Docklands News

Due to an increase in major projects and housebuilders' growing confidence, the UK's construction industry experienced its fastest growth in more than two years in September. The S&P Global construction purchasing managers' index (PMI) rose to 57.2, surpassing analysts' expectations of 53.1. Tim Moore, economics director at S&P Global Market Intelligence, noted: “UK construction companies indicated a decisive improvement in output growth momentum during September.” Factors such as lower interest rates and a stable domestic economy contributed to this growth, although rising demand for raw materials has led to the highest input cost increase since mid-2023. Despite the positive growth, business optimism has dipped to its lowest since April, as companies brace for potential challenges ahead. 

The Daily Telegraph (05/10/2024)   The Independent UK (05/10/2024)   The Standard (05/10/2024)   The Times (05/10/2024)  

As the Budget approaches, attention is shifting to potential interest rate cuts by the Bank of England. David Smith in the Times argues that the housing market and the economy have coped much better with high interest rates in recent years than some commentators had feared. He says: "House prices did not crash but, on the official measure, fell by a mere 3.7% from peak to trough and are now back above where they were two years ago." Measures of housing activity such as mortgage approvals have also recovered well, an upturn which continues. Smith also notes that the structure of the housing market has changed, with less than half of owner-occupiers owning mortgages, and older households owning outright. He suggests the shift to predominantly fixed-rate borrowing has softened the impact of rising rates, allowing borrowers more time to adjust.

The Times (09/10/2024)  

Gen Z homebuyers are facing unprecedented challenges, with average mortgage repayments reaching £1,739 a month, nearly double that of millennials, who paid around £863. Research highlights that Gen Z is expected to pay £104,000 in the first five years of their mortgages, compared to £51,800 for millennials. The surge in costs is attributed to soaring house prices and rising mortgage rates, which are unlikely to return to pre-COVID levels. Millennials paid an average of £246,000 for their homes, significantly more than previous generations. As a result, while baby boomers and Gen X have repaid about 60% of their loans by the halfway point of a typical 25-year mortgage, millennials are projected to have paid off just shy of 40%. 

The Times (07/10/2024)  

Paul Bassi, chief executive of Real Estate Investors, believes that the property market is “at or near the bottom,” indicating a potential recovery. He anticipates "a period of positive activity and the potential for capital and rental growth," helped by lower interest rates and increased demand. “A normalising market backdrop will contribute to more rapid sales and debt repayment, allowing us to execute our strategy and return capital to shareholders, whilst continuing to pay a covered dividend,” he said.  Despite a challenging first half of 2024, with transaction activity 40% below the five-year average, the Bank of England's recent interest rate cuts may bolster the market.  

City AM (24/09/2024)  

New build homes in the UK have long faced criticism for issues such as poor quality, snagging problems, and long construction times. However, improvements are underway due to the New Homes Quality Board, a non-profit organisation with redress powers established by the government to ensure higher standards in new housing developments. Property sales of new homes have also increased, with 231,000 completed in 2023

Daily Mail (25/09/2024)  

Homeowners anticipating further reductions in mortgage rates may be disappointed as the Bank of England's monetary policy committee has maintained the base rate at 5%. Aaron Strutt from Trinity Financial cautioned: "The likelihood of fixed rates coming down significantly more is slim," suggesting that locking in a deal now could be wise. The lowest two-year fixed rate currently stands at 3.99% from Santander, while Barclays offers a three-year fix at 3.88% for Premier customers. Nicholas Mendes from John Charcol predicts that by year-end, five-year rates could drop to around 3.5%. David Hollingworth from L&C Mortgages advises borrowers to start considering their options three months before their current deal ends. 

The Sunday Times (22/09/2024)