30/10/2022
NBRE Weekly Ep.8
Not much new on the NBRE front. So, as done in previous weeks, I thought I’d give a more in-depth review of the market instead.
Rishi Sunak has become the third Prime Minister in just seven weeks, succeeding Liz Truss in her short-lived position as leader of the Conservative Party. With a controversial past in policymaking for the nation's property market, an expert has weighed in on how house prices will fare under Mr Sunak's leadership.
Former Chancellor of the Exchequer, Rishi Sunak, has been responsible for several significant property policies in recent years, including the Stamp Duty holiday in July 2022.
The Daily Express released a article this week with the title - “House prices reach new high of £371,158 - PM Rishi Sunak could prevent 'dramatic fall'”
The uncertainty of the last few months has had a material impact on gilt rates: the rate at which the UK government can borrow.
In turn, this impacts the cost of borrowing for the rest of us. It affects mortgage rates for home buyers, development debt costs for housebuilders, and refinancing costs for property investors.
Anything that helps bring certainty and confidence back to the market is likely to reduce borrowing costs. That, in turn, will reduce affordability pressure for households securing mortgage finance, for housebuilders starting on new sites, and for investors buying and operating homes for rent.
In that sense, the trajectory of gilt rates over the last few days is reassuring. While government borrowing costs remain far higher than they were in the summer, they have declined substantially since the highs immediately following the so-called “mini” Budget announced by Kwasi Kwarteng.
This should bring more breathing room, meaning lenders should feel the confidence to put more products back out to the market.
