House prices in Germany declined in the second quarter at the fastest pace since 2000, adding further evidence to the adverse impact of rising interest rates on the real estate market in the biggest euro area economy.
Prices of residential property decreased by an average 9.9 percent year-on-year, the statistical office Destatis said Friday. This was the biggest annual fall since the start of the time series in 2000.
In the same quarter last year, the house price index hit a record high. But they have been falling quarter-on-quarter since then, the statistical office observed.
In the second quarter, house prices fell 1.5 percent from the previous three months after a 2.9 percent slump in the first quarter. In the fourth quarter of 2022, prices had declined 5.1 percent.
Official data released earlier this month showed that apartment permits granted during January to July were 27.8 percent lower than in the same period last year.
Separate survey data suggest the crisis in the German residential construction sector has intensified in recent months.
The number of housing project cancellations hit a new high in August, mainly due to rising costs and higher interest rates the ifo Institute said last week.
“The uncertainty in the market is huge,” Head of Surveys at ifo Klaus Wohlrabe said.
In addition to the surge in construction costs and higher interest rates, which have made many projects that were still profitable in early 2022 no longer viable, the scaling back of subsidies due to tighter energy regulations is putting a strain on builders’ calculations, ifo said.
The ifo survey also showed that 44.2 percent of companies reported a lack of orders for housing in August, up from 40.3 percent in July. In the same month last year, the share was only 13.8 percent.
The latest purchasing managers’ survey by S&P Global had shown that Germany’s construction activity continued its downward trend in August amid a steep fall in residential building projects due to the impact of rising interest rates.
The PMI survey showed that housing activity contracted at the fastest rate in thirteen-and-a-half years.
Both the ifo and the PMI surveys showed that business expectations among house builders deteriorated as they expect further decline in business going forward.
The European Central Bank raised its key interest rates for a tenth policy session last week, but has signaled a pause ahead, despite policymakers assessing inflation to remain “too high, too long”, as Eurozone economy slows.
by Jyotsna V
For comments and feedback: contact editorial@rttnews.com
| 2019 | September | 6.1 |
|---|---|---|
| 2019 | October | 6.3 |
| 2019 | November | 5.8 |
| 2019 | December | 6.5 |
| 2020 | January | 6.3 |
| 2020 | February | 6.6 |
| 2020 | March | 7 |
| 2020 | April | 7.3 |
| 2020 | May | 7.7 |
| 2020 | June | 7.6 |
| 2020 | July | 7.4 |
| 2020 | August | 8.2 |
| 2020 | September | 8.6 |
| 2020 | October | 9.1 |
| 2020 | November | 8.9 |
| 2020 | December | 8.3 |
| 2021 | January | 9.3 |
| 2021 | February | 10.4 |
| 2021 | March | 11.3 |
| 2021 | April | 11.5 |
| 2021 | May | 12.9 |
| 2021 | June | 14.6 |
| 2021 | July | 16.3 |
| 2021 | August | 17.8 |
| 2021 | September | 18.5 |
| 2021 | October | 18.3 |
| 2021 | November | 20.1 |
| 2021 | December | 20.4 |
| 2022 | January | 21.1 |
| 2022 | February | 20.2 |
| 2022 | March | 19.5 |
| 2022 | April | 19.7 |
| 2022 | May | 18.8 |
| 2022 | June | 16.6 |
| 2022 | July | 14.5 |
| 2022 | August | 11.9 |
| 2022 | September | 9.4 |
| 2022 | October | 7.8 |
| 2022 | November | 4.9 |
| 2022 | December | 2.7 |
| 2023 | January | 1.1 |
| 2023 | February | -0.8 |
| 2023 | March | -2.3 |
| 2023 | April | -4.4 |
| 2023 | May | -5.6 |
| 2023 | June | -5.5 |
| 2023 | July | -5.5 |
| 2023 | August | -4.8 |
| Source: CBS, Kadaster | ||
Relative to July, the price index of existing owner-occupied dwellings increased by 0.6 percent in August. House prices reached a low in June 2013; they subsequently followed an upward trend until August 2022. Then the trend reversed, but prices have risen again over the past three months. In August, house prices were 89.5 percent higher than during the low in June 2013.
| 2019 | September | 133.4 |
|---|---|---|
| 2019 | October | 134.1 |
| 2019 | November | 134.8 |
| 2019 | December | 134.8 |
| 2020 | January | 136.9 |
| 2020 | February | 137.2 |
| 2020 | March | 138.3 |
| 2020 | April | 139.3 |
| 2020 | May | 140.4 |
| 2020 | June | 140.9 |
| 2020 | July | 142.2 |
| 2020 | August | 143.4 |
| 2020 | September | 144.8 |
| 2020 | October | 146.3 |
| 2020 | November | 146.8 |
| 2020 | December | 146.1 |
| 2021 | January | 149.7 |
| 2021 | February | 151.4 |
| 2021 | March | 153.9 |
| 2021 | April | 155.3 |
| 2021 | May | 158.4 |
| 2021 | June | 161.4 |
| 2021 | July | 165.3 |
| 2021 | August | 168.9 |
| 2021 | September | 171.5 |
| 2021 | October | 173.2 |
| 2021 | November | 176.3 |
| 2021 | December | 175.8 |
| 2022 | January | 181.3 |
| 2022 | February | 182.1 |
| 2022 | March | 183.9 |
| 2022 | April | 185.9 |
| 2022 | May | 188.2 |
| 2022 | June | 188.3 |
| 2022 | July | 189.2 |
| 2022 | August | 189 |
| 2022 | September | 187.6 |
| 2022 | October | 186.7 |
| 2022 | November | 184.9 |
| 2022 | December | 180.6 |
| 2023 | January | 183.3 |
| 2023 | February | 180.6 |
| 2023 | March | 179.6 |
| 2023 | April | 177.7 |
| 2023 | May | 177.6 |
| 2023 | June | 178 |
| 2023 | July | 178.9 |
| 2023 | August | 180 |
| Source: CBS, Kadaster | ||
According to The Netherlands’ Cadastre, the total number of housing transactions recorded over the month of August stands at 15,934. This is almost 3 percent less than one year previously. In the first eight months of this year, altogether 115,796 dwellings changed owners. This represents a decrease of almost 7 percent relative to the same period in 2022.
| 2019 | September | 11.3 |
|---|---|---|
| 2019 | October | 0 |
| 2019 | November | 0.3 |
| 2019 | December | 16.2 |
| 2020 | January | 15.9 |
| 2020 | February | -0.3 |
| 2020 | March | 10.6 |
| 2020 | April | 9 |
| 2020 | May | -6.9 |
| 2020 | June | 14.4 |
| 2020 | July | 7.3 |
| 2020 | August | -2.8 |
| 2020 | September | 12.5 |
| 2020 | October | 17.8 |
| 2020 | November | 0.6 |
| 2020 | December | 16.1 |
| 2021 | January | 39.9 |
| 2021 | February | 9.4 |
| 2021 | March | 35.5 |
| 2021 | April | 0.5 |
| 2021 | May | -12.1 |
| 2021 | June | -0.1 |
| 2021 | July | -15.6 |
| 2021 | August | -9.3 |
| 2021 | September | -14.7 |
| 2021 | October | -26.9 |
| 2021 | November | -13 |
| 2021 | December | -21.6 |
| 2022 | January | -42.7 |
| 2022 | February | -16.8 |
| 2022 | March | -37.3 |
| 2022 | April | -15.7 |
| 2022 | May | -2.3 |
| 2022 | June | -11.6 |
| 2022 | July | -13.8 |
| 2022 | August | -4.9 |
| 2022 | September | 0.3 |
| 2022 | October | -8.2 |
| 2022 | November | -5.6 |
| 2022 | December | 3.8 |
| 2023 | January | -6.6 |
| 2023 | February | -15.5 |
| 2023 | March | -2.4 |
| 2023 | April | -19.8 |
| 2023 | May | -4.1 |
| 2023 | June | 5.9 |
| 2023 | July | -9.1 |
| 2023 | August | -2.9 |
| Source: CBS, Kadaster | ||
Annual house price growth has returned to its lowest level since the pandemic, Land Registry data shows.
The latest figures from the Land Registry shows property price growth slowed from 1.9% to 0.6% in July 2023.
That is the slowest rate since the pandemic, when prices rose by just 0.69% in April 2020.
Prices also slowed on a monthly basis from 1.9% to 0.5%, putting the average property price at £289,824.
Annual house price inflation was highest in the North East where prices increased by 2.7% in the 12 months to July 2023. The South West was the English region with the lowest annual inflation, where prices decreased by 1%.
It comes after the Halifax and Nationwide house price reports showed values dropping at their lowest levels since 2009.
Agents remain positive though despite the time lag in the Land Registry data, highlighting separate figures showing the rate of inflation has fallen to 6.7%.
Iain McKenzie, chief executive of The Guild of Property Professionals, said: “Despite gloomy predictions, house price growth is still positive, and good news on inflation means that the market can be optimistic about autumn.
“Sellers may worry about the value of their home, but it’s important to remember that it‘s still worth much more than it was prior to the pandemic.
“Continuing buyer demand is helping hold up the market and keeping property prices buoyant in the face of challenging conditions.
“The inflation figures will add to downward pressure on mortgage rates, offering a welcome respite to first-time buyers and those nearing the end of fixed deals.
“Autumn is typically a busy season for estate agents, and there’s a few glimmers of hope that the end of the year will see the market turn.”
Chris Druce, senior research analyst at Knight Frank said he expects prices to fall further, with a reduction of 10% through the rest of this year and next.
He added: “This is despite the growing expectation that we are near the top of the interest rate cycle, which has reduced buyers’ spending power and depressed activity in the UK housing market.
“However, improved confidence, strong wage growth, high employment by historic standards, the availability of longer mortgage terms and forbearance from lenders will place a floor on how low prices will go. While we expect a muted period ahead for the residential market we do not expect a cliff edge moment.”
Nathan Emerson, chief executive of agency trade body Propertymark, added: “It is no surprise we are seeing such a drastic slowing in house price growth due to the unprecedented pace at which they increased last year.
“This drop is needed and should not be seen as a negative as house prices remain up compared to what they were last year, and this slowing is playing a crucial part in combatting rising interest rates and improving homebuyers’ affordability.”
As the trend for working from home slowly diminishes, so there has been a return of the premiums for homes near railways stations.
This has long been a classic property investment tip – to buy a home near a commuter link.
According to new research form the estate agent eXp UK, near the top 20 stations it costs an average of 122 per cent more to buy property.
The average house price across the top 20 busiest stations in the nation comes in at £478,016.
Many of the best rated train stations are in London, which serves to pull up the average sold price. Indeed, 15 of the 20 best stations are in the capital, with the priciest being London Fenchurch Street (£1.62m), and the cheapest being Barking (£329,000).
There are exceptions to London’s dominance however. Moorfields in Liverpool is by far the cheapest region with a strong railway service, where property is priced at £108,000, followed by Glasgow Central, at £177,000, and Norwich, at £208,000.
The station with the worst score for punctuality and cancellations is Manchester Oxford Road, where 11 per cent of trains are cancelled and many more are delayed. Living in that part of Manchester costs £236,000.
Living in a wealthy area doesn’t guarantee a strong train service, as Bath Spa commands an average price of £457,000, the least affordable on the list of worst performers, while also having a performance score of 76 per cent – one of the worst in the study.
Head of eXp UK, Adam Day, comments: “It may be tricky to afford to buy property in expensive areas of the UK, but our research suggests that digging deep could provide homebuyers with amore reliable commute. That’s especially the case in London, where stations outperform much of the rest of the UK in terms of cancellations and delays.
“Seeing as the capital acts as something of a hub of the UK, where many journeys start and end, maybe it’s not surprising that London sets the standards when it comes to reliability. Not that every area fits that trend, as Glasgow, Norwich, as well as Moorfields in Liverpool, all prove that it’s possible to have a reliable commuter service in an area where house prices are relatively affordable.”
ondon asking prices fell by 1.5 per cent this month, bringing the average price of a home in the capital to £673,200, according to the latest data from Rightmove.
The property portal also found it now takes an average of 63 days for someone to sell.
Worryingly for anyone with their house on the market, price reductions are creeping up to a level not seen since January 2011.
This month, a whopping 36.3 per cent of properties currently for sale have had a price reduction, with an average discount of £22,700 nationally or 6.2 per cent, suggesting buyers are in a strong position to negotiate.
Rightmove said one reason for this is that many sellers had priced too high at first but were now heeding their estate agent’s advice and pricing appropriately.
There were signs of green shoots however: the number of properties coming onto the market in the first week of September jumped by 12 per cent across the UK when compared to the average in August, as children went back to school and people returned from their summer holidays.
While the number of sales agreed in August 2023 was down 18 per cent on August 2022, the sector’s crucial first-time buyers, who purchase homes with two bedrooms or fewer, was the best performing sector and only down 13 per cent compared to 2019.
Estate agents, buyers and sellers will all be looking to see what happens to interest rates over the next few weeks and there is reason to be hopeful. The average five-year fixed mortgage is now at 5.67 per cent, the seventh consecutive week of these rates dropping, after peaking at 6.11 per cent in July.
“It’s been a slower than usual August, so all eyes will be on market activity over the next few weeks, which will set the trend for the rest of the year.
“The combination of 14 consecutive Bank of England interest rate rises and many buyers and sellers still catching up on lost pandemic holidays has contributed to a bigger than expected summer lull, though we still anticipate an autumn bounce,” says Tim Bannister Rightmove’s Director of Property Science.
“Market conditions still vary considerably in different locations, and so a local estate agent will be best placed to advise sellers to give them the best chance of finding a buyer this autumn.”
The story across London was mixed. The top performing borough was Richmond upon Thames, where average house prices rose by three per cent annually but were down 0.2 per cent in the last month to £936,460.
Haringey posted a 2.1 per cent year-on-year increase to £683,583, closely followed by Southwark, whose annual house price has increased to £665,321, a two per cent annual increase.
At the other end of the scale, Merton saw the biggest monthly and annual price drops. In August, house prices fell 4.3 per cent to £690,300, an annual reduction of 6.7 per cent.
This was significantly more than the capital’s second faller, Lewisham, whose prices fell 0.7 per cent monthly and 2.9 per cent annually to £508,533.
In Redbridge, prices stayed the same this month, but the borough dipped annually by 2.3 per cent to £512,510.
by Calculated Risk on 9/14/2023 12:00:00 PM
Today, in the Calculated Risk Real Estate Newsletter: Part 2: Current State of the Housing Market; Overview for mid-September
A brief excerpt:
Yesterday, in Part 1: Current State of the Housing Market; Overview for mid-September I reviewed home inventory and sales.
…
Most measures of house prices have shown an increase in prices over the last several months, and a key question I discussed in July is Will house prices decline further later this year? I will revisit this question soon.Other measures of house prices suggest prices will be up YoY over the next few months in the Case-Shiller index. The NAR reported median prices were up 1.9% YoY in July, up from a 0.9% YoY decline in June. Black Knight reported prices were up 2.3% YoY in July to new all-time highs, and Freddie Mac reported house prices were up 2.9% YoY in July, up from 1.6% YoY in June – and also to new all-time highs.
Here is a comparison of year-over-year change in the FMHPI, median house prices from the NAR, and the Case-Shiller National index.
The FMHPI and the NAR median prices appear to be leading indicators for Case-Shiller. Based on recent monthly data, and the FMHPI, the YoY change in the Case-Shiller index will turn positive in the report for July.
There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/
High mortgage rates and a lack of supply may mean the prime property market misses its typical seasonal boost in the run up to Christmas, LonRes has warned.
It comes as the latest LonRes data for August shows transactions were 28.5% lower than the same month last year, and 9.2% below the 2017-2019 pre-pandemic period.
Average achieved sold prices fell by 1% compared to a year earlier, a slower pace of decline than last month, LonRes said.
Average values across prime London are 4.2% above their 2017-2019 average, which LonRes said indicates little change over the past few years.
The property data firm said other indicators suggest this relatively quiet market will continue. New instructions were down 16.5% compared to last August and the number of properties going under offer fell by 17.1% on the same basis.
However, the number of under offers for the year to date is 18.9% above the 2017-19 average, so the wider context suggests that there is still a decent level of demand in the market.
The market for properties priced at £5m or more has been the strongest segment this year, but activity is slowing, LonRes said.Transactions in August were down 31.1% on the same month a year earlier and under offers fell 34.5%. New instructions fell 2.5% after two months with very high levels. All three of these metrics are significantly above their average 2017-19 levels.
The proportion of properties sold at £5m plus after a price reduction in the three months to August was 47%. This is the highest level since early 2019.
Nick Gregori, head of research at LonRes said: “The central London market has been quiet over the summer with agents reporting feedback from clients that there is a feeling that London is not ‘open for business’ compared to other global cities.
“This is particularly relevant to investors and international buyers who still want to buy but have other options. With many sellers in this market discretionary and not needing to move we are not yet seeing much downward pressure on prices. The impact has all been on transactions, which continue to fall.”
For some domestic buyers demand is constrained by the cost of borrowing, Gregori said.
He added: “High – and volatile – mortgage rates are feeding into a sense of caution for those looking to move. On the supply side the potential impact of remortgage increases creating ‘forced’ sellers is not yet evident. Households facing higher repayments are likely to cut back on spending before deciding to go down the route of selling up.”
While activity over the summer has been quiet, Gregori added, comparison to previous years shows it is around typical levels for much of the past decade.
He said: “The post-Covid boom in activity has made the slowdown seem more significant, but it remains to be seen what the last few months of the year will hold. September is typically the start of the autumn selling season for people looking to move by Christmas. But with transactions taking longer to go through a move by Christmas may be off the cards, meaning the usual seasonal activity may not take place this year.”
While the halcyon days of near-zero interest rates are long gone, the IMF expects Bank Rate to fall in the coming years. This could make mortgages more affordable, while an end to the cost of living crisis and a significant pickup in economic activity may further boost demand for new homes.
In terms of supply, the UK continues to struggle to build enough new homes to accommodate a growing population. England’s is forecast to rise by roughly 220,000 people per year over the next decade.
While not every individual will require a home, only 150,000 new homes were built per year, on average, over the past decade. This suggests the issue of undersupply is unlikely to be solved – even with changes to planning laws that have been mooted for years.
Indeed, the industry’s concentrated structure and the vast land banks of major housebuilders, alongside substantial barriers to entry, mean incumbents enjoy a strong position.
While Barratt’s shares could fall further in the short run after declining by 40pc since first being tipped by Questor in January 2020, they have significant long-term potential. Investors who can cope with short‑term uncertainty are likely to be highly rewarded in the next boom.
Questor says: buy
Ticker: BDEV
Share price at close: 436.8p
Update: Polarean While Barratt has the financial strength to overcome temporary market difficulties, medical device company Polarean last week warned investors about its financial position.
Its half-year results stated that “it is anticipated that additional capital will need to be raised by the end of the second quarter of 2024… to fund the group’s activities at their planned levels beyond this date”.
Given a lack of certainty in its future existence, Questor recommends that readers sell the stock. Its 88pc share price decline since first being tipped by this column in June 2021 is hugely disappointing. However, its risk-to-reward ratio is highly unfavourable.
Read the latest Questor column on telegraph.co.uk every Tuesday, Wednesday, Thursday and Friday from 6am
Read Questor’s rules of investment before you follow our tips
Builders have to submit far more supporting evidence because increased public scrutiny of planning applications has driven a surge in the use of case law in planning decisions.
Mr Brocklehurst said: “There was an unwritten social contract that used to occur between the generations, that we know we have to build housing for future generations.
“Up until the early 80s there was an acceptance of new house building. But that social contract seems to have slowly unwound and now people seem to be less willing to accept development near them.”
House price growth, which has far outstripped wage growth, has been key, Mr Brocklehurst added.
“Everybody is starting to view their house as a financial asset, as well as a place to bring up their family, and when people see it as a store of wealth, they get very concerned about anything that they imagine might reduce that,” Mr Brocklehurst said. “It has been a slow creep over 30 years, with an increased regulatory burden and changing social views.”
Edward Clarke, of Lichfields, said: “Every possible development that could affect anybody starts to get questioned much more when you’re in an atmosphere that is heavily politicised, not just between political parties but in local areas.
“Local authorities say everything has to be absolutely bulletproof before we take anything forward, just in case somebody brings up some vaguely relevant case law.”
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My best ever property deal (and the mistakes followed)
Here, the key is to gather as much information as possible about the property. Don’t be afraid to ask questions, although there are always elements you won’t discover until you start pulling things apart. Of course you need the views of builders, surveyors and maybe architects, but go further afield. Ask your neighbours about the issues they have experienced with their properties and what they wish they had known when they moved into the area.
If the road is made up of terraced or similar properties it is likely they will be affected by the same problems. A house I owned in Wandsworth was situated on a road with a slight decline that we later discovered used to have a river at the end, causing problems for the properties nearby. This isn’t something an estate agent is going to tell you. Ask around.
But over the thousands of properties I have helped view, buy, sell or renovate, the mistake I see the most often is when buyers choose properties based on the life they are currently living rather than the lifestyle they may like to have in years to come. Take a couple of young professionals buying their first home. They may choose somewhere with an easy commute, close to their friends and favourite local pub.
But those things can be quite temporary, whereas choosing a house needs to be as long term a decision as possible. My advice, and I know it’s not easy, is to try to think five years ahead when you’re buying property.
It may seem outlandish to buy a three-bedroom house close to good schools when there’s just two of you, but it’ll save you more than just stamp duty if you don’t have to move again as your family grows. And while it may be painful to pay a premium to be in a family-friendly area, these properties usually hold their value. It is unlikely to be a sunk investment even if your plans change.
Further down the line, buying your forever home with space for maybe your parents to move in, or for older children to return home to after university might not be something you are thinking about now, but it will give you more options later on.
However, another common mistake is to constantly think about the value of your property rather than what will increase your enjoyment of living there. I’ve done this myself. At one point I was digging a basement in a property, paying rent on one house, a mortgage on another bigger family home.
I had it all worked out but when the 2008 property crash started my business dried up; suddenly I was ploughing money into a property that was dropping in value by the day. Everything was moving in the wrong direction, I was terrified. I knew it was the right work for the right property, but I couldn’t see past the finances.
My advice here is to remember that unless you are looking to sell, the value of your house at a particular point in time isn’t important. We all know how quickly this market moves, as long as you can sit out a dip and it is the right home for you then, while it doesn’t feel nice, it doesn’t necessarily matter.
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