By Stephen Johnson, Economics Reporter For Daily Mail Australia
14:52 08 Feb 2023, updated 14:55 08 Feb 2023
- Aussie Home Loans founder sees house prices rising
- John Symond said it would occur in 2024 as rates cut
Aussie Home Loans founder John Symond predicts house prices will start rising again in 2024 as interest rates go back down, slammed the Reserve Bank boss for being a failure, and says baby boomers had it much than today’s borrowers.
The RBA’s latest quarter of a percentage point increase has taken the cash rate to a new 10-year high of 3.35 per cent – with Governor Philip Lowe signalling further increases in coming months.
Three of Australia’s Big Four banks – Commonwealth, Westpac and ANZ – are now expecting the RBA to raise rates two more times to a new 11-year high of 3.85 per cent.
But Mr Symond, who founded Aussie in 1992, said the RBA would be forced to cut rates in 2024 to ward off a steep economic downturn, and that would cause house prices to rise again like they did in 2021 and early 2022.
‘I’m confident that this time next year, house prices will be stronger than they are now,’ he told Daily Mail Australia.
Mr Symond said the lead-up to rate cuts at the end of 2024 would be a signal to buyers to get back into the market.
‘Once they start coming off again, which probably will be towards the end of next year, mid to the end of next year and you see rates edging down by half a per cent, that will be a signal to home owners “we’ve got to have a hard look at this”,’ he said.
The Commonwealth Bank is expecting the RBA to cut rates by 0.5 percentage points in the December quarter of 2023, followed by two more rate cuts by the end of June 2024.
Mr Symond did not expect such a rapid reversal, and thought rate declines would not occur until late 2024 when the current rate squeeze would have caused a sharp drop in consumer spending, possibly triggering a recession.
‘If they continue going up over the next six months, they are taking that risk,’ he said.
‘I disagree with the governor when he said that interest rate rises aren’t felt straight away – Australia unlike Europe and the US, we’re a very, very, very housing-centric country and as soon as there’s an interest rate rise, it’s felt immediately.’
Just as rate rises had a sudden impact, Mr Symond said future rate reductions would also prompt a rapid re-investment in housing, with consequent price increases.
Upmarket suburbs near the water in interest-rate sensitive markets like Sydney would be likely to bounce back first, like they did in late 2020 when rates were cut to a record-low of 0.1 per cent.
‘The upper areas of anywhere near water, they will be more resilient in my opinion than other suburbs,’ Mr Symond said.
Mr Symond, who pioneered non-bank lending three decades ago, predicted that when rates were cut in 2024, bank variable rates would drop by less than the RBA cash rate easing – as occurred in late 2008 during the Global Financial Crisis.
‘Interest rates, when they start dropping, you might find some of the banks might not drop the whole Reserve Bank amount,’ he said.
That’s because the banks and non-bank lenders source about 40 per cent of their funding from global money markets instead of from the Reserve Bank of Australia.
The banks’ global borrowing costs could mean they will likely be slow to pass on the full rate reductions to mortgage holders.
But he said the banks would be unlikely to raise variable rates through 2023 in excess of RBA moves, regardless of what their borrowing costs might be.
‘In this environment when interest rates have gone up so sharply, in such a short period of time, the banks would not be game enough – they’d get slaughtered both media and from customers,’ Mr Symond said.
When it came to the performance of the Reserve Bank, Mr Symond was scathing of Dr Lowe for promising in 2021 rates would stay on hold until 2024 only to have since raised them nine times.
‘The guy obviously knows his stuff but in this particular aspect of his job, it’s very unfortunate that this aspect is a very, very big and sensitive area of his role, he got it so wrong,’ he said.
‘On that, you’d have to mark him as a fail.’
Inflation last year surged by a 32-year high pace of 7.8 per cent, a level more than double the RBA’s 2 to 3 per cent target, which Mr Symond said made rate cuts unlikely in 2023.
‘I’d be more confident rates will come off during 2024, maybe mid to later, than I am this year,’ he said.
The man who fronted Aussie Home Loans TV commercials during the 1990s also had a message for older Australians saying they did it tougher than young borrowers today, with interest rates hitting 17.5 per cent 33 years ago.
The entrepreneur, who paid 21 per cent interest on his mortgage, said that those ‘boomers’ were able to buy houses at much lower prices as a percentage of average income.
‘The ’87 stock market crash caused a lot of pain for five or six years but take that away, baby boomers had it pretty good,’ he said.
‘Housing was more affordable, baby boomers didn’t have to go to war – there was some conscription but the percentage of baby boomers who went to Vietnam is very tiny and I think the baby boomers’ era was a golden era.
‘I remember when I was a young articled clerk in law, the average price of a house in the seventies was around 50 grand – when I say it was easier, less people got home loans then because money wasn’t a commodity like it is today where banks are borrowing offshore against their balance sheets.’
In November 1992, Sydney’s median house price of $220,628 was dear but an average, full-time worker on $30,966 with a 20 per cent deposit owed the bank 5.7 times their annual salary.
Little more than three decades later, Sydney’s mid-point house price of $1,205,618 is so expensive an average, full-time worker on $92,030, with a deposit, would have a dangerous debt-to-income ratio of 10.5.
That also followed a 15 per cent plunge in the year to January which barely unwound the 27.7 per cent surge during the pandemic, CoreLogic data showed.
The Australian Prudential Regulation Authority considers anyone owing more than six times their annual salary as over-committed.
Mr Symond sold the remainder of his stake in Aussie to the Commonwealth Bank in 2017, 25 years after being the head of Australia’s first non-bank lender.
Financial deregulation allowed lenders to source funding from overseas instead of having to rely on customer deposits to finance home borrowing.
After a trail of flop auctions, the Chandigarh Housing Board (CHB) has slashed the reserve prices of leasehold commercial properties by 10% ahead of the next auction.
Putting 137 properties on offer, the board has invited e-bids from February 8 to March 7 through its website.
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Among the total properties, 45 are freehold residential units and 92 are leasehold commercial units.
The decision to reduce the reserve prices came after the previous auction, held on January 24, proved to be a damp squib with only nine takers for 140 properties. Out of 91 commercial properties on leasehold basis, only two were sold.
CHB chief executive officer Yashpal Garg said, “The reserve prices of commercial properties have been slashed by 10%. So, we are hoping to get better response this time.”
Willing participants may visit the board’s official website — www.chbonline.in — to understand the detailed procedure for submission of earnest money deposit (EMD) and e-bids. The detailed tentative list, mentioning localities/sectors of the built-up units and reserve price, can also be downloaded from the website .
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“To submit e-bids, every prospective bidder is required to get registered at https://etenders.chd.nic.in. A valid e-mail ID, mobile number and digital signature are the basic requirements to participate in the e-render process,” Garg said.
The e-bid must be above the reserve price and the bidders can revise their e-bids, any number of times, till closure of bid submission. The properties will be allotted to the highest bidder.
The dwelling units can be further sold, alienated, transferred, etc., after the execution of conveyance deed with CHB, as per law and the board’s transfer policies applicable to freehold properties.
- One luxurious house has dropped a staggering £9.5 million since October 2021
- While another property on the market slashed its price by £200k in a single day
Average property prices in London have plummeted by more than £11,000 in the opening month of 2023 – while country-wide figures show an annual increase of just 1.9%.
In a hint that the capital’s housing boom may be at an end, Britain’s biggest mortgage lender, Halifax, revealed the average home in the capital lost more than £350 a day over January amid higher borrowing costs and recession fears.
And the average house price nationally is now more than £12,000 below a peak seen in August last year, according to Halifax. The lender said property values increased by 1.9 per cent annually – the lowest level recorded over the past three years.
It recorded 0.0 per cent house price growth in January year on year in London, following monthly decreases of 1.3 per cent in December and 2.4 per cent in November.
The typical property value remained largely unchanged in January 2023 at £281,684, compared with December 2022.
Experts now have now warned London’s housing market is ‘following the trajectory’ of the 2008 financial crash and could soon slip into negative year-on-year changes.
The slump has already seen huge slashes in some properties, with one four-bedroom terraced house in Stoke Newington cutting its price from £1,550,000 to £1,350,000 in a single day on February 1.
A luxurious five-bedroom semi-detached home in the city’s upmarket Chelsea district – which has its own pool, spa and cinema – lost almost half its value since October 2021, dropping a staggering £9.5 million since October 2021.
Nationally, house prices dropped for the fourth month in a row, falling 1.5 per cent in December compared to November, with the average UK property now costing £281,272 – more than £12,000 than the high of £293,992 in August, Halifax said.
The bank warned that uncertainly over how the cost of living crisis will hit household bills, as well as soaring interest rates, was behind the slowing housing market.
But it expects buyers and sellers to ‘remain cautious’ over the coming year, with December’s monthly fall being lower than the 2.4 per cent decline seen in November, even taking into account the expected seasonal slowdown.
Kim Kinnaird, director, Halifax Mortgages, said: ‘We expected that the squeeze on household incomes from the rising cost-of-living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years.
‘As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand.
‘For those looking to get on or up the housing ladder, confidence may improve beyond the near-term.
‘Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home buying affordability over time.’
The slowdown in annual house price growth is reflected in most nations and regions across the UK, Halifax said.
The bank’s regional figures are based on the most recent three months of approved mortgage transactions due to smaller sample sizes.
This means they are not directly comparable to the annual house price growth rate for the UK as a whole for the month of January.
The annual rate of house price growth in Wales slowed from 6.0 per cent in December to 2.0 per cent in January, with a new average house price there of £210,275, down by nearly £14,000 from a peak of £224,210 in August.
The South West of England has also seen annual house price growth slow considerably, to 2.7 per cent in January compared with 6.0 per cent in December.
The average house price in the South West has dipped below £300,000 for the first time since March last year.
In Northern Ireland and Scotland the pace of annual growth has eased more slowly, Halifax said.
In Northern Ireland, annual house price growth eased from 7.1 per cent in December to 6.9 per cent in January and in Scotland it slowed from 3.3 per cent in December to 2.4 per cent in January.
In London, house prices stalled in January, with 0.0 per cent growth, compared with a 2.9 per cent increase in December.
Tom Bill, head of UK residential research at estate agent Knight Frank, said: ‘Some discretionary demand has disappeared but most buyers need to move and have accepted the fact that a 13-year period of ultra-low rates is over.
‘As budgets adjust to higher rates, we think prices will fall by five per cent this year but offers are still exceeding the asking price in some areas.’
Nicky Stevenson, managing director at estate agent group Fine & Country said: ‘A month without a fall in house prices brings some much-needed stability to the property market, and will likely encourage more sellers to put their homes up for sale ahead of the traditionally busy springtime.’
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: ‘There is encouraging news on the mortgage front with fixed-rate pricing continuing to edge downwards.
‘While the days of sub-one per cent fixes are long gone, rates are beginning to look more palatable for borrowers, which should be a welcome boost for the housing market and encourage more to take the plunge.’
Steven Morris, director at Bristol-based mortgage broker, Advantage Financial Solutions, said: ‘Though the property market is still under pressure, the fixed-rate mortgage price war currently raging and the fact prices were flat in January shows there’s light at the end of the tunnel.
‘Every time we apply for a fixed-rate for a customer, within no time it’s cheaper elsewhere.’
Commenting on Halifax’s latest house price index, Phil Tennant, chief operating officer of iBuyer UPSTIX, said the Halifax’s figures were a ‘reliable’ indictator of where the market was likely to go.
‘Extrapolating the trend since values peaked in August 2022, the market seems to be following the trajectory of the 2008 crash, having dropped 2.3 percent in five months. Yet when and where the market will bottom out is still very much an open question,’ he added.
‘Realistically, it’s those currently part way through transactions that will be suffering the most. A cool market greatly increases the risk of broken chains, which are already endemic. Navigating the turbulence will require savvy agents to consider all tools at their disposal to ensure that sales complete.’
(Alliance News) – Stock prices in London were higher on Wednesday at midday, as investors hope for slower interest rate hikes by the world’s key central banks.
The FTSE 100 index was up 14.32 points, 0.2%, at 7,786.02. The FTSE 250 was up 160.60 points, 0.8%, at 20,014.05, and the AIM All-Share was up 5.85 points, 0.7%, at 873.67.
The Cboe UK 100 was up 0.1% at 778.45, the Cboe UK 250 was up 0.9% at 17,474.90, whilst the Cboe Small Companies was down 0.1% at 14,070.56.
Investors are hoping for a dialling back of the pace of interest rate rises, with markets now expecting a 25 basis point hike in US interest rates. Should the Fed raise rates as expected on Wednesday, this would take the federal funds rate range to 4.70% to 4.75%.
The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 1900 GMT. This will be followed by a press conference with Fed Chair Jerome Powell at 1930 GMT.
“The FTSE 100 moved higher on Wednesday morning, with today’s trading session in London sandwiched by strong gains on Wall Street overnight and the US Federal Reserve’s decision on interest rates later,” says AJ Bell investment director Russ Mould.
“A lot is riding on the Fed dialling back the pace of rate hikes to 25 basis points and there will also be plenty of attention on the surrounding messaging from Chair Jerome Powell and his colleagues. Helping the market’s mood on Tuesday was data that revealed slowing US wage growth, another signal that inflationary pressures have peaked.
“Investors clearly hope we are getting closer to the point at which the Fed pivots away from rate rises and that it does so before too much economic pain has been inflicted.”
In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average ending up 1.1%, the S&P 500 up 1.5% and the Nasdaq Composite up 1.7%.
New York stocks are called higher ahead of the Fed’s decision, which is made during US market hours. The Dow Jones Industrial Average was called up 1.1%, the S&P 500 index up 1.5%, and the Nasdaq Composite up 1.7%.
On Tuesday, figures from the Bureau of Labor Statistics on Tuesday showed that US wages and salaries increased in the final quarter of 2022.
According to the US Bureau of Labor Statistics, wages and salaries increased 1.0% in the three-month period ended December compared to September 2022. Wages and salaries increased 5.1% for the 12-month period ended December 31.
The European Central Bank and the Bank of England also hold their rate-setting meetings this week, with decisions due on Thursday. Both are expected to hike by 50 basis points.
In European equities on Wednesday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both down 0.1%.
There was some good news for the eurozone, and the ECB, on Wednesday as a flash estimate from Eurostat showed that consumer price inflation slowed in January.
In January, the eurozone annual inflation is estimated at 8.5% last month, down from 9.2% in December. A year earlier, the inflation rate for January was 5.1%.
On a monthly basis, consumer prices in the eurozone fell by 0.4% in January.
The figures, however, do not include German inputs as they have been postponed.
“All in all, the data looks decent as a jump in core inflation has been avoided but uncertainty remains without final German figures. For the ECB, the muddied picture of inflation is annoying, but dont expect it to throw it off course for tomorrow. The jump in core inflation in some key countries will be enough for the central bank to confirm its current hawkish stance and add another 50 basis points to policy rates,” remarked ING Senior Economist Bert Colijn.
Eurostat also said the eurozone unemployment rate for December was 6.6%. This is stable compared with November 2022 and down from 7.0% in December 2021.
Meanwhile, the downturn in the eurozone’s manufacturing sector eased somewhat in January, according to survey results, as cost pressures faded.
The S&P Global eurozone manufacturing purchasing managers’ index rose to a five-month high of 48.8 in January from 47.8 in December.
At below the 50.0 no change mark, the reading shows the sector is still in contraction, though the pace has eased slightly.
The situation is “considerably brighter” than a few months ago, according to Chris Williamson, chief business economist at S&P Global Market Intelligence.
“Not only has the rate of output decline moderated now for three consecutive months, but business optimism about the year ahead has also surged higher over the past three months,” he said.
In the UK, the PMI from S&P Global showed the manufacturing sector continued to contract in January but input inflation eased.
The seasonally adjusted S&P Global-CIPS manufacturing PMI edged up to 47.0 points in January from December’s 31-month low of 45.3 and above the flash estimate of 46.7.
This marks the sixth consecutive month of contraction in UK manufacturing.
S&P noted that average input costs eased to a two-month low in January, however there was a slight uptick in selling price inflation.
Looking ahead, S&P said that manufacturers’ confidence is reviving from recent lows, hitting a nine-month high. However, it noted that the mood continues to be darkened by concerns over price inflation and the possibility of recession.
The pound was quoted at USD1.2327 at midday on Wednesday in London, down compared to USD1.2375 at the equities close on Tuesday. The euro stood at USD1.0895, higher than USD1.0861. Against the yen, the dollar was trading at JPY129.84, down compared to JPY130.17.
In the FTSE 100, Ladbrokes- owner Entain gained 2.0%, making it one of the best performers of the morning.
The London-based gaming and sports betting firm lifted its outlook following a World Cup boost.
Entain said it expects earnings before interest, tax, depreciation and amortisation for 2022 to be in the range of GBP985 million to GBP995 million. It had previously guided for a range of GBP925 million to GBP975 million.
At best, the new guidance represents a 13% rise from 2021’s Ebitda of GBP881.7 million.
For the fourth quarter of 2022, net gaming revenue rose 11% year-on-year and 7% at constant currency. Entain reported “record” online net gaming revenue. It rose 12% year-on-year, reflecting a “successful men’s World Cup, partly offset by weather disruptions to sporting fixtures”, Entain explained.
Looking ahead, Entain said it has started 2023 with “good momentum” across the business.
Telecommunications firm Vodafone was one of the worst FTSE 100 performers at midday.
It shed around 2.1%, after its CEO said “we can do better” as it reported that growth slowed in the third-quarter.
On an organic basis, service revenue rose 1.8% on-year during the quarter ended December 31. It had risen 2.5% yearly in the second quarter.
On a reported basis, service revenue was 1.3% lower on-year at EUR9.52 billion from EUR9.65 billion. Total revenue amounted to EUR11.64 billion, down 0.4% from EUR11.68 billion a year earlier, but up 2.7% on an organic basis.
“Although we’re continuing to target our financial guidance for the year, the recent decline in revenue in Europe shows we can do better. We need to do more for our customers by delivering quality connectivity in an easy way. We’ve already taken action, including simplifying our structure to give local markets full autonomy and accountability to make the best commercial decisions for their customers,” Chief Executive Margherita Della Valle said.
Della Valle became interim chief executive at the start of the year, replacing Nick Read who departed after just over four years in the top job.
interactive investor analyst Richard Hunter said: “[Wednesday’s] share price performance continues to reflect the enormity of the challenges ahead.
“Whether the newly appointed CEO can revitalise fortunes remains to be seen, but there is unquestionably a mountain to climb. As such, the jury remains out on immediate prospects, with the market consensus coming in at a hold, albeit a strong one.”
Vodafone backed its annual guidance, expecting adjusted Ebitda after leases between EUR15.0 billion and EUR15.2 billion. At best, that would be around the EUR15.21 billion achieved in financial 2022.
In the FTSE 250 index, London-based commercial property investor UK Commercial Property REIT lost 4.2%.
In the quarter to December 31, the company’s net asset value fells by 22% to 79.7 pence per share from 101.5p at September 30. NAV total return was negative 21%, compared to negative 7.9% a quarter ago.
However, the company reported a 12% rise in earnings per share to 0.82 pence as at December 31, up from 0.73p on September 30. It also declared a dividend of 0.85 pence per share for the quarter, up from 0.75p a year prior.
Brent oil was quoted at USD85.42 a barrel at midday in London on Wednesday up from USD85.27 late Tuesday. An OPEC meeting is scheduled for Wednesday.
Gold was quoted at USD1,929.43 an ounce up against USD1,927.04.
In addition to the Fed’s interest rate announcement, the economic calendar on Wednesday has a US manufacturing PMI and labour turnover survey.
By Sophie Rose, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.
HOUSE PRICES in Finland fell significantly at the end of last year, according to preliminary data released by Statistics Finland.
The data indicates that the prices of old dwellings in housing companies declined by 2.5 per cent year-on-year and 0.2 per cent month-on-month in December 2022, translating to a year-on-year decline of three per cent for the period between October and December.
Although the decline was particularly sharp for smaller dwellings, the phenomenon was not exclusive to them.
The decline is attributable to the rapidly rising energy prices, reference interest rates and cost of living in general. Euribor 12, the most popular reference rate for housing loans in Finland, has surged to 3.3 per cent after starting last year almost half a percentage point below zero.
The downward trend is expected to continue this year. OP Financial Group, the largest mortgage lender in Finland, forecast at the end of last year that house prices would decrease by an average of 4–6 per cent this year, driven by drops of 5–7 per cent in Greater Helsinki. Outside the capital region, the drops are not expected to be quite as dramatic – somewhere between 3.5 and 5.5 per cent.
Activity in the real estate market also slowed down significantly, with real estate agencies brokering 38 per cent fewer house sales in December 2022 than in December 2021.
Aleksi Teivainen – HT
Brisbane and Hobart house prices have fallen sharper and faster than ever before after a “specular upswing” through COVID-19, according to property analysts CoreLogic.
Key points:
- Property values dropped 10.9 per cent in Brisbane, and 9.3 per cent in Hobart
- Both cities saw values soar during COVID-19
- The decline was steeper still in Sydney, but the NSW capital is yet to break records
The cities are the only two capital markets to set record declines — but the drop has barely made a dent on pandemic gains, according to the company’s home value index.
Values rose 43 per cent in Greater Brisbane after a pandemic population surge, but have gone down 10.9 per cent from its peak in June 2022 to January 28.
In Hobart, prices dropped 9.3 per cent in the past eight months after a five-year upswing.
Tim Lawless, from CoreLogic, said the two markets had a similar rise and rapid fall.
“They’re both relatively affordable markets — at least, they were prior to the pandemic — and they both recorded quite spectacular rises in housing values through the upswing.
“Another similarity is that they were both seeing very strong interstate migration rates that have now pulled back to some extent. Hobart of course, also broadly falls into that lifestyle category, that many areas of south-east Queensland could also be described as.”
Nationally house prices dropped 8.6 per cent since the Reserve Bank of Australia began raising interest rates.
In Sydney, prices dropped nearly 14 per cent, but it was not yet record-breaking in the capital, Mr Lawless said.
“Through the previous downturn, for example, which ran between the middle of 2017 and the middle of 2019, Sydney housing prices were down nearly 15 per cent through that trough,” he said.
“So Sydney is not quite at a record level of decline, but it’s probably a matter of time considering we’re still seeing values falling at around 1 per cent month-on-month in that market.”
‘Buyer’s market’
Recent home owners may find their property is worth less now than what they paid, but Mr Lawless said it’s unlikely many would go into negative equity.
“Typically, most home owners would have at least a 10 per cent deposit if not a 20 per cent deposit, which means there is some insulation in this downturn. The thing to keep in mind is most home owners in Brisbane are still sitting on a substantial amount of equity.
“We’re still seeing Brisbane housing prices about 28 per cent above what they were before the pandemic.”
And although Brisbane’s stock levels are about 40 per cent lower than average, Mr Lawless said it was still a buyer’s market.
“At the moment buyers do have time on their hands, there’s no real urgency to buy into the market like what there was a back in 2020 and 21. They can negotiate and if they don’t get the price they think is fair market value they can move on to the next property .
“For sellers, they really need to be realistic about their pricing expectations.”
Northland is one of just two regions bucking the downward national trend in the median house price.
Photo / Michael Cunningham
Northland is one of two regions experiencing a growth in the median house price but a real estate expert is advising buyers and sellers to treat the lift with caution.
Figures from the Real Estate
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By Robb M. Stewart
OTTAWA–New-house prices in Canada are projected to be muted this year after holding steady in December following three straight months of declines.
Elevated mortgage rates in the country, and the risk of further increases in 2023, coupled with a fall in lumber prices should continue to cool prices for new houses, at least during the first half of the year, Statistics Canada said Monday.
New-home prices rose 7.7% nationally in 2022–with a fall toward the end of the year as a jump in mortgage rates following a string of central bank policy-rate increases curbed demand–cooling from growth of 10.3% in 2021, the data agency said.
Statistics Canada’s new-house price index was unchanged in December from the month before, and was up 3.9% from a year earlier. Prices declined 0.4% from July to December after rising early in the year, the agency said.
A big driver of economic growth in 2021, Canada’s housing market cooled last year as the Bank of Canada drove one of the most aggressive rate-rising campaigns among developed-world central banks in an effort to tackle inflation. The bank raised its main interest rate by 4 percentage points over the course of the year to 4.25%, the highest level in almost 15 years, but has signaled it is at or near the end of its tightening campaign. The bank is set to decide monetary policy on Wednesday, and most economists forecast a further one-quarter percentage point increase.
Last week, the Canadian Real Estate Association said sales of existing homes edged 1.3% higher in December from the previous month, but remained sharply below the level of sales recorded a year earlier, while new listings were down 5.7% for the month. The association projected the number of properties that trade hands in 2023 will slip by 0.5% after a drop of about 25% in 2022, while average prices are expected to fall 5.9% after rising 2.4% last year.
Statistics Canada said lower softwood lumber prices, which were down 57.3% in December from a high in March, and higher mortgage rates are expected to weigh on new home prices this year. However, as mortgage rates stabilize and uncertainty in markets calms, housing demand and prices should edge up in the latter half of 2023. This and other factors, including increased immigration targets for Canada and continued inter-provincial migration, could lead to price increases for new homes, it said.
The new-house price data from Statistics Canada covers single-dwelling, semi-detached and row houses. It doesn’t incorporate prices for newly built condominium units.
Write to Robb M. Stewart at robb.stewart@wsj.com
London stocks managed a positive finish on Monday, almost touching its record high, although the session remained quiet on a global basis as US markets were closed for Martin Luther King day.
The FTSE 100 ended the session up 0.2% at 7,860.07, and the FTSE 250 was ahead 0.65% at 20,082.33.
Sterling was meanwhile in negative territory, last falling 0.23% on the dollar at $1.2199, as it weakened 0.15% against the euro to trade at €1.1274.
“The rally in the FTSE 100 has slowed to a crawl today as newsflow and liquidity both dried up,” said IG chief market analyst Chris Beauchamp.
“The flood of trading updates from UK firms has abated for the day, but will resume later in the week, leaving the FTSE 100 with little to drive trade, while as usual European markets have been left becalmed by the lack of any US session.
“The FTSE 100’s excellent run from the October low has meant that much good news has been priced in, so the run of decent trading updates needs to continue if we are to see a move to a new all-time high.”
In economic news, house prices nudged higher in January according to fresh industry research released earlier, halting two months of falls.
According to the latest Rightmove house price index, prices rose 0.9% month-on-month, swinging from a 2.1% decline in December.
It was the biggest January rise since 2020, while year-on-year, house prices jumped 6.3%.
The average asking price now stood at £362,438, although that was still £8,720 below its October 2022 peak.
Rightmove said the number of prospective buyers contacting agents in January rose 4% when compared to the same period in 2019, and by 55% when compared to the two weeks before Christmas.
However, buyer demand was down by 36% on January last year, indicating that the market was returning to “more normal” levels of activity.
Tim Bannister, director of property science at Rightmove, said house buyers would be reassured by calmer market conditions following the “rapidly changing and at times chaotic economic climate of the final few months of last year”.
“We expect that the full effect of affordability constraints and last year’s mortgage rate rises will hold back some segments of the market in the first half of the year, but our leading market indicators may start to identify some green shoots of growth that will go onto strength in the second half of 2023,” he added.
In corporate news, J Sainsbury closed up 1.31% after the grocery giant signed a new deal with Just Eat Takeaway to provide rapid grocery delivery.
Marks and Spencer Group was in the black by 3.2% after it announced the opening of 20 new stores and the creation of 3,400 jobs.
Housebuilders were also in the green after the house price data from Rightmove, with Taylor Wimpey up 2.27% and Barratt Developments ahead 1.8%.
Insurer Prudential also pushed higher, finishing Monday’s session ahead by 2.51%.
“Asia-focused insurer Prudential was among the gainers as shares in China and other markets in the regions, bar Japan, enjoyed gains,” noted Russ Mould, investment director at AJ Bell.
Analysts at Jefferies upgraded investment manager Man Group from ‘hold’ to ‘buy’ on Monday, sending the shares 3.76% higher.
The broker said Man Group’s shares offered “cheap downside protection” should the current “more constructive market backdrop” start to unravel.
Abrdn was also in positive territory, rising 1.96%, despite a downgrade from Jefferies to ‘hold’ from ‘buy’.
On the downside, Ashmore Group fell 2.06% even after it posted a 2% rise in second-quarter assets under management to $57.2bn, with the investment manager hailing a strong performance from emerging markets.
Gold miner Centamin was 3.37% lower after it said Egypt’s Supreme Constitutional Court ruled that a local law stopping third-party challenges to a deal between the government and an investor was constitutional.
The case related to a challenge started in 2011, which wanted a halt to deals struck in Egypt in relation to privatisations which took place during Hosni Mubarak’s administration of 1981 to 2011.
Centamin runs the Sukari gold mine in Egypt.
Outside the FTSE 350, guarantor lender Amigo Holdings tumbled 24.62% after saying it had failed to secure a commitment from a cornerstone investor to underwrite the whole of its £45m capital raise.
The company said it was now looking for a syndicate of investors.
ITM Power also slid, closing 12.04% weaker, after issuing its third profit warning in eight months.
Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti and Abigail Townsend.
Market Movers
FTSE 100 (UKX) 7,860.07 0.20%
FTSE 250 (MCX) 20,082.33 0.65%
techMARK (TASX) 4,559.80 0.47%
FTSE 100 – Risers
Ocado Group (OCDO) 808.00p 5.18%
BT Group (BT.A) 130.45p 2.72%
Spirax-Sarco Engineering (SPX) 11,760.00p 2.71%
Prudential (PRU) 1,325.50p 2.51%
Taylor Wimpey (TW.) 117.35p 2.27%
Kingfisher (KGF) 271.50p 2.22%
Intertek Group (ITRK) 4,375.00p 2.22%
Unite Group (UTG) 1,004.00p 2.14%
WPP (WPP) 942.00p 1.99%
Smurfit Kappa Group (CDI) (SKG) 3,501.00p 1.95%
FTSE 100 – Fallers
Beazley (BEZ) 633.50p -3.65%
Rio Tinto (RIO) 6,096.00p -1.98%
Rolls-Royce Holdings (RR.) 107.16p -1.47%
Johnson Matthey (JMAT) 2,194.00p -1.08%
National Grid (NG.) 1,022.00p -1.06%
Glencore (GLEN) 552.50p -1.06%
Admiral Group (ADM) 2,161.00p -1.05%
Standard Chartered (STAN) 701.80p -0.88%
United Utilities Group (UU.) 1,029.00p -0.77%
BP (BP.) 481.00p -0.69%
FTSE 250 – Risers
Ascential (ASCL) 224.00p 7.90%
888 Holdings (DI) (888) 93.95p 5.27%
ASOS (ASC) 783.50p 5.17%
Carnival (CCL) 798.40p 5.08%
Playtech (PTEC) 552.00p 4.84%
W.A.G Payment Solutions (WPS) 78.90p 4.23%
Workspace Group (WKP) 501.50p 3.92%
Man Group (EMG) 237.60p 3.76%
Trainline (TRN) 312.10p 3.52%
Howden Joinery Group (HWDN) 685.80p 3.22%
FTSE 250 – Fallers
Aston Martin Lagonda Global Holdings (AML) 161.15p -5.76%
Darktrace (DARK) 252.20p -3.56%
Centamin (DI) (CEY) 118.95p -3.37%
Hiscox Limited (DI) (HSX) 1,080.00p -2.92%
Marshalls (MSLH) 314.80p -2.48%
Quilter (QLT) 101.20p -2.36%
Lancashire Holdings Limited (LRE) 639.00p -2.14%
Bank of Georgia Group (BGEO) 2,605.00p -2.07%
Ashmore Group (ASHM) 266.00p -2.06%
Direct Line Insurance Group (DLG) 172.35p -2.05%
The riverside district of Chiswick was the only area of London where house prices rose by more than a quarter in the year through September.
The affluent west London suburb defied the wider slowdown in house price growth in the capital, according to a Bloomberg News analysis of the latest UK Land Registry data. A backlog of central London residents searching for more space in the work-from-home era may have contributed to the 27% increase in prices in the W4 postcode during the period.
The figures, which are smoothed to remove outlier transactions, show the median price paid for a home in W4 was more than £1.05 million ($1.3 million) in September compared with about £832,500 one year prior.
Chiswick House Prices
Property prices keep rising in London’s Chiswick district
Note: Median price (trend), all homes in W4 Source: HM Land Registry data © Crown copyright and database right 2021
“Chiswick house prices outpaced other districts because of a sweeping increase in demand,” said Jean Jameson, chief sales officer at Foxtons Group Plc. “Most sales in Chiswick last year were for terraced properties, as well as expansive detached homes.”
The boom in W4 comes at a pivotal time for the capital’s property market. House prices in some of the wealthiest central London districts dived during the pandemic as buyers sought out greener areas with more space. Meanwhile, the rest of the UK enjoyed a house price boom driven by a temporary relief on stamp duty.
The average house price in prime London, which includes central districts such as Knightsbridge and Mayfair, has since risen above £1 million again after falling to £973,000 in May 2020. This recovery gives prospective Chiswick buyers more purchasing power when they eventually secure a sale on their prime London home.
“We saw a huge influx of registrations and new buyers during the pandemic but there was nothing initially on the market,” said Charlie Peace, sales manager at broker Chestertons’s Chiswick branch. “That suited central London buyers, who were waiting for the market to pick up before they moved.”
UK House Prices
Four months of declines is the longest losing streak since 2008
The Land Registry data are yet to reflect the disruptive spike in borrowing costs that priced out many buyers in late September, or the latest effects of the decline in house prices. UK property values fell for a fourth consecutive month in December, adding to concerns that a deeper nationwide slump may be underway.
Over 800,000 UK households will see their mortgage rates more than double this year as they come off fixed-rate deals, according to Office for National Statistics analysis of Bank of England data. These soaring borrowing costs are the main driver behind Britain’s gloomy house price forecasts, with economists predicting a 10% drop in values this year.
Still, existing homeowners in Chiswick should be cushioned from the full impact of a slowdown due to a surge in values since 2020. BOE Deputy Governor Jon Cunliffe said last month that UK house prices could fall by as much as 20% without causing distress to homeowners, due to the price boom that occurred during the pandemic.
What’s more, one broker noted an increase in buyers moving back to Chiswick after escaping to the outskirts of London during the pandemic, further fueling demand. That’s because the district has “excellent transport links to central London” while offering a “taste of the country,” according to Euan Rollo, head of sales at broker Savills Plc’s Chiswick branch.
“At least half a dozen deals have gone through recently where people have moved back to Chiswick, which has driven competition in the area,” Rollo said. “The big, detached houses at the top end of the market have been most in demand.”