UK Housing Market Trends 2023

Study Notes

Home Asking Price Increases

UK house asking prices rose sharply in September, with the average price hitting £370,759
This was a 1% increase from August, exceeding the typical September rise of 0.4%
The increase is attributed to a combination of factors, including post-election stability and declining mortgage rates
After a 1.5% drop in August, buyer and seller activity rebounded, indicating a positive market shift

Factors Influencing Market Activity

the "certainty of a new government" and the first Bank of England rate cut in four years have invigorated buyer activity
Markets expect the BoE to maintain current interest rates at their next meeting on September 19, with further cuts anticipated in November and 2025
The BoE's August rate cut to 5% marked the first reduction since the start of the pandemic
Inflation has retreated to 2.2% in July, down from a high of 11.1% in October 2022, impacting interest rates and affordability

Impact on Housing Market

The increase in asking prices was driven by larger properties, with four-bedroom detached homes and larger houses experiencing a 0.8% rise
The cost of three- and non-detached four-bedroom properties also increased by 0.7%, while smaller properties showed a weaker growth of 0.2%
Annual growth in asking prices reached 1.2% in September, marking the fastest rate in over a year
The number of agreed sales in September was 27% higher compared to the same period last year, indicating strong demand

Increased Availability of Properties

More homeowners are listing their properties for sale due to increasing market confidence
the number of new sellers increased by 14% from last September, indicating a growing supply of available properties
The average number of available homes for sale per estate agent reached its highest level since 2014

Future Market Outlook

While the current market momentum is positive, potential changes to tax structures in the upcoming budget could influence the market
The market remains optimistic, but there are "question marks" regarding the impact of the upcoming budget announcement in October

Oil Prices Remain Elevated

Despite the recent attack by Iran, oil prices have remained relatively stable.
Brent crude, the global benchmark, has dipped below $90 a barrel.
Traders believe Israel will not retaliate in a significant way.
Oil prices are likely to rise further in the summer due to increased demand and tight supply.

Geopolitical Factors and Supply Disruptions

Geopolitical risks play a role in the rise of oil prices.
Mexico's intention to produce more petrol for domestic use is leading to reduced exports.
A leaky Scottish pipeline has been forced to close, disrupting supply.
Libya's political instability is hindering oil production.
The ongoing war in South Sudan could also negatively impact oil output.
Western sanctions on Russia are limiting the flow of Russian oil to global markets.
India, Russia's second-largest buyer, has stopped accepting tankers owned by Sovcomflot due to Western sanctions.
The reinstated sanctions on Venezuela could further reduce global oil supply.
The US may increase enforcement of its embargo on Iranian oil sales.

OPEC+ Cuts and Demand Growth

OPEC+ has pledged to cut output by 2.2 million barrels a day, a significant portion of global production.
OPEC+ extended these cuts until the end of June.
Russia has deepened its cuts by another 471,000 barrels a day.
Non-OPEC output is expected to rise but at a slower rate than last year.
Global oil stocks are declining.
Global oil demand is expected to rise by an average of 1.2 million barrels a day in 2024.

Impact on Demand and Prices

Higher oil prices are pushing American petrol prices up, nearing $4 a gallon.
A significant surge in oil prices could significantly decrease petrol demand.
OPEC+ may signal an intention to increase production at its next meeting.
Oil price forecasts anticipate an average price of $90 a barrel during the third quarter of 2024, and $89 in the final quarter.

Iran and the Strait of Hormuz

Iran's oil exports in March amounted to 1.6 million barrels a day.
In a worst-case scenario, Iran could close the Strait of Hormuz, a vital waterway for global oil transport.
Closing the Strait of Hormuz would likely be detrimental to Iran's own economy.
Harassing ships in the Gulf, a possibility for Iran, may not have a substantial impact on oil prices.

Description

Explore the recent trends in the UK housing market, focusing on sharp increases in asking prices and influences such as government stability and mortgage rate cuts. Understand how these factors are reshaping buyer and seller activity in September 2023.