support reforms that are likely to leave communities with fewer new social and affordable homes, mixed and balanced developments and less of the infrastructure they need.
Letter to Secretary of State, Michael Gove
Start on sites will slump this year but recover in 2024, says Glenigan
Information provider Glenigan has forecast that housing starts this year will fall by 18% before recovering 12% next year and 3% the year after.
In its industry forecast for 2023-2025, the firm states that a combination of the war in Ukraine, inflation and rising interest rates will hamper production this year.
We are still in a state of extreme uncertainty, and the industry is set for a challenging period over the coming year, but there’s light at the end of the tunnel.
Allan Wilen, Economic Director, Glenigan
Meanwhile, Mace has increased its tender price forecast in light of further inflation in the UK.
The international consultancy firm recognises cooling material prices, but has increased its 2023 tender price forecast from 2.5% to 3.0% in London, and 3.5% elsewhere.
Forecasts for 2024 and 2025 have also risen, with Mace warning of “dire conditions” for the housing industry if interest rates continue to remain at current levels, or rise further.
The report also stated that labour shortages have led to regular pay “reaccelerating”, rising 1.8% in Q1 – an increase of 6.2% on 2022.
Notably, pay in construction is currently going from strength to strength, leaving us with little option but to increase tender prices for this year.
Andy Beard, Global Head of Cost and Commercial Management, Mace
Recent suggestions that interest rates could rise as high as 5.5% need careful watching. With the economy still incredibly fragile, such a shift could trigger a recession.
Prince William plans to build social housing on Duchy estate
The Prince of Wales has announced plans to build social housing on his 130,000-acre Duchy of Cornwall estate, as part of a five-year plan to end homelessness.
Stating that he wanted to “start small” with a view to scaling up construction, the Prince told the Sunday Times: “The key thing is making this sustainable. It’s all very well doing big gestures, but there’s no point if there’s no future to it.”
A long-term supporter of charities aimed at ending homelessness, a cause close to his mother’s heart, the Prince also stated that the project would provide “living conditions up and down the country that improve people’s lives who need that first rung of the ladder.”
Meanwhile, analysis by Legal & General has suggested that borrowing cost hikes will reduce the capacity of housing associations, resulting in 20,000 fewer homes being built per year.
L&G said that the sector would only be able to build around 45,000 homes a year; a fall from around 65,000 identified in a report published in March 2022.
Berkeley profits rise, as ilke Homes file for administration
A report for the full year ending 30 April 2023 from the Berkeley Group saw pre-tax profit rise 9.5% during its financial year, reaching £604m (2022: £551.5m).
Delivering 4,043 homes (2022: 3,760), the developer also revealed that sales for 2023/24 would be around 20% lower than 2022/23, due to current sales rates and an “uncertain” near-term market outlook.
Berkeley also said it was concerned about the Government’s proposed changes to the National Planning Policy Framework.
“While well-intended, all aspects must be fully considered and balanced with the objective of increasing the supply of quality new homes,” the group stated.
“The current position is creating uncertainty and delays in the construction of much needed homes, delays for people trying to move and increased barriers to entry for SME developers.”
Meanwhile, troubled modular house builder ilke Homes has filed a notice of intention to appoint an administrator as a two-week deadline to find a buyer approaches.
Ilke has been exploring fundraising options to allow it to deliver on its 4,200-home pipeline.
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