Property Natter - Ready, steady, go?

Funny how time flies faster as you get older and I’m reminded that next week, (23^rd September, to be precise) it will be a year since that fateful day when Kwasi Kwarteng stood at the Despatch Box and delivered his now infamous mini-Budget.

We all know what happened next – economic and political carnage. Now I’m not going to dwell on it (I don’t want to trigger anyone) but what brought it to mind was the news this week that the mortgage market was beginning to settle.

Data released in the Moneyfacts UK Mortgage Trends Treasury Report revealed that the number of mortgage options for borrowers had risen to its highest level since February 2022 and the average 2-year and 5-year fixes had fallen to 6.7% and 6.1% respectively.

Still too high? Well perhaps….but the important thing is they are stabilising, as Rachell Springall from Moneyfacts explained: “This positive momentum has resulted in the shelf life of a mortgage product rising to 15 years, up from a record low of 12 days in July.”

The overwhelmingly positive thing about this is that buyers rely on predictability. Can they be confident that they can cover the mortgage? If the answer is yes, the chances are that transactions will begin to rise when confidence grows.

And there was another ripple of good news when the ONS announced that average UK earnings rose 7.8% year on year to July - marginally outpacing inflation – and unemployment remains low at 4.3%. Of course, there still many households facing financial challenges, but there are indications that offer more than a crumb of comfort to those people who have been waiting for stability before they dare to risk a furtive glance at the listings pages.

In an effort to chivvy things along, more and more lenders are now offering longer and longer mortgage terms. One homebuilder announced that the number of first time buyers who had secured deals over 36 years had tripled – a direct result of higher interest rates making the traditional 25-year mortgage unmanageable for many.

Rallying around the cash-strapped city

Anyone who raised an eyebrow (or two!) at the news that Birmingham City Council declared itself effectively bankrupt this week, should take heart from research conducted by estate agents, Barrows and Forrester.

Their figures suggest that the residential housing market in locations where councils have previously declared effective bankruptcy, were largely unaffected by the authority’s dire financial straits.

Their analysis shows that in Northamptonshire, Hackney, Thurrock, Croydon and Slough, house prices rose at an average rate of 3.2% in the year that followed the financial crisis.

For some peculiar reason, Hackney saw the strongest performance. The council declared effective bankruptcy in October 2000 and prices rocketed 13.6% during the next 12 months.

However, a hard-up council isn’t always a guarantee of house price rises. Take, for example, the cases of Thurrock and Croydon. When they made their declarations, prices fell by 4% and 4.5% respectively.

Undeterred, Barrows and Forrester MD, James Forrester, said: “We’re proud people in the Midlands and we’ll rally round our city regardless of what may come. While there is certainly a tricky period ahead, we don’t foresee any notable damage to the housing market.”

Crisis? What crisis?

But while Birmingham City Council may be suffering from economic woes, another report this week showed that an estimated £2.8bn in funding from home builders is sitting, unspent in local authority bank accounts in England and Wales.

The report from HBF suggests that millions of pounds of contributions made by homebuilders is earmarked for local services or infrastructure improvements. It is paid out as part of the planning agreement for new developments.

And it includes £567m allocated for affordable housing and HBF says that’s enough to build 7,000 homes.

The report was based on FOI responses from 171 local authorities (around half). On average, they are each holding on to £8m which seems odd at a time when the country is facing an acute housing crisis.

HBF Chair, Stewart Baseley, said: “Investment in new housing delivery brings unrivalled economic and social benefits to communities but too many of these advantages are going unseen by local people as councils fail to turn payments into the services, facilities and infrastructure that residents want. Not only is this a disservice to communities but it undermines perceptions of home building, allowing lazy negative perceptions to persist.

“In the face of a deepening housing shortage and cost of living crisis, it has never been more important to build new homes and local people should enjoy the benefits that can bring.”

He’s got a point.                                                             

Until next time…