Monday, November 18, 2024

The London Rush: November rains on UK house prices

House prices fall more than usual

Morning, I'm Louise Moon from Bloomberg UK's breaking news team, bringing you up to speed on today's top business stories.

Business in Britain has made a lot of noise about how growth will be harmed by tax hikes and other measures announced in Labour's budget. But what about the impact on choices made by the average Brit? 

Well, fresh housing data shows similar sentiment has been trickling down to consumers.  

Asking prices for houses across the country fell by almost double the norm in November, according to Rightmove. It says the 1.4% fall in average price suggests "pre-Budget jitters have turned into post-Budget disappointment". 

Buyer demand had already dropped in the lead up to the fiscal event, and Rachel Reeves' increases in stamp duty (and other taxes) didn't quell fears. Plus, seller competition is "intense."

It may not be a one off blip: November was the second consecutive month when prices underperformed historic averages. 

And looking forward, Rightmove says affordability could take longer to improve than previously thought, as homebuying budgets tighten and the BOE signals a cautious approach to more interest rate cuts.

Markets Today's Sam Unsted has more below on why the housing market recovery could be even slower than anticipated.

What's your take? Ping me on X, LinkedIn or drop me an email at lmoon13@bloomberg.net. Oh, and do subscribe to Bloomberg.com for unlimited access to trusted business journalism on the UK, and beyond.

What We're Watching

Chemicals company Elementis is hunting for a new CEO as the incumbent Paul Waterman plans to step down after nine years. He will go by April next year, but stay on hand to help until the end of July.

Aerospace technology business Melrose Industries expects supply chain issues to continue to strain production in 2025. Its aftermarket division is performing well, however, which should put it on track to deliver a £700 million profit next year.

AstraZeneca's key cancer drug, Tagrisso, has been recommended for approval in the European Union to treat some lung cancers.

Global Catch Up

Markets Today: Slow Build

Here's your daily snap analysis from Bloomberg UK's Markets Today blog:

Data on asking prices for UK homes can be quite volatile. Remember, these are the prices at which houses are initially listed and —  outside of a wildly hot market — they tend to fall once sellers are convinced to be a little more realistic.

The budget is having an effect. There was no expectation of demand-side measures — like Help to Buy or stamp duty holidays in the past — but some of the chancellor's changes, like higher stamp duty, had the opposite effect. Post-budget disappointment is probably playing a part in Rightmove's reported drop in asking prices. 

The budget will also be compounded by the rise in gilt yields making the cost of funding higher for lenders. That and expectations of slower rate cuts by the Bank of England has pushed mortgage rates a touch higher again. And this part of the story could be volatile too, as gilt moves since the budget have been led in large part by US Treasuries as the potential implications of a second Trump presidency are priced in.

All of which points to an even slower recovery in housing market activity than had previously been assumed.

Sam Unsted

Check Bloomberg UK's Markets Today blog for updates all day.

What's Next

High cigarette pricing and lower losses from next-generation products (eg. vapes) means cash flow is expected to stay high for tobacco giant Imperial Brands when it reports full-year results on Tuesday. In order to maintain or improve this, however, it needs to grow its share in key markets, says Bloomberg Intelligence.

Quick Coffee with: Michael Mainelli

Michael Mainelli handed over the reins this month as Lord Mayor of London, an annually elected head of the City's governing body and ambassador for the Square Mile. We met to reflect on his tenure, in the Mansion House office.

Photographer: Louise Moon/Bloomberg

What made you pick your job? I became a partner at 29 — quite young — at BDO Group. I got very involved with the Corporation at the business level and I lit upon the fact that truthfully what we really are is a workers' and residents' cooperative. It's entrancing to think of a body like that still doing relevant work. So that started it. I became an Alderman in 2013, Sheriff in 2019 — and if you do it well, you know you'll try and run for Lord Mayor. You basically get the keys to the tool shed and you can use the tools to do things. It's been a fun year. 

How do you save time? The biggest way to save time is to get away from your computer.

Where do you go for a working lunch? It depends on the other person, but I knock around The George and Vulture. Sweetings would be my go-to, traditional place.

What book do you always recommend? I read voraciously so it makes it hard. My favourite book is probably The Master and Margarita, by Mikhail Bulgakov. Or just about anything by Iain M. Banks.

Top podcast recommendation? The Rest Is History — I absolutely love it. You can't be Lord Mayor if you don't like history.

Who's your dream dinner party guest? Erasmus. Erasmus was a Humanist but the origins of Humanism were the New Learning, and the New Learning was a scientific method of the late 1400s. I'm just curious as to how religious or rational he was about that. 

What do you most want to achieve in your career? My career has always been bouncing between science and technology. So, the biggest thing I would really like to achieve is a richer use of systems theory in solving global problems. My doctorate was in systems theory and I think it's one of the most important ways of looking at the world. I would like to see a lot more interdisciplinary work, trying to bring those connections together.

At the start of my career, I wish someone had told me… Don't seek certainty, seek doubt. If you don't have doubt, you won't listen to anybody. 

Pub Quiz

Keir Starmer is meeting Xi Jinping today, in a potential pivot from the frosty relationship under the previous Conservative administration. Who was the last British PM to meet the Chinese president?

[Friday's answer: Three actors in previous Bridget Jones films — Jim Broadbent (her dad), Gemma Jones (her mum) and Emma Thompson (her gynaecologist) — were also all cast as staff in the Harry Potter series.]

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The London Rush: November rains on UK house prices

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