Biggest December to January price rise since 2020
Rightmove sounded an optimistic note for the housing market in their house price index this week, revealing that average new seller asking prices rose by 1.3% month-on-month to reach an average of £359,748.
The monthly increase was the highest December to January rise since 2020, although average prices are still 0.7% lower than this time last year.
However, the number of new properties coming to market is 15% higher in January than the same period in 2023, described by the property website as “tentatively promising activity” in the first week of the year.
Despite the good start to the year, Director of Property Science Tim Bannister called for the sector to not get too carried away.
Elevated mortgage rates and the wider cost-of-living squeeze are still limiting buyers’ spending power.
Tim Bannister, Director of Property Science, Rightmove
Accurate and realistic pricing for their local area is the recipe for success for sellers looking to get moving in 2024, and it’s been proven that over-optimistic pricing makes a move much less likely.
This generally-optimistic outlook for 2024 was echoed by Knight Frank, who have already revised their forecast for the year from three months ago, where they predicted UK house prices to fall by -4%.
Now, the property consultancy firm believes that house prices will rise by 3% in 2024, thanks to falling mortgage rates, with another 3% rise in 2025.
Meanwhile, official figures for November 2023 from the Office for National Statistics has found that average UK house prices decreased by -2.1% over the year, with a typical property valued at £285,000.
Annual house prices decreased by -2.9% in England and -2.4% in Wales, but increased by 2.2% in Scotland and 2.1% in Northern Ireland.
All regions of England saw a fall in house prices over the twelve months to November, with London experiencing the highest fall, at -6%. The North East felt the least impact, at -0.4% over the year.
Contractors showing caution as insolvencies rise
Global consultancy Gardiner & Theobald has warned of growing risk-aversion amongst contractors, following a number of high-profile collapses over the past twelve months.
However, survey respondents have forecast greater tendering competition over the next six months, due to fewer tendering opportunities as the UK construction industry “continues to grapple with uncertain demand, high construction and financing costs, as well as skilled labour shortages”.
In its Q1 2024 Tender Price Forecast, Gardiner & Theobald have predicted a 2% rise in tender price inflation over the next twelve months, rising to 2.25% in 2025.
Meanwhile, figures from the Government’s Insolvency Service have revealed that 4,370 UK construction firms went out of business in the year to November 2023.
The figure, reports Noble Francis (Economics Director at the Construction Products Association), is at its highest level since the global financial crisis in 2007/8, and raises concerns about the year ahead if the market continues at a subdued level.
A byproduct of increased insolvencies is the effect on labour; young people who lose their jobs tend to move to other sectors, widening an already critical skills gap.
Red Sea attacks could impact supply times, warns CPA
The Construction Products Association has sounded the alarm over the ongoing attacks on container vessels in the Red Sea by Houthi rebels, saying that the crisis could become a “significant issue” for the supply of construction materials.
Prices for 40ft containers travelling from the Far East to Europe have more than quadrupled in the past month from $1,170 in December to $4,400 last week, as many shipping companies opt to take a longer and more expensive route around Africa.
And, whilst around three-quarters of UK construction products are manufactured in the UK or Europe, there could still be an effect on lead-in times for products transported from further afield, such as electronics and sanitaryware.
In a moment where we want trading to improve for everybody’s benefit, this is very much a drag on the ability to improve, and so clearly, it’s a concern.
Peter Caplehorn, Chief Executive, Construction Products Association
Crest sounds profit warning as material manufacturers cut back
Developer Crest Nicholson has issued a profit warning for its 2023 financial year, citing issues on legacy schemes.
The housebuilder has stated in a trading update to the year ending 31 October 2023 that it now expects pre-tax profit to be £41m, having previously forecast in November that it was anticipating a range from £45m to £50m.
The firm did add that it was “encouraged” by an increase in customer interest since the start of 2024, but stated that it was “too early to gauge customer behaviour”.
Meanwhile, Travis Perkins has signalled further job losses to those carried out at the end of 2023, as it seeks to deliver savings in a slowing market. The firm employs around 20,000 staff across 1,400 branches in the UK.
Brick giant Ibstock has also carried out an operational review of the business, shutting down its South Holmwood brick factory as sales slump.
The closure follows a similar shutdown of the firm’s Ravenhead factory in 2023, with the business looking to deliver £20m a year in savings as it anticipates the housing market to “remain subdued in the near-term”.
Housing View 