Real Estate

Asking prices for UK homes near record high; Thames Water lifts spending plan to £19.8bn – business live


Introduction: UK house asking prices edge closer to record peak

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The asking price for UK homes is creeping closer to a record high, as demand for larger, more expensive houses picks up.

New data from Rightmove this morning shows that the average price of property coming to the market rose by 1.1% (+£4,207) this month to £372,324. That’s just £570 short of the record set in May 2023.

A chart showing UK asking prices
Photograph: Rightmove

But “Top of the ladder” properties saw the biggest jump in asking prices in the last month (from 10th March – 13th April 2024). They rose by 2.7%, while the price tag on smaller properties more suited to first-time buyers only rose 0.3%.

UK house asking prices to April 2024
Photograph: Rightmove

Rightmove reports that the number of sales agreed so far this year is 13% higher than at this stage in 2023, as activity rebounds from last year’s much more subdued Spring.

Activity picked up at the end of last month; Thursday 28th March was the busiest day for new homes coming onto the market this year, and the third busiest since August 2020.

Rightmove suspects there is currently a “window of opportunity” for those considering a move to act, before a busy summer of sporting events (including the Olympics and Euro 2024) and the looming general distract movers.

Rightmove’s Tim Bannister says:

The top-of-the-ladder sector continues to drive pricing activity at the start of the year, with movers in this sector typically less sensitive to higher mortgage rates, and more equity rich, contributing to their ability to move.

While some buyers, across all sectors, will feel that their affordability has improved compared to last year due to wage growth and stable house prices, others will be more impacted by cost-of-living challenges and stickier than expected high mortgage rates.

Asking prices aren’t the same as actual selling prices, of course; Halifax reported earlier this month that house prices dipped in March for the first time this year.

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Estate agents have warned that sellers who overprice their properties will struggle to find buyers, and end up cutting asking prices to get a deal.

Sellers of larger homes who waited out 2023 price drops & pinned hopes on rates being trimmed in time for their 2024 gardens to bloom, are coming out with renewed confidence of securing a buyer this time round. Driving up, the overall avg growth in asking prices, AKA optimism, by… pic.twitter.com/VYQzwaGv95

— Emma Fildes (@emmafildes) April 22, 2024

The Royal Institution of Chartered Surveyors (Rics) reported this month that demand continued to “recover gradually”, after being hit by the surge in mortgage costs last year.

Uncertainty over the path of UK interest rates could still weigh on the market this year, with the Bank of England currently expected to only cut rates twice by the end of 2024, to 4.75%.

Tom Bill, head of UK residential research at Knight Frank, says:

“Buyers and sellers have faced mixed messages in 2024 as interest rate predictions have fluctuated. While rising asking prices show seller expectations have improved, there is broader downwards pressure on prices as mortgage rates edge higher, supply increases and a wave of people roll off sub-2% fixed-rate mortgages agreed in early 2022.

The result is more friction around prices, particularly when a rate cut seems to move further into the distance with every release of economic data. That said, higher supply means there should be a recognisable spring bounce in the housing market.”

The agenda

  • 9.30am BST: Nathanaël Benjamin, executive director for Financial Stability Strategy & Risk at the Bank of England, speaks at a Bloomberg event

  • 11am BST: CBI industrial trends survey of UK factry sector

  • 1.30pm BST: The Chicago Fed National Activity Index for March

  • 3pm BST: Eurozone consumer confdence stats

  • 4.30pm BST: ECB president Christine Lagarde gives a lecture at Yale University

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Key events

Lords urge FCA to halt plan to ‘name and shame’ companies under investigation

Newsflash: The House of Lords Financial Services Regulation Committee is calling on the City regulator to pause its plan to “name and shame” companies under investigation more frequently.

The Committee are asking the Financial Conduct Authority to freeze the plan to announce its enforcement investigations into firms in advance, while it gathers evidence and scrutinises the proposal.

It fears the plan could undermine the overall integrity of the market, and lead to reputations being unfairly tarnished.

Committee chair Lord Forsyth of Drumlean says:

“The FCA’s plan to announce the opening of new enforcement investigations could have a highly negative impact on firms subsequently cleared following a potentially lengthy investigation. Despite having done nothing wrong, those firms, and individuals associated with them, risk having their reputations tarnished. This could also unnecessarily distort the market.

“’Innocent until proven guilty’ is a fundamental principle of our justice system. The committee is presently unconvinced that the FCA has justified departing from this important principle and taking an approach that is at odds with almost all other financial services regulators.

The Financial Times reported last night that government insiders are concerned the FCA’s approach to regulation is harming the City of London and driving business abroad.

First UK interest rate cut priced in for August

The City money markets are brought forward their forecast for the Bank of England’s first interest rate cut to August.

City investors are pricing in a more rapid easing from the BoE this morning, after its deputy governor Sir Dave Ramsden predicted on Friday that UK inflation could be lower than expected over the next few years.

They now expect the first cut in Bank rate, from 5.5% to 5%, in August, rather than September, with a second cut to 4.75% priced in by December.

Last week, the markets briefly indicated the first cut might not come until November, after inflation fell by less than expected in March, to 3.2%.

Ramsden told an audience in Washington DC that he was confident that headline inflation will fall sharply in April, to close to the 2% target, from 3.2% in March.

And significantly, Ramsden also revealed that he believes the “balance of domestic risks” to the UK inflation outlook is more negative than in February, when the Bank predicted inflation would drop this year, but then rise back to 3%.

Now, Ramsden says, it’s “at least as likely” that inflation stays close to the Bank’s 2% target over the next three years.

A chart from Dave Ramsden’s speech Photograph: Bank of England
A second chart from Sir Dave Ramsden’s speech Photograph: Bank of England

The oil price has dipped to its lowest level in almost four weeks this morning, as anxiety over Middle East tensions ease.

Brent crude is down 1.5% in early trading today at $85.94 per barrel, the lowest since 27th March.

Last Friday, Brent jumped as high as $90.75 per barrel, before easing back after Tehran downplayed Israel’s missile attack on the Iranian city of Isfahan.

Sigh of relief for Oil importing countries.#Oil prices continue to decline as tensions simmer in Middle East

Brent lower near $US87 a barrel after losing 3.5 % last week.

— Dr. Khaqan Hassan Najeeb (@KhaqanNajeeb) April 22, 2024

Today’s fall means oil is now back to its levels just before Israel attacked an Iranian diplomatic compound in Syria on 1 April, killing 11 people including two senior Iranian generals.

Antonio Ernesto Di Giacomo, market analyst Latam at XS.com, says hopes for a diplomatic resolution and moderation in the region have dampened concerns and contributed to short-term oil price stability.

In conclusion, Iran’s measured response to the alleged Israeli attack in Isfahan has underscored the importance of diplomacy in times of high tension in the Middle East. Although financial markets initially reacted with concern, the retreat in oil prices reflects the hope of avoiding conflict escalation.

However, the situation remains delicate and requires constant monitoring. Stability in the region and the security of the global oil supply largely depends on the ability of the parties involved to stay calm and seek diplomatic solutions to the challenges they face.

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Shares have jumped in London at the start of the new trading week, as geopolitical tensions ease.

Britain’s FTSE 100 share index has gained 93 points, or 1.2%, to 7990 points in early trading, heading closer to its alltime high of 8,047 points.

Shares are recovering amid relief that last weekend passed off without further attacks in the Middle East, after Israel’s missile attack against Iran last Friday.

Investors could also be cheered that the US House of Representatives finally approved more than $61bn worth of military assistance to help Ukraine on Saturday.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, says:

‘’The FTSE 100 has spring in its step at the start of the week, amid an easing of geopolitical tensions.

The pulse of positivity comes in the absence of fresh retaliatory attacks by Israel or Iran and the US flexing its funding muscle and passing a crucial aid package for Ukraine.

Stocks are higher across most of Europe too, with Germany’s DAX up 0.46% and France’s CAC 0.2% higher.

Hornby blames Red Sea disruption for sales drop

Losses at model maker Hornby have widened, after disruption to shipments through the Middle East delayed deliveries of stock and hit sales.

Hornby reported that its underlying loss before tax weakened in the second half of its financial year (the six months to the end of March), while sales only grew by 2%.

In the final quarter, from January to March, sales fell by 8% year-on-year. It blames an early Easter this year, and Red Sea delivery delays which meant some some high value containers didn’t arrive until April.

Hornby’s net debt rose to £14.3m on 31 March, up from £5.5m a year before, which it says is mainly due to the trading loss and capital expenditure.

That is slightly better than the £14.6m reported halfway through the financial year, though.

Red Sea ship attacks have caused a dip in sales for Hornby, the British manufacturer of iconic model railway sets, after deliveries were delayed. https://t.co/A5Yv693dQG

— City A.M. (@CityAM) April 22, 2024

Hornby adds that its remains “cautious” in its outlook, due to “the natural challenges facing a business in turnaround, and the uncertainty of the wider economic and socio-political factors affecting all businesses at this time.”

Full story: Thames Water could raise bills to £627 a year to help fix leaks

Thames Water could raise bills to as much as £627 a year to pay to fix its leaky network, after promising to invest up to £3bn more over the next five years (see earlier post), my colleague Alex Lawson writes.

More here:

CBD vape company Chill Brands shares slide after CEO suspended

Jasper Jolly

Jasper Jolly

The share price of London-listed CBD vape company Chill Brands has slumped 23% after it announced the suspension of its chief executive in connection with an investigation into the use of inside information.

The company is a minnow valued at only £16m before the announcement. It had been under pressure because of proposed ban on disposable vapes in the UK.

Now the company has said that it has asked law firm Fieldfisher to investigate, and that it will work with the City regulator, the Financial Conduct Authority. It is also looking for an interim chief executive.

Chief executive Callum Sommerton has been suspended “in connection with these allegations”, the company said, adding:

This suspension does not constitute disciplinary action or a disciplinary penalty and does not imply any assumption that Mr Sommerton is guilty of any misconduct or that any decision has been made.

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UK asking house prices rise: what the experts say

Estate agents and lenders are reporting that the housing market picked up this spring, following Rightmove’s data showed average asking prices are near their highest level. But there’s not universal agreement….

Tomer Aboody, director of property lender MT Finance, attributes this to stability in the mortgage markets:

“With a pick up in sales providing further confidence in the market, we are seeing the fruits of a stable interest rate environment, combined with reduced inflation, all contributing to an increase in asking prices.

“With the announcement that the government may be looking to introduce another stamp duty restructure in the autumn ahead of the general election, this will provide a further boost for the housing market, saving buyers thousands of pounds.”

Marc von Grundherr, director of Benham and Reeves, says easing cost of living pressures are helping the market:

“Spring has sprung in housing market terms with growing buyer demand pushing sellers to increase asking prices to near record levels.

As the rate of inflation slows and market uncertainty subsides, the property market is responding, as it always does, with upward price movements.

What’s more, wage growth is now outstripping both consumer inflation and house price growth, ensuring that for the first time in years, house price affordability is actually improving.”

While north London estate agent Jeremy Leaf reports that some buyers are still haggling on prices…

“The market continues to play catch-up as the increase in new enquiries is emboldening sellers, not only to make their properties available, but chance their arm at higher asking figures.

“The prospect of more stable or even falling mortgage rates is certainly helping to improve confidence generally.

“However, the uplift in supply has meant more choice so the market remains price sensitive and buyers are negotiating hard, particularly those who require little or no finance.”

However, Charlie Lamdin of Bestagent argues that the asking price data is distorted by more people listing expensive properties, and that “actual house prices are mostly falling”.

Brace yourself for a raft of headlines on “house prices rising” on the back of reporters either wilfully or ignorantly misinterpreting Rightmove’s newest unhelpful and misleading average asking price index.

The average of new asking prices is higher because more people are… pic.twitter.com/jraI0BLYsm

— Moving Home with Charlie (@moving_charlie) April 22, 2024

This incorrect wording implies that sellers are raising their asking prices.

The actual situation: more people are putting expensive higher end properties up for sale which makes the average figure bigger.

Asking prices are being cut. Not raised.

The struggle against this… https://t.co/OyFLC2t5UL

— Moving Home with Charlie (@moving_charlie) April 22, 2024

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Another UK firm falls to overseas takeover

Jasper Jolly

Jasper Jolly

The London Stock Exchange’s mid-sized FTSE 250 index is due to lose one of its manufacturing members to a US takeover.

Tyman, a member of the FTSE 250 that makes door and window components, will be bought by a US rival Quanex in a £788m cash and shares deal, the two companies annoucned this morning.

The takeover is a 35% premium to Tyman’s share price at the close of trading on Friday. Tyman’s board recommended shareholders accept the Quanex offer.

Nicky Hartery, chair of Tyman, said:

In the context of a rapidly evolving North American marketplace, our board ultimately determined that this transaction is the best path to maximising value for Tyman shareholders, who will be able to realise a meaningful portion of their holding in cash at a significant premium to the prevailing share price while also participating in the future upside of the enlarged group.

The 400p per share offer may be a premium to Tyman’s closing price, but it is also short of the prices reached as recently as July 2022.

Yet another takeover by a US rival will do nothing to assuage concerns about the gradual whittling down of the UK’s listed companies. One concern has been that UK companies are relatively undervalued compared to US rivals. That makes it easier for US companies to get a good deal when mounting takeovers.

Thames Water pushes up spending promise by £1.1bn

Troubled water company Thames has this morning outlined plans to increase spending on its network to tackle leaks and sewage spills by at least £1.1bn.

Thames, which is fighting to avoid temporary nationalisation, has submitted an update to its business plan for 2025-2030, under which it would spend £19.8bn to address environmental concerns over sewage dumping, guarantee high quality drinking water and ensure the security of water supplies.

It had previously proposed spending £18.7bn on its network, under a plan that would lift customer bills by 40% to an average of £608 by 2030.

This extra £1.1bn will not lead to even higher bills, Thames pledges, as it will rebalance “operating and capital expenditures”.

BUT, it is also proposing a further £1.9bn of potential investment – if the regulator approves, this would add an extra £19 to bills, taking the average to £627.

Chris Weston, CEO of Thames Water, said:

“Our business plan focuses on our customers’ priorities. As part of the usual ongoing discussions relating to PR24 [Thames’s business plan], we’ve now updated it to deliver more projects that will benefit the environment.

We will continue to discuss this with our regulators and stakeholders.”

The Guardian reported last week that government plans were being drawn up for the renationalisation of Thames Water, under which most of its £15.6bn debt would be added to the public purse.

Its parent company defaulted on a debt at the start of this month, raising the prospect that the company could face a significant restructure or even ultimately collapse.

Introduction: UK house asking prices edge closer to record peak

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The asking price for UK homes is creeping closer to a record high, as demand for larger, more expensive houses picks up.

New data from Rightmove this morning shows that the average price of property coming to the market rose by 1.1% (+£4,207) this month to £372,324. That’s just £570 short of the record set in May 2023.

Photograph: Rightmove

But “Top of the ladder” properties saw the biggest jump in asking prices in the last month (from 10th March – 13th April 2024). They rose by 2.7%, while the price tag on smaller properties more suited to first-time buyers only rose 0.3%.

Photograph: Rightmove

Rightmove reports that the number of sales agreed so far this year is 13% higher than at this stage in 2023, as activity rebounds from last year’s much more subdued Spring.

Activity picked up at the end of last month; Thursday 28th March was the busiest day for new homes coming onto the market this year, and the third busiest since August 2020.

Rightmove suspects there is currently a “window of opportunity” for those considering a move to act, before a busy summer of sporting events (including the Olympics and Euro 2024) and the looming general distract movers.

Rightmove’s Tim Bannister says:

The top-of-the-ladder sector continues to drive pricing activity at the start of the year, with movers in this sector typically less sensitive to higher mortgage rates, and more equity rich, contributing to their ability to move.

While some buyers, across all sectors, will feel that their affordability has improved compared to last year due to wage growth and stable house prices, others will be more impacted by cost-of-living challenges and stickier than expected high mortgage rates.

Asking prices aren’t the same as actual selling prices, of course; Halifax reported earlier this month that house prices dipped in March for the first time this year.

Estate agents have warned that sellers who overprice their properties will struggle to find buyers, and end up cutting asking prices to get a deal.

Sellers of larger homes who waited out 2023 price drops & pinned hopes on rates being trimmed in time for their 2024 gardens to bloom, are coming out with renewed confidence of securing a buyer this time round. Driving up, the overall avg growth in asking prices, AKA optimism, by… pic.twitter.com/VYQzwaGv95

— Emma Fildes (@emmafildes) April 22, 2024

The Royal Institution of Chartered Surveyors (Rics) reported this month that demand continued to “recover gradually”, after being hit by the surge in mortgage costs last year.

Uncertainty over the path of UK interest rates could still weigh on the market this year, with the Bank of England currently expected to only cut rates twice by the end of 2024, to 4.75%.

Tom Bill, head of UK residential research at Knight Frank, says:

“Buyers and sellers have faced mixed messages in 2024 as interest rate predictions have fluctuated. While rising asking prices show seller expectations have improved, there is broader downwards pressure on prices as mortgage rates edge higher, supply increases and a wave of people roll off sub-2% fixed-rate mortgages agreed in early 2022.

The result is more friction around prices, particularly when a rate cut seems to move further into the distance with every release of economic data. That said, higher supply means there should be a recognisable spring bounce in the housing market.”

The agenda

  • 9.30am BST: Nathanaël Benjamin, executive director for Financial Stability Strategy & Risk at the Bank of England, speaks at a Bloomberg event

  • 11am BST: CBI industrial trends survey of UK factry sector

  • 1.30pm BST: The Chicago Fed National Activity Index for March

  • 3pm BST: Eurozone consumer confdence stats

  • 4.30pm BST: ECB president Christine Lagarde gives a lecture at Yale University

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