UK property asking prices stagnating, lifting hopes of softer landing for housing market – business live

In the crypto world, Galois Capital hedge fund founder Kevin Zhou has confirmed in a tweet on Monday that his flagship fund would close after “losing almost half” of the fund’s money when the cryptocurrency exchange FTX collapsed.

Galois was one of the biggest crypto-focused quantitative funds, and was caught up in the collapse of FTX last autumn.

Zhou released his statement via his Twitter account, confirming an earlier report from the Financial Times that the fund would close.

European stock markets are making a positive start to the new week, in the face of rising US-China tensions.

The pan-European Stoxx 600 index has gained 0.2% in early trading, with the FTSE 100 index up 0.1% in London – lifted by banks and miners, as well as Frasers following this morning’s share buyback announcement.

Over the weekend, US secretary of state Antony Blinken met with China’s top diplomat, Wang Yi, on the margins of the Munich Security Conference, and warned Beijing not to supply military aid to Russia.

Blinken also accused China of an “unacceptable violation of US sovereignty and international law,” after the US shot down a high-altitude surveillance balloon this month.

Wang, though, has mocked America’s response to the balloon overflight, calling the US’s actions “absurd and hysterical” (details here).

But despite this, China’s CSI 300 index has rallied by nearly 2.5% today.

Paul Donovan, chief economist at UBS Global Wealth Management, says the markets are now used to signs of rising tensions between Washington and Beijing:

US and Chinese officials met on the fringes of the Munich security conference at the weekend, and exchanged rather brusque communiques. Markets are used to the idea of tense relations between the two countries, and unless tensions are seen as generating new trade taxes (which they are not) this is unlikely to concern investors.

The area of Sino-US relations that might concern investors is the US warning China against providing Russia with “lethal aid”. If this is seen as likely, it could result in US and European sanctions against Chinese companies, which would have market and economic consequences.

There’s been increased activity in the housing market this month, estate agents say, as calm returns after the turmoil following last September’s mini-budget.

Matt Thompson, Chestertons’ head of sales, reports a pick-up in interest from potential buyers:

“This month, we have so far seen a 17% uplift in viewings and 14% decrease in withdrawals. This shows us that there are currently fewer window shoppers and the buyers who are entering the market are more serious about closing a deal.

For the remainder of February, as mortgage products have already come down, we expect to see more buyers wanting to capitalise on favourable rates before we enter the spring market which is expected to get more competitive due to pent-up demand.”

Tom Bill, head of UK residential research at Knight Frank, says the market has been ‘surprisingly strong’ so far this year:

“The six weeks since Christmas have been markedly different from the chaotic final three months of last year for the UK property market.

Buyers and sellers switched off early for the holidays due to the volatility caused by the mini Budget but have come back surprisingly strongly in 2023. The crucial difference is stability in the mortgage market, which means plans have been reactivated.

The true strength of the market will be put to the test in spring, along with the price expectations of sellers. As budgets come under pressure, we expect prices to fall by around 5% this year.”

Demand from first-time buyers could be holding the UK housing market up.

Rightmove reports that sales in the first-time buyer sector held up most strongly in the first half of February, and were only 7% lower than in 2019 – while the wider market was 11% lower than three years ago.

But sales at the top of the housing ladder are rather weaker, down 16% in the first two weeks of February compared with the same time in 2019.

High and increasing rents may be driving first-time buyers to complete deals, although interest rate increases mean mortgages cost more than a year ago.

Rightmove’s Tim Bannister says:

Agents are reporting that they are now increasingly seeing buyers who have more confidence and more choice albeit with revised budgets to accommodate higher mortgage rates.

It’s a positive sign for the market to see many in the first-time buyer sector getting on with their moves, though despite average mortgage rates having edged down, some first-time buyers will still be priced out of their original plans and may need to look for a cheaper property, save a bigger deposit, or factor higher monthly mortgage repayments into their budgets.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK house prices remained stagnant this month, despite a rebound in demand from buyers as the disruption following the mini-budget chaos fades.

The average asking price for a home increased by just £14 month-on-month in February, according to property website Rightmove this morning.

That’s the smallest increase recorded between January and February since Rightmove’s records began in 2001.

More sellers are “heeding their agents’ advice to price right first time” and being more realistic about what their property is worth, Rightmove says.

Increasing numbers of buyers are returning to the market as mortgage rates fall back, it reports, with the number of potential buyers contacting agents is up by 11% in the last two weeks compared with the same period in 2019.

On an annual basis, asking prices were 3.9% higher than a year ago in February, down from 9.3%/year in July.

Today’s report shows:

• The number of sales agreed continues to rebound, and is now just 11% down on 2019’s levels, recovering from 15% down at the start of the year, and 30% down in the aftermath of the mini-budget

• Average rates for a 15% deposit five-year fixed mortgage are now 4.82%, down from October’s 5.90%

Although the housing market has slowed, it has started 2023 “much better than many expected”, Rightmove reckons. That could be a sign that the market will experience a “softer landing” than many expected, the company says.

Tim Bannister, Rightmove’s Director of Property Science says:

The big question this month was whether we would see new sellers increasing their asking prices as has been the yearly norm as we approach the spring selling season. This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint.

In addition to market conditions demanding greater realism on price, we are transitioning into a slower paced market, where buyers will take longer to find the right property at the right price due to the higher cost of servicing a mortgage.

There are other indicators that this will be a softer rather than a hard transition despite the turbulence at the end of 2022.

Homeowners who are coming to market in the upcoming spring season should use their agent’s expertise and get the price right the first time , which can really help to find the right buyer more quickly.

Data from building society Halifax has shown that prices paid for houses were flat in February, after falling for the previous three months.

At the end of last year, economists predicted that prices will fall by between 5% and 12% in 2023, although a worst-case scenario could mean a crash of 15% to 20%, they warned.

Also coming up today

Britain’s retail crisis has claimed almost 15,000 jobs since January, in what one leading retail expert called “a brutal start to the year”.

According to figures compiled by the Centre for Retail Research (CRR), 14,874 jobs have been cut from high streets and top shopping destinations during January and February.

Most of the jobs being shed — 11,689 — are due to cost-cutting progrmmes at large retailers, with 3,185 jobs are being lost through insolvency procedures.

National retailers including stationery brand Paperchase, clothing chain M&Co and Tile Giant have all gone bust in recent weeks, while discount retailer Wilko, clothing retailer New Look and supermarkets Tesco and Asda have all also announced job cuts, my colleague Joanna Partridge explains.

More here:

Germany’s central bank, the Bundesbank, releases its latest economic assessment this morning… we also get the latest consumer confidence report, and a healthcheck on European building firms.

European stock markets are set to begin the new week with small gains, while Wall Street is closed for President’s Day.

The agenda

• 8am GMT: China FDI (foreign direct investment) data for January

• 9.30am GMT: Impact of increased cost of living on adults across Great Britain: September 2022 to January 2023

• 10am GMT: Eurozone construction output report

• 11am GMT: German Bundesbank’s monthly report

• 3pm GMT: Eurozone consumer confidence report