Introduction: ‘Storm clouds are gathering’ for the property market, warn surveyors
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Storm clouds are gathering over the UK property Market, according to the country’s surveyors.
The Royal Institution of Chartered Surveyors (RICS) is warning this morning that expectations of further interest rate rises from the Bank of England may put renewed downward pressure on the market in the months ahead.
RICS’s monthly healthcheck on the property sector has found some improvement in market conditions during May, with the first rise in new instructions since early 2022. House prices continue to fall in much of England, although Scotland and Northern Ireland have witnessed an uplift.
RICS Senior Economist, Tarrant Parsons, says there was a modest recovery in the sales market activity during May, with generally less negativity compared to the end of 2022.
But he warns that expectations of further interest rate hikes will hit demand and affordability.
“However, it seems storm clouds are gathered, with the UK’s stubbornly high inflation likely undermining the recent improvement in activity by prompting the Bank of England to take further action through interest rate rises, leading to higher mortgage rates and ultimately reducing affordability and buyer demand.
The banking sector appears to expect this with many banks and building societies already introducing products with higher interest rates.
MKT condition metrics look sunnier in May but recent inflation blow could see storm clouds closing in.
-New buyer enquiries inc from -34% in April to -18%.
-New instructions inc +14%
-Surveyors cite further falls in national prices of -30% (least neg fig in 3mths) @RICSnews pic.twitter.com/hgGey1dTXD— Emma Fildes (@emmafildes) June 8, 2023
Yesterday morning, Halifax reported that house prices experienced their first annual fall in more than a decade last month.
The Bank of England has already raised interest rates 12 times in a row, and the City currently expects another rise this month, from 4.5% to 4.75%. They could hit 5.5% by the end of the year, the money markets indicate.
Interest rate rises are also impacting the rental sector, encouraging landlords to leave the sector and sell up property, Parsons adds.
Also coming up today
The UK’s financial regulator has unveiled a major shake-up of the rules around marketing of cryptoassets.
The crackdown from the Financial Conduct Authority will include banning the so-called “refer a friend” bonuses that are popular in the industry. Promoters must also ensure adverts are clear, fair and not misleading, and ensure people have the appropriate knowledge and experience to invest in crypto.
Sheldon Mills, executive director at Consumers and Competition, said:
“It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.
“Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.
“The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.”
The agenda
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9.30am BST: Latest UK economic activity and business insight data
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10am BST: Eurozone growth figures for Q1 2023 (third estimate)
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1.30pm BST: US weekly jobless data
The Treasury Committee has been investigating retail banks since February, when UK interest rates were 4%. At that stage, the big four banks offered between 0.5% and 0.65% on their easy access savings accounts.
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EDT","blockLastUpdated":1686212155000,"blockLastUpdatedDisplay":"04.15 EDT","blockFirstPublished":1686212155000,"blockFirstPublishedDisplay":"04.15 EDT","blockFirstPublishedDisplayNoTimezone":"04.15","title":"MPs: Banks must 'up their game' and pass on interest rate rises to savers","contributors":[],"primaryDateLine":"Thu 8 Jun 2023 04.37 EDT","secondaryDateLine":"First published on Thu 8 Jun 2023 02.42 EDT"},{"id":"64817d118f080249d9e1d770","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"“With the Bank of England confirming the pass through of base rate increases to easy access savings accounts has been unusually weak, it’s clearer than ever that the nation’s biggest banks need to up their game and encourage saving. While other products are available to those who shop around, the measly easy access rates on offer lead us to conclude that loyal customers are being squeezed to bolster bank profit margins.
\n“We remain concerned that the loyalty penalty is especially prominent for elderly and vulnerable customers who may still rely on high street bank branches.”
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Britain’s labour market cooled last month, with the starting salaries paid to permanent staff rising at the weakest pace in over two years.
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Carberry, REC chief executive, said:
","elementId":"73540bfa-2753-427e-9049-803282727f83"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"05976898-f4db-4cf8-99d2-23e23fece142"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1686207761000,"blockCreatedOnDisplay":"03.02 EDT","blockLastUpdated":1686208533000,"blockLastUpdatedDisplay":"03.15 EDT","blockFirstPublished":1686208533000,"blockFirstPublishedDisplay":"03.15 EDT","blockFirstPublishedDisplayNoTimezone":"03.15","title":"UK jobs market shows signs of cooling","contributors":[],"primaryDateLine":"Thu 8 Jun 2023 04.37 EDT","secondaryDateLine":"First published on Thu 8 Jun 2023 02.42 EDT"},{"id":"648175628f085d9ad6c9dbbb","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"“Despite the overall temporary work market continuing to grow – and permanent hiring declining from the sugar rush of 2022 – the story can vary widely across different businesses as their economic outlook remains unclear.”
\n
One of the UK’s building firms is warning of a further slowdown in the housing market this morning too, and urging more action from the government.
","elementId":"783388a0-b358-44bb-a40c-a7d0b4eb6757"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Crest Nicholson has reported a fall in revenues in the six months to 30 April to £282.7m, down from £364m a year before. Adjusted pre-tax profits more than halved to £20.9m, from £52.5m.
","elementId":"86d260cc-87d3-4a77-9a1d-bc8193ffebd1"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Peter Truscott, chief executive, says the period began amid “the worst of the economic uncertainty arising from the September 2022 mini-budget”.
","elementId":"bf07fa1c-556c-4e59-98b8-a19104099684"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Rapidly falling consumer confidence and rising interest rates immediately led to softer demand in the housing market, Truscott explains. And although confidence has returned, Crest Nicholson fears that rising interest rates will cool demand further.
","elementId":"f985f7c6-e366-4323-b96c-8da9ee695c44"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Truscott says:
","elementId":"551f0b6a-16db-4c37-af3b-4dc2c79eb74a"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"4ef7a930-0cdf-4268-8e96-a4c8b52105e3"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The economic case for buying a home therefore remains compelling, but for many first time buyers the higher cost of borrowing and the cessation of Help to Buy are prohibitive to realising this ambition.
\nIf interest rates continue to rise, and remain elevated for a sustained period of time, this will undoubtedly exacerbate this issue even further and start to impact demand and confidence again. We continue to call on Government to recognise this challenge and provide further support to these potential homeowners.
\n
Mortgage rates in the UK have been rising in recent weeks, and some lenders have also pulled deals from the market.
","elementId":"a2e71b1a-6770-4f12-acb0-b42d8793ea35"},{"_type":"model.dotcomrendering.pageElements.RichLinkBlockElement","url":"https://www.theguardian.com/money/2023/jun/05/uk-banks-pull-hundreds-more-home-loan-deals-as-fixed-mortgage-rates-rise","text":"UK banks pull hundreds more home loan deals as fixed mortgage rates rise","prefix":"Related: ","role":"thumbnail","elementId":"aa4d95aa-cc2a-401c-90d7-b17b564f3ec6"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"It emerged last month that Rishi Sunak was drawing up plans to boost support for first-time home buyers, as part of the next general election campaign.
","elementId":"2cceff24-7b1f-4fda-97ff-b00ee1fb5711"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Officials in Downing Street and the Treasury are looking at proposals to help thousands of renters who have been unable to get on the housing ladder in the face of high prices and rising interest rates, The Times reported at the start of May.
","elementId":"914c9b70-de7d-4c2b-896c-4307ea2df886"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1686206533000,"blockCreatedOnDisplay":"02.42 EDT","blockLastUpdated":1686206644000,"blockLastUpdatedDisplay":"02.44 EDT","blockFirstPublished":1686206624000,"blockFirstPublishedDisplay":"02.43 EDT","blockFirstPublishedDisplayNoTimezone":"02.43","title":"Housebuilder Crest Nicholson warns higher interest rates will hit demand","contributors":[],"primaryDateLine":"Thu 8 Jun 2023 04.37 EDT","secondaryDateLine":"First published on Thu 8 Jun 2023 02.42 EDT"},{"id":"6481674f8f085d9ad6c9db79","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
","elementId":"09459393-2ac7-4002-837d-1c62f0fc29da"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Storm clouds are gathering over the UK property market, according to the country’s surveyors.
","elementId":"687ff825-c782-4d22-9703-a2f7ac6d1129"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The Royal Institution of Chartered Surveyors (RICS) is warning this morning that expectations of further interest rate rises from the Bank of England may put renewed downward pressure on the market in the months ahead.
","elementId":"ab29ef12-c801-4f61-8e9c-1242bbefa1e8"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"RICS’s monthly healthcheck on the property sector has found some improvement in market conditions during May, with the first rise in new instructions since early 2022. House prices continue to fall in much of England, although Scotland and Northern Ireland have witnessed an uplift.
","elementId":"20dee62c-22df-42b7-b06c-34871d626369"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"RICS Senior Economist, Tarrant Parsons, says there was a modest recovery in the sales market activity during May, with generally less negativity compared to the end of 2022.
","elementId":"644878c4-0bfd-4562-8e79-f4b56979449b"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"But he warns that expectations of further interest rate hikes will hit demand and affordability.
","elementId":"926a09f4-3210-415b-b7c0-ae17b3c98dc3"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"5d62001f-6e94-4e33-8e69-f53b821b6f83"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"“However, it seems storm clouds are gathered, with the UK’s stubbornly high inflation likely undermining the recent improvement in activity by prompting the Bank of England to take further action through interest rate rises, leading to higher mortgage rates and ultimately reducing affordability and buyer demand.
\nThe banking sector appears to expect this with many banks and building societies already introducing products with higher interest rates.
\n
\n","url":"https://twitter.com/emmafildes/status/1666697240147050496","id":"1666697240147050496","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"e0981ff4-0a8c-464f-8de1-a523029db7ae"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"MKT condition metrics look sunnier in May but recent inflation blow could see storm clouds closing in.
— Emma Fildes (@emmafildes) June 8, 2023
-New buyer enquiries inc from -34% in April to -18%.
-New instructions inc +14%
-Surveyors cite further falls in national prices of -30% (least neg fig in 3mths) @RICSnews pic.twitter.com/hgGey1dTXD
Yesterday morning, Halifax reported that house prices experienced their first annual fall in more than a decade last month.
","elementId":"95d26422-0e77-4ab2-ad07-b73ebfa9e405"},{"_type":"model.dotcomrendering.pageElements.RichLinkBlockElement","url":"https://www.theguardian.com/money/2023/jun/07/uk-house-prices-halifax-data-may","text":"UK house prices experience annual fall for first time in decade, data shows","prefix":"Related: ","role":"thumbnail","elementId":"9482ebcb-a6ef-4eb7-a194-32727c1307e5"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The Bank of England has already raised interest rates 12 times in a row, and the City currently expects another rise this month, from 4.5% to 4.75%. They could hit 5.5% by the end of the year, the money markets indicate.
","elementId":"60258c0d-f121-4f5c-a542-896f220f6a5b"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Interest rate rises are also impacting the rental sector, encouraging landlords to leave the sector and sell up property, Parsons adds.
","elementId":"45ac7f4e-7c69-4c35-b947-c3865c8950e7"},{"_type":"model.dotcomrendering.pageElements.SubheadingBlockElement","html":"Also coming up today
","elementId":"74ea6539-1b5f-4088-947a-690ac750fcbc"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The UK’s financial regulator has unveiled a major shake-up of the rules around marketing of cryptoassets.
","elementId":"6710d3d4-9bc6-4c06-918b-5ff376b2f297"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The crackdown from the Financial Conduct Authority will include banning the so-called “refer a friend” bonuses that are popular in the industry. Promoters must also ensure adverts are clear, fair and not misleading, and ensure people have the appropriate knowledge and experience to invest in crypto.
","elementId":"94489592-920c-40ac-a053-dd2b6291e587"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Sheldon Mills, executive director at Consumers and Competition, said:
","elementId":"8ba6a1cf-8a59-46b3-98ab-09fc891078f0"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"3a5e607d-c02e-4111-b77f-ce115841d7b2"},{"_type":"model.dotcomrendering.pageElements.RichLinkBlockElement","url":"https://www.theguardian.com/technology/2023/jun/08/crypto-ads-risk-warnings-fca-uk-rules-october","text":"Crypto ads will need to carry risk warnings under new UK rules","prefix":"Related: ","role":"thumbnail","elementId":"c961754e-2c0e-48da-813b-8f0fdbcb9ff1"},{"_type":"model.dotcomrendering.pageElements.SubheadingBlockElement","html":"“It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.
\n“Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.
\n“The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.”
\n
The agenda
","elementId":"5990c966-1099-4602-8fd8-ee3e338f233b"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"- \n
9.30am BST: Latest UK economic activity and business insight data
\n 10am BST: Eurozone growth figures for Q1 2023 (third estimate)
\n 1.30pm BST: US weekly jobless data
\n
Key events
UK business conditions remain “challenging”, according to the latest realtime data from across the economy.
But there are some small signs of improvement last month, the Office for National Statistics reports. Fewer companies voiced concerns about their prospects, and around two-thirds were able to get the materials, goods and services they need from within the UK.
Latest results from our Business Insights and Conditions Survey (live from 15 to 28 May 2023) suggest business conditions continue to remain challenging, but estimates show small signs of positive improvement for some measures.
https://t.co/lCsyFTOOD4 pic.twitter.com/gFu3xpSmwz
— Office for National Statistics (ONS) (@ONS) June 8, 2023
65% of trading businesses said they were able to get the materials, goods or services they needed from within the UK in April 2023
This is unchanged from March 2023.
— Office for National Statistics (ONS) (@ONS) June 8, 2023
When asked in May 2023, 68% of businesses reported they had some form of concern for June 2023
This is:
down from the 71% reporting concerns the previous month for May 2023
the lowest percentage reported this year— Office for National Statistics (ONS) (@ONS) June 8, 2023
23% of businesses said their employees’ hourly wages had increased in April 2023 compared with March 2023 (14%)
For businesses with over 10 employees this was 48% in April 2023 compared with March 2023 (23%)
https://t.co/lCsyFTOOD4
— Office for National Statistics (ONS) (@ONS) June 8, 2023
MPs: Banks must ‘up their game’ and pass on interest rate rises to savers
Parliament’s Treasury Committee are urging UK banks to pass on higher interest rates to savers.
The Treasury Committee has been investigating retail banks since February, when UK interest rates were 4%. At that stage, the big four banks offered between 0.5% and 0.65% on their easy access savings accounts.
Today, they’re offering between 0.7% and 1.35%, while Bank Rate has been raised to 4.5%.
Harriett Baldwin MP, chair of the Treasury Committee, said:
“With the Bank of England confirming the pass through of base rate increases to easy access savings accounts has been unusually weak, it’s clearer than ever that the nation’s biggest banks need to up their game and encourage saving. While other products are available to those who shop around, the measly easy access rates on offer lead us to conclude that loyal customers are being squeezed to bolster bank profit margins.
“We remain concerned that the loyalty penalty is especially prominent for elderly and vulnerable customers who may still rely on high street bank branches.”
