WASHINGTON, Sept 26 (Reuters) – U.S. consumer confidence dropped to a four-month low in September, weighed down by persistent worries about higher prices and rising fears of a recession, though households remained generally upbeat about the labor market.
The second straight monthly decline in confidence reported by the Conference Board on Tuesday also reflected higher interest rates and concerns about the political environment.
The nation faces a potentially disruptive shutdown of the federal government on Saturday amid political wrangling. Confidence fell across all age groups, and was most pronounced among consumers with annual incomes of $50,000 or more.
“Inflation is slowing, but prices are still higher than they were before the pandemic and this is taking a toll on consumer confidence,” said Christopher Rupkey, chief economist at
FWDBONDS in New York.
The Conference Board said its consumer confidence index dropped to 103.0 this month, the lowest reading since May, from an upwardly revised 108.7 in August. Economists polled by Reuters had forecast the index easing to 105.5 from the previously reported 106.1. Consumers’ perceptions of the likelihood of a recession over the next year ticked back up.
A sharp decrease in the expectations measure accounted for the decline in confidence, which economists partially attributed to the looming government shutdown, with Congress so far failing to pass any spending bills to fund federal agency programs in the fiscal year starting on Oct. 1.
Hundreds of thousands of federal workers will be furloughed and a wide range of services, from economic data releases to nutrition benefits, suspended beginning on Sunday.
“Consumers also expressed concerns about the political situation and higher interest rates,” said Dana Peterson, chief economist at The Conference Board in Washington.
The cutoff date for the preliminary survey was Sept. 18. Millions of Americans will also start repaying their student loans in October and most have run down their pandemic savings.
The survey showed consumers increasingly concerned about their family finances.
The Federal Reserve last week left its benchmark overnight interest rate unchanged at the 5.25%-5.50% range. The U.S. central bank, however, stiffened its hawkish stance, projecting another rate hike by year end and monetary policy staying significantly tighter through 2024 than previously expected.
The Fed has hiked the policy rate by 525 basis points since March 2022.
Though consumers continued to fret over the higher cost of living, their inflation expectations over the next year remained stable and they showed no intentions of drastically pulling back on purchases of motor vehicles and other big-ticket items like television sets and refrigerators over the next six months.
Fewer, however, expected to buy a house, with the rate on the popular 30-year fixed-mortgage the highest in more than 22 years and home prices reaccelerating.
Consumers’ 12-month inflation expectations were unchanged at 5.7% for the third straight month.
Consumer spending remains underpinned by a tight labor market, which is keeping wage growth elevated.
The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, widened to 27.3 this month compared to 26.7 in August. This measure correlates to the unemployment rate in the Labor Department’s closely followed employment report.
Stocks on Wall Street fell. The dollar rose against a basket of currencies. U.S. Treasury prices were lower.
HOUSE PRICES ACCELERATE
A separate from the Commerce Department showed new home sales plunged 8.7% to a seasonally adjusted annual rate of 675,000 units in August after racing to a 17-month high in July.
Economists had forecast new home sales, which account for a small share of U.S. home sales, falling to a rate of 700,000 units. New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis. Sales increased 5.8% on a year-on-year basis in August.
Though new home sales remain supported by a dearth of previously owned homes on the market, the resurgence in mortgage rates is reducing affordability for prospective home buyers.
The rate on the 30-year fixed mortgage vaulted above 7% in August and climbed to an average of 7.19% last week, the highest since July 2001, according to data from mortgage finance agency Freddie Mac. Mortgage rates are rising in tandem with U.S. Treasury yields, which have surged on worries that soaring oil prices could hamper the Fed’s fight against inflation.
“While we expect higher rates to hurt new home sales, we think they will be more resilient than existing home sales as builders seem willing to scale up their use of incentives to motivate sales,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics in New York.
A third report from the Federal Housing Finance Agency showed annual home price growth quickened for a second straight month in July, largely reflecting the tight supply in the market for previously owned homes. House prices jumped 4.6% on a year-over-year basis in July after rising 3.2% in June. Prices shot up 0.8% month-on-month after advancing 0.4% in June.
The resurgence in house prices was seen feeding through to higher inflation, likely giving the Fed cover to maintain its hawkish posture for some time.
“The Fed will see the reacceleration of house prices as a reason to keep interest rates higher for longer,” said Bill Adams, chief economist at Comerica Bank in Dallas. “Renting households are seeing some relief in new lease prices, but since two thirds of Americans are homeowners, the Fed cannot afford to look past house prices’ influence on the cost of living.”
Reporting by Lucia Mutikani; Additional reporting by Amina Niasse; Editing by Chizu Nomiyama and Andrea Ricci
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Construction sites are photographed in Frankfurt, Germany, July 19, 2023. REUTERS/Kai Pfaffenbach Acquire Licensing Rights
BERLIN, Sept 22 (Reuters) – German housing prices fell by the most since records began in the second quarter as high interest rates and rising materials costs took their toll on the property market in Europe’s largest economy, government data showed on Friday.
Residential property prices fell by 9.9% year-on-year, the steepest decline since the start of data collection in 2000, the federal statistics office said. Prices fell by 1.5% on the quarter, with steeper declines in larger cities than in more sparsely populated areas.
In cities such as Berlin, Hamburg and Munich, apartment prices fell by 9.8% and single and two-family house prices dropped by 12.6% on the year.
For a decade, low interest rates have fuelled a property boom in Europe’s largest real estate investment market. A sharp rise in rates and increasing construction costs have put an end to the run, tipping a string of developers into insolvency as deals froze and prices fell.
Building permits for apartments in Germany declined 31.5% in July from a year earlier, the statistics office disclosed on Monday, as construction prices rose by almost 9% on the year.
Germany aims to build 400,000 apartments a year, but has struggled to meet the goal.
German housing industry association GdW on Friday sounded the alarm over the situation calling for government support for construction companies.
“The construction crisis in Germany is getting worse day by day and is increasingly reaching the middle of society,” GdW, which represents around 3,000 housing companies nationwide, said in a statement.
GdW called for a cut in value added tax (VAT) to 7% from the current level of 19% for affordable rentals and government funding loans with a 1% interest rate to support companies.
The government is scheduled to hold a summit with the industry on Monday to discuss the situation.
GdW and the Haus&Grund owner’s association said they were boycotting the summit as they had too little influence on its agenda.
The German cabinet plans to present an aid package for the industry by the end of month after announcing plans to promote the construction sector, including reducing regulatory and bureaucratic requirements.
Reporting by Riham Alkousaa and Klaus Lauer, editing by Kirsti Knolle and Sharon Singleton
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WASHINGTON, Sept 21 (Reuters) – The number of Americans filing new claims for unemployment benefits dropped to an eight-month low last week, pointing to persistent labor market tightness even as job growth is cooling.
The report from the Labor Department on Thursday also showed unemployment rolls in early September were the smallest since January. It was published a day after the Federal Reserve held interest rates steady but stiffened its hawkish stance, with a further rate increase projected by the end of the year and monetary policy to be kept significantly tighter through 2024 than previously expected.
“This economy is just not showing any sign of slowing down which hints that inflation will not be coming back down to target,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The Fed was wise to keep another interest rate hike in their back pockets just in case, and it now looks like another rate hike is warranted.”
Initial claims for state unemployment benefits dropped 20,000 to a seasonally adjusted 201,000 for the week ended Sept. 16, the lowest level since January. Economists polled by Reuters had forecast 225,000 claims for the latest week. Claims are in the lower end of their 194,000-265,000 range for this year.
Claims could, however, increase in the coming weeks as a partial strike by the United Auto Workers (UAW) union forces automobile manufacturers to temporarily lay off workers because of shortages of some materials.
The UAW last week launched a targeted strike against Ford (F.N), GM (GM.N) and Stellantis (STLAM.MI), impacting one assembly plant at each company. It has threatened to broaden the work stoppages, which for now only involve about 12,700 of the affected 146,000 UAW members.
Though striking workers are not eligible for unemployment benefits, the walkout has snarled supply chains.
Ford has furloughed 600 workers who are not on strike, while GM expected to halt operations at its Kansas car plant, affecting 2,000 workers. Chrysler parent Stellantis said it would temporarily lay off 68 employees in Ohio and expects to furlough another 300 workers in Indiana.
Unadjusted claims rose by only 67 to 175,661 last week. There were notable declines in filings in Indiana and California, which mostly offset sizeable increases in South Carolina, New York and Georgia.
Fed Chair Jerome Powell said on Wednesday that “the labor market remains tight, but supply and demand conditions continue to come into better balance.”
Employment growth has been slowing and job openings falling. Labor market resilience is propping up the economy even as recession fears linger. The leading indicator, a gauge of future U.S. economic activity, fell 0.4% in August after dropping 0.3% in July, the Conference Board said in a second report on Thursday.
It has dropped for 17 straight months. Since March 2022, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.
The claims data together with the Fed’s hawkish stance pushed stocks on Wall street lower. The dollar gained versus a basket of currencies. U.S. Treasury prices fell, with the yield on the benchmark 10-year bond rising to a nearly 16-year high.
HOUSING FALTERING
The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of September’s employment report.
The strike is unlikely to have an impact on payrolls as it started towards the end of the survey week. Workers most likely received pay for that week. Claims fell between the August and September survey period.
Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will offer more clues on the state of the labor market in September.
The so-called continuing claims declined 21,000 to 1.662 million during the week ending Sept. 9, also the lowest level since January, the claims report showed. That suggests laid-off workers are quickly finding employment.
While the labor market remains unbowed, the housing market is faltering after showing signs of stabilizing earlier this year as mortgage rates resume their upward trend in tandem with the 10-year Treasury note, which has spiked on worries soaring oil prices could hamper the Fed’s fight against inflation.
Existing home sales slipped 0.7% last month to a seasonally adjusted annual rate of 4.04 million units, the National Association of Realtors said in a third report.
Existing home sales are counted at the closing of a contract. Last month’s sales likely reflected contracts signed in July, before the recent run-up in mortgage rates, which lifted the rate on the popular 30-year fixed mortgage above 7%.
Home sales last month were restrained by persistently tight supply, with inventory falling 14.1% from a year earlier to 1.1 million, the lowest on record for any August.
As a result, the median house price accelerated 3.9% from a year earlier to $407,100, the fourth-highest reading. It hit a record $413,000 in June 2022.
“The prospects for improved sales in the coming months look bleak,” said Ben Ayers, senior economist at Nationwide in Columbus, Ohio. “2023 could end in a whimper for the real estate sector as any substantial pull-back in rates is likely far off into 2024.”
News on manufacturing was downbeat. Manufacturing together with housing have borne the brunt of the Fed’s aggressive monetary policy tightening.
A fourth report from the Philadelphia Fed showed factory activity in the mid-Atlantic region slumped in September. Firms in the region that covers eastern Pennsylvania, southern New Jersey and Delaware reported decreases in new orders and shipments. They continued to report a decline in employment.
The Philadelphia Fed’s business conditions index fell to -13.5 this month from 12.0 in August. It was the index’s 14th negative reading in the past 16 months.
“Softer demand for goods and higher borrowing costs are hurdles for activity,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “But re-shoring of supply chains, infrastructure projects and a stabilization in demand could provide support to manufacturing output over time.”
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Paul Simao and Andrea Ricci
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Zhao Youming, 60, looks at an unfinished residential building where he bought an apartment, at the Gaotie Wellness City complex in Tongchuan, Shaanxi province, China September 12, 2023. REUTERS/Tingshu Wang/File Photo Acquire Licensing Rights
HONG KONG, Sept 18 (Reuters Breakingviews) – Chinese developers are in trouble. Many are struggling to stay afloat as both financing and sales dry up. Why don’t they simply slash prices and sell down their bloated inventory? Well, they can’t. Restrictions imposed after the last property crisis in 2016 were intended to contain runaway home prices. Those limits endured and are now obstructing a recovery in the world’s second largest economy.
“Guidance” set by local governments helped officials to achieve price stability. Average new home prices in the 70 major cities, per official data, have fluctuated around just 2% on a monthly basis for more than a year even as top developers wrestle to restructure their debt. Evergrande (3333.HK) and Country Garden (2007.HK) alone have combined liabilities worth 3.8 trillion yuan ($524 billion).
Yet the restrictions hid distortions. When the mood was bullish, price caps in major cities were far below what people were willing to pay. Crowds of buyers typically flocked to project launches. Those who were lucky enough to be allocated a new apartment could then flip it for a handsome profit in the limited secondary market.
That’s one reason many Chinese viewed caps as a “subsidy” for prospective homeowners. Fast forward, and these controlled prices are much higher than the perceived market value. Some developers have tried to work around the problem, by offering homebuyers “discounts” including car parking lots or even gold bars. Home sales last year fell 27% to return to 2017 level, per National Bureau of Statistics, and sales this year are on course to be worse.
Scrapping the price caps would be a cleaner fix and officials are weighing up such a move, Reuters reported this month. The Guangzhou government has already quietly abandoned its seven-year-old policy in regulating new home prices, according to Caixin, a financial publication. Hard up developers will be able to start generating much-needed cash if more cities follow. Take Country Garden, it had a 202 million square metre landbank at the end of 2022, including 3,000 projects under construction. How quickly it can monetise some of those assets ultimately depends on how attractive the selling prices are.
A price slump would spur demand but the government would need to brave enormous fallout. Existing owners will be unhappy to see the value of their homes tumble: China’s homeownership rate reached 90% by 2020, and real estate accounts for 70% of household wealth. In a weak economy, it is unclear where an undistorted price will settle. Still, finding the bottom of the market looks crucial to any property market revival.
CONTEXT NEWS
China’s Guangzhou city has cancelled price caps on new residential projects, Caixin reported on Sept. 12. Developers still need to share their planned selling prices with authorities but regulators will no longer provide price guidance, the financial publication said.
Price caps of various kinds were introduced in many Chinese cities from 2016 following the central government’s call for a stable residential market.
Editing by Una Galani and Thomas Shum
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Men stand near residential buildings in Beijing, China April 14, 2022. REUTERS/Tingshu Wang/File Photo Acquire Licensing Rights
BEIJING, Sept 15 (Reuters) – A slump in China’s property sector worsened in August, with deepening falls in new home prices, property investment and sales, despite a recent flurry of support measures, adding pressure to the world’s second-largest economy.
New home prices fell at the fastest pace in 10 months in August, down 0.3% month-on-month after a 0.2% decline in July, according to Reuters calculations based on National Bureau of Statistics (NBS) data. Prices were down 0.1% from a year earlier, after a 0.1% decline in July.
For August, property investment fell for the 18th straight month, down 19.1% year-on-year from a 17.8% slump the previous month, separate data showed on Friday. Home sales are down for the 26th consecutive month, according to Reuters calculations based on the data.
China has in recent weeks delivered a raft of measures to boost home buying sentiment, including easing some borrowing rules, and relaxing home purchasing curbs in some cities.
These policies have given major cities like Beijing a tiny boost in new home sales, but some worry they might be short-lived and could potentially dry up demand in smaller cities.
China’s broader economy is showing signs of stabilisation with economic figures showing quickening growth in industrial output and retail sales.
However, analysts say a series of supportive policies have yet to firm up the crisis-hit property sector with major Chinese developers still fighting to avoid default.
“We are still hopeful that housing sales would stage small sequential pickups in the coming months, but stimulus will ultimately stop short of reflating the sector,” said Louise Loo, China economist at Oxford Economics.
China’s central bank said on Thursday it would cut the amount of cash banks must hold as reserves, its second such easing this year.
“The more material risks in the near-term come from some property developers and financial institutions, and a small RRR cut could do very little to help,” said Nomura in a research note on Friday.
Around 30 cities eased home purchase curbs and relaxed mortgage rules for buyers in recent weeks but analysts say Beijing may have to introduce more aggressive property easing measures to deliver a real recovery.
Authorities may also need to lift almost all restrictions on home transactions, invest more in the urban renovation programme, speed up infrastructure spending and restructure local government debt, said Nomura.
Moody’s on Thursday cut China’s property sector outlook to negative from stable, citing economic growth challenges, which the rating’s agency said will dampen sales despite government support.
China’s property crisis is seen as one of the biggest stumbling blocks to a sustainable economic recovery, with rising risks of default among private developers threatening to imperil the country’s financial and economic stability.
Reporting by Liangping Gao, Ella Cao and Ryan Woo
Editing by Sam Holmes
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Terraced houses are seen in Liverpool, Merseyside, Britain May 28, 2023. REUTERS/Carl Recine/File Photo Acquire Licensing Rights
LONDON, Sept 14 (Reuters) – British house prices showed the most widespread falls in 14 years in August as demand weakened against the backdrop of elevated mortgage costs and economic uncertainty, an industry survey showed on Thursday.
The Royal Institution of Chartered Surveyors (RICS) house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, slumped to -68 in August from -55 in July.
Thursday’s house price balance marked the weakest reading since February 2009 and was below the -56 forecast in a Reuters poll of economists.
Simon Rubinsohn, chief economist at RICS, said the survey pointed to a sluggish housing market with little sign of relief in prospect.
“Prices are continuing to slip albeit that the relatively modest fall to date needs to be seen in the context of the substantial rise recorded during the pandemic period,” Rubinsohn said.
The survey results echoed other signs of slowdown in the property sector.
Mortgage lenders Halifax and Nationwide have both shown prices falling in monthly terms as the Bank of England’s sustained run of interest rate rises, persistent inflation and a prolonged cost-of-living crisis squeeze home-buyers.
Official figures, released on Wednesday, showed the country’s economy shrank by a sharper-than-expected 0.5% in July after public sector strikes and unusually rainy weather weighed on output.
Overall across Britain, RICS’ measure of agreed sales was the weakest since April 2020 when much of the property sector was on lockdown due to the COVID-19 pandemic, and new buyer enquiries fell marginally from the month before.
In the rental market, tenant demand continued to outstrip landlord instructions, limiting the number of available homes to rent, while a net balance of +60% surveyors expect to see a rise in rental prices over the coming three months.
Separate figures from property website Zoopla on Thursday showed the joint-highest rental affordability squeeze, with tenants spending 28.4% of their earnings in July on rent.
Reporting by Suban Abdulla, editing by Andy Bruce
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The company logo of construction company Redrow is pictured on a flag at a new housing development near Manchester northern England, April 7, 2016. REUTERS/Phil Noble/File Photo Acquire Licensing Rights
Sept 13 (Reuters) – Redrow (RDW.L) on Wednesday said it expected its profit to more than halve in fiscal 2024, after the British homebuilder posted a 4% decline in annual earnings that was ahead of estimates as the country’s housing sector battles a pronounced slowdown.
The latest warning from a British housebuilder comes as concerns about Britain’s economy and rising interest rates, which have pushed up mortgage borrowing and dampened buyer demand, have dented housebuilders’ profits and build targets.
Recent measures of Britain’s property market have shown house prices falling at the fastest pace since 2009, and a decline in mortgage loan demand.
Data from the Bank of England, which has raised interest rates 14 times since December 2021 in an effort to tame inflation, showed the value of residential mortgages in arrears jumped to the highest level in seven years in the three months to June.
“Whilst the market did partially recover in spring 2023, the further rise in mortgage rates combined with the cost of living crisis means the market remained subdued,” Chairman Richard Akers said in a statement.
Shares in the company slipped 1.7% in early trade.
“Redrow’s FY23 results provide a reassuring statement. The skew in completions and margins for the start of calendar of 2024 implies we may need to wait for the ‘turn’ in earnings reported, but perhaps that we are nearer the turn in expectation,” analysts at Jefferies wrote in a note.
The FTSE 250 firm forecast profit before tax in the range of 180 million pounds to 200 million pounds ($224.2 million to $249.1 million) for fiscal 2024.
The Wales-based builder, which constructs bigger houses than rival housebuilders and sells them to second or third-time movers, posted underlying profit before tax of 395 million pounds for the full-year ended July 2, compared with company-compiled analysts’ consensus estimates of 367 million pounds.
($1 = 0.8028 pounds)
Reporting by Aby Jose Koilparambil in Bengaluru and Suban Abdulla in London; Editing by Rashmi Aich and Christina Fincher
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A view of semi-detached homes in Tilbury, southeast England, May 12, 2014. REUTERS/Suzanne Plunkett/File Photo Acquire Licensing Rights
Sept 11 (Reuters) – British homebuilder Vistry (VTYV.L) said on Monday it will shift its entire focus onto its affordable homes business as a slowdown in the country’s broader housing sector intensifies.
Shares in the builder rose about 11% to a more than one-year high of 893 pence in early trade.
British housebuilders are increasingly feeling the pinch from the Bank of England’s 14 consecutive interest rate hikes, which have hit profit margins and demand as buyers cope with elevated mortgage costs and affordability concerns.
Industry gauges, from mortgage approvals to house prices, have fallen in recent months. Mortgage lender Halifax last week reported a 4.6% annual drop in house prices, the fastest pace since 2009.
Vistry has been working with local government authorities and housing associations to build affordable homes and this Partnerships division has outperformed its Housebuilding unit, which operates on similar lines to rival builders.
“The scale of the social need for affordable mixed tenure housing across the country continues to increase and it is clear that Vistry is uniquely positioned as the leader in partnerships housing,” CEO Greg Fitzgerald said in a statement.
The FTSE 250 (.FTMC) firm said it would merge its Partnerships business with the Housebuilding operations by the end of the 2023 fiscal year to focus on this “high-return, capital-light, resilient” affordable-housing model.
“The shift in strategy removes any doubt about Vistry’s mixed model. It focuses the group on a less volatile part of the
housing market where need is very high,” Peel Hunt analysts wrote.
Vistry had bolstered its Partnerships business with its 1.25 billion pounds ($1.56 billion) acquisition of rival Countryside last September.
The company said it would aim to return 1 billion pounds to shareholders over the next three years and intended to launch an initial share buyback programme worth up to 55 million pounds in November.
Vistry, one of the biggest British housebuilders in terms of the number of homes built each year, reported a drop of more than 8% in adjusted pretax profit to 174 million pounds for the six months ended June 30. It reiterated its forecast for annual pretax profit to exceed 450 million pounds.
($1 = 0.7994 pounds)
Reporting by Aby Jose Koilparambil in Bengaluru and Suban Abdulla in London; Editing by Rashmi Aich and Louise Heavens
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People sit in the sun by the window of their house in Beijing February 17, 2011. REUTERS/Jason Lee/File photo Acquire Licensing Rights
BEIJING/HONG KONG, Sept 11 (Reuters) – New home sales in Beijing jumped last week, keeping property showrooms open late into the night to meet demand, in a sign government efforts to revive the sector are yielding some results in the Chinese capital if not elsewhere in the country.
A survey by real estate research firm China Index Academy showed on Monday new homes transactions in Beijing rose 16.9% by area sold in the week of Sept. 4-10 from the previous week even as they fell 20% on average across the country.
Another report, by Haitong Securities, showed sales by area in China’s four largest cities were still down 45% in the first week of September from the same period last year.
The figures suggest that China’s latest steps to revive a crisis-hit property market, including lower mortgage rates and down payments, could unlock some pockets of housing demand in the most sought-after areas, but may struggle to halt the broader property market downturn.
“These measures may generate a short-term rebound in property transactions, but are insufficient to stabilize the property market,” Goldman Sachs analysts said in a note.
Beijing and other big cities said more than a week ago they will allow people who have fully repaid their previous mortgage or sold their other homes to make down payments of as little as 35-40%, compared with 60-70% previously.
This prompted interested buyers such as 75-year-old Zhang Guoqiang to rush to property showrooms across the capital.
“I’m worried that if I don’t buy soon, there won’t be any good flats left,” said Zhang, as he visited a development by state-owned CR Land in northern Beijing with his wife and daughter.
“I’ll put my small, old apartment for sale as soon as I get home.”
Real estate agents were trying to sell the remaining 10% of the project’s total of 1,000 apartments, keeping doors open for potential buyers until 10:30 p.m. (1430 GMT) over the weekend, three hours longer than initially planned.
“Customer traffic has definitely increased significantly since the new policies came out,” agent Zhao Jie said. “I worked until 2.00 am on the first day after the announcement and sold 10 flats that night.”
MORE RADICAL POLICIES EYED
At another Beijing project by private developer Longfor Group (0960.HK), agents said visits by potential buyers more than doubled in the past week. They were mostly people who looked to sell their old homes either in Beijing or in other cities in China and replace them with new ones, the agents said.
But Yu Fei, a property sales agent at HomeLink, said the initial spike in interest he noticed in the first few days is already petering out.
“Many homebuyers remain in a wait-and-see approach, some hoping for more radical policies to stimulate the property market,” Yu said.
Goldman analysts said if property sales kept sliding policymakers could release more liquidity into the market by cutting banks’ reserve requirement ratios, lowering rates, easing home purchasing rules further.
At the CR Land project, a visitor surnamed Wan, who spoke on condition of partial anonymity for privacy reasons, said he was inclined to keep searching for cheaper apartments. At the same time, he was worried that prices might rise beyond reach should further easing measures be introduced.
“I’m still hesitant,” Wan said.
Editing by Emelia Sithole-Matarise
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A man looks at houses for sale in the window of an estate agents in Manchester, Britain, June 22, 2023. REUTERS/Phil Noble Acquire Licensing Rights
LONDON, Sept 7 (Reuters) – British house prices have fallen at the fastest pace since 2009 over the past year, reflecting the increasing impact of higher interest rates, mortgage lender Halifax said on Thursday.
Halifax said house prices were 4.6% lower last month than in August 2022, when they were close to their peak. This compared with a 2.5% annual fall in July and a median 3.45% decline forecast in a Reuters poll.
Prices fell 1.9% in August alone, the biggest monthly fall since November 2022, and also more than the 0.3% poll forecast.
“House prices have proven more resilient than expected so far this year…. However, there is always a lag-effect where rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs,” said Kim Kinnaird, director at Halifax Mortgages, part of Lloyds Banking Group (LLOY.L).
The Bank of England has raised interest rates 14 times since December 2021, taking rates to 5.25% in August. Governor Andrew Bailey said on Wednesday that rates were now “much nearer” their peak than before, although financial markets still expect a further increase to 5.5% this month and another rise after.
Rival mortgage lender Nationwide reported last week that house prices in August were 5.3% lower than a year earlier.
Official data showed house prices rose 27% between February 2020 and their peak in September 2022, reflecting increased demand for living space during the COVID-19 pandemic, temporary tax breaks and low interest rates over much of that period.
The average property price had now fallen back to levels similar to early 2022 at 279,569 pounds ($349,601), Halifax said, down 14,000 pounds from the peak last year but still around 40,000 pounds higher than before the pandemic.
A Reuters poll of housing market analysts last week showed they expected prices this year to fall 4% and to be unchanged in 2024 before rising 3.3% in 2025.
Imogen Pattison, assistant economist at Capital Economics, said the bigger-than-expected fall in Halifax house prices supported the consultancy’s forecast that house prices would drop a total of 10.5% by mid 2024.
“High mortgage rates will mean demand remains very weak while previously tight supply of second-hand homes on the market is easing,” she said.
($1 = 0.7997 pounds)
Reporting by David Milliken, Editing by Paul Sandle and Emelia Sithole-Matarise
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