In this video, we explore the current trending subject in the UK real estate markets, and what we can expect to see over the coming year.
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More than 36% of properties have had their asking prices cut at least once the highest figure since 2011 the office for Budget responsibility predicts a 4.7% decline in UK house prices in 2024 applying this to London where the average property cost 537,500 drop in a value of 5 £
11,761 representing a 7.6% fall since the 222 Peak the OB is a non-departmental public body funded by the UK treasury that provide independent economic forecast and independent analysis of the public finances they suggest that house prices may not recover to the 2022 levels until 2027 the forecast aligns with sav’s
Estimate which anticipates a 3% decline across the UK and a 4% drop in London in 2024 mortgage rates are expected to remain high reaching 5% in 2027 impacting property prices despite their predicted decrease property prices in London remain high necessitating cheaper mortgage rates for Market accessibility the OB also notes a 6.9%
Decrease in in housing transactions contributing to the affordability concerns while the government extended its mortgage guarantee scheme there were no changes to stamp Duty schemes for homeowners or firsttime buyers the scheme is open to new 95% mortgages until the 30th of June 2025 which means you only need a 5% down payment we
Participating lenders offering 95% mortgages under the government guarantee we must take note of the date being July 2025 which coincides with the 18.6 year real estate cycle maybe they have plotted the cycle out themselves and want one last hurah from the housing markets before risk becomes too much
Point of this scheme is because the government aims to support aspiring homeowners by introducing a mortgage guarantee scheme the scheme reminiscent of 2013 help to buy allows lenders to purchase a government guarantee facilitating High LTV lending to credit worthy customers the guarantee compensates losses in case of foreclosure the scheme targets
Presidential mortgages on properties up to 600,000 with a loan to value of 91 to 95% now this is a scary sign for the housing market and can once again lead to a houseing bubble if you look back at history and with the idea that the government will bail out the banks and
Other lenders if necessary the lenders can offset the majority of the risk by securitizing mortgages and with the notion that the government will take the pitfall should house prices collapse in other words there will be no repercussions or B loans so listen closer to this this is off of the scheme
On the government’s website lenders must offer a 5year Fe mix rate product under the scheme the government sets a cap of 3.9 billion on its contingency liability National savings and investments will administer the scheme and lenders will pay a commercial fee to ensure its self financing nature so whilst it suggests
The lenders will have to finance the scheme the 3.9 billion contingency is from funds which have been collected from tax taxes it would be wise to think that if this contingency fund is depleted it will need replenishing once again by none other than the courtesy of UK citizens as self-fulfilling prophecy
This may sound upsetting for most however looking at history this happens repeatedly and at least those watching have the intelligence to do some further due diligence and see what is actually happening to negate any risk so why have these we can call them instruments been extended one interesting notion is that
UK house sellers are reducing asking prices at the vastest rate in over a decade due to the increased interest rates and reduced summer demand according to property website right move over 36% of properties on the market have seen at least one price reduction some more surpassing the prepandemic average of
31.2% the average price reduction cross rights move is 6.2% which is the highest since January 2011 this suggests some sellers were overly optimistic initially or the fact that we have seen negative year on-year growth suggest that we are coming into the Slowdown of the housing market Nationwide and Halifax report selling
Prices falling at the fastest rate since 2009 mortgage lenders have cut fixed rate deals the bank of England’s potential interest rate hike May further impact borrowers despite some positive indicators concerns about buyer confidence persists due to the market volatility in the past year average house prices are predicted to fall by a
Single bdit amount in 2023 and a again in 2024 there is is much speculation around when rates will finally be cut to stimulate the economy again City economists are increasingly confident that the bank of England will start to cut interest rates from their current 15-year highs next year the money
Markets are currently predicting their rates will have been cut from 5.25% to 5% by next June but some forecasters believe the cuts will come in May 2024 which is when the bank is due to release one of its quarterly inflation reports we can look at the statistics which show the average fed
Polls last 7 months which will bring us to March 2024 so by combining these predictions we can expect interest rates to be cut in the three Monon window of March 2024 to June if we are to take this stat which states if interest rates pulls for 5 months there has never being another
Rate hike and 78% of the time or 11 out of the past 14 rate Heights had led to a recession as we can see from this chart the central banks know something is broken as they’ puled rates and are printing money behind the scenes to pop up markets so the purple squiggly line
Here is related to the liquidity coming into the markets from the Federal Reserve so we look at the F fed funds rate on top of this typically what we see is speculation starting again once the FED puses rates but as this time round something has slightly changed arguably
Because enough damage was done during the co pandemic but since this point the FED has St an injecting funds which has given new life and new breath to this move upwards the US 10 year yield has shown us the first time frame reversal and the longer treasuries often
Show us when the FED is done raising rates Qui show so you can see this across the board so this also supports the time frame we mentioned earlier the S&P 500 is still climbing although we’re just shy of filling this Gap so if we are going to start topping out this would be
The place to do so and we’d have to see something like this then you see a sell somewhere in here the Dow Transportation index is still yet to break through the resistance which you mentioned in our previous video and if you didn’t see last week’s video be sure to check that out as
You’ll see why we are watching these levels uh let’s look at home builders quickly home builders are still in an uptrend they broke that major resistance this line here is where we have a slight Gap obviously these gaps have higher probabilities of being filled the small caps of R 2000
Did see a small time frame reversal and if we take a look at consumer discretionary versus Consumer Staples which is basically luxuries things which are not compulsory versus the Necessities which we need and if we lay over the FED funding right quickly we typically see discretionary spending
Contract around or before the FED pauses because of the fact that money is harder to come by the economy starts to contract and the FED is doing its job by hiking rates and potentially enough rate hiking has already taken place by time these pauses occurred as you can see
Discretionary spended always started to go into a downtrend it is important to note we haven’t necessarily seen a turn in price yet and this is probably because of the excess savings we had accumulated due to the stimulus in the pandemic and these savings have now been depleted so levels to watch watch out
For or obviously this box here and if we are going to go to higher highs you’re going to want to see this highby taken out because at the moment this entire move looks similar to a yof schematic so I’m going to wrap this one up here I
Won’t go too much into the technical analysis because we’ve done enough last week and not too much has happened this week to report on um be sure to like And subscribe and I will be giving away some property consultations in the future if there’s any think you would like more
Information on be sure to let me know in the comments