Bank of England ‘could worsen recession’ without interest rate cuts soon; UK property market gaining momentum – business live | Business

The UK government has announced proposals to rein in the growth of short-term holiday lets in tourist hotspots in England – but they won’t prevent the practice.

Changes in planning rules announced today will mean:

• Planning permission will be required for future short-term lets

• A mandatory national register will provide valuable information and help ensure accommodation is safe

• Homeowners can continue to let out their own main or sole home for up to 90 nights a year

The government says its proposals will give communities greater control over future growth in short-term lets, to prevent a “hollowing out” of communities, and address anti-social behaviour.

Under the reforms councils will be given greater power to control short-term lets by making them subject to the planning process.

Last April, the governmnent proposed that people who convert homes into short-term holiday lets would require planning permission in tourist hotspots in England.

Today they are also confirming that a new mandatory national register will give local authorities the information they need about short-term lets in their area.

Here’s some reaction to Rightmove’s report that UK house asking prices rose again this month, from Tomer Aboody, director of property lender MT Finance:

“As confidence starts to creep back into the market due to the reduction in mortgage rates and lower inflation, we are seeing higher sales volumes, with vendors encouraged to sell.

“Encouragingly, while sales have picked up, vendors are pricing correctly in order to attract buyers. This, in turn, is making a property purchase more affordable and appealing to buyers. Unless there is some dramatic intervention from the Government, we don’t expect to see a huge increase in pricing in the forthcoming 12 months or so.”

Nigel Bishop of buying agency Recoco Property Search says:

“We have seen first-hand that buyer confidence has returned to some degree, particularly if compared to this time last year. This uplift in market activity is largely driven by the availability of more affordable mortgage products but also falling inflation. Equally, sellers have become more motivated to put their property up for sale which is resulting in buyers having a larger pool of properties to choose from.

House hunters at the higher end of the market, of homes priced £2mn and above, however, are generally less dependent on a mortgage and remain cautious amid the potential impact of this year’s election and upcoming Spring Budget. Cash or chain-free buyers who are currently making an offer are less likely to settle on the seller’s asking price and willing to enter tough price negotiations.”

There’s some encouraging economic data from China this morning as the Lunar New Year break ends, and some less positive statistics too.

On the upside, tourism revenues in China during the Lunar New Year holiday surged by 47.3% year-on-year and surpassed 2019 levels.

Domestic tourism spending hit 632.7 billion yuan (£69.7bn), according to government figures, thanks to a domestic travel boom amid a longer-than-usual break.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:

The week starts with the soothing news that the Chinese traveled and spent more than they did in the same period of 2019. As such, the Chinese stock markets return from the CNY break on a cheery note.

The CSI 300 index of Chinese stocks is up 1.1% today.

Dampening the mood, though, is data showing that foreign businesses’ direct investment (FDI) into China last year increased by the lowest amount since the early 1990s.

China’s direct investment liabilities, a broad measure of FDI, rose by $33bn in 2023, down 81.7% from 2022, according to data from the State Administration of Foreign Exchange released on Sunday.

The slowdown commes amid rising tensions with the West which are making it harder for China to attract foreign capital.

The Bank of England risks making the UK’s recession worse unless it cuts interest rates soon, the central bank’s former chief economist has warned.

Andy Haldane, who left the Bank in 2021 after a 32-year stint, says his former colleagues should consider loosening policy to support the economy.

Concerns over the economy have risen since the UK fell into a technical recession at the end of last year, GDP data released last Thursday showed.

Some economists have predicted that the economy is picking up this year.

But, asked whether the BOE could worsen the recession unless it loosened policy soon, Haldane told Bloomberg’s UK Politics podcast:

“I think that’s where the balance of risks lies, yes.”

“For me the case for putting in place some upfront, early insurance on the monetary policy side is strong and strengthening, and I’m fearful we leave that insurance a little too late in the year.”

Eaarlier this month the BoE left interest rates on hold at 5.25%, with just one of its nine policymakers voting for a cut (two wanted a rise).

There was relief last week when UK inflation was lower than expected in January, at 4% (twice the Bank’’s target). But BoE governor Andrew Bailey then doused hopes that this could lead to faster cuts in interest rates.

The City money markets are currently anticipating around three interest rate cuts this year, bringing Bank rate down to 4.5% by December, with the first cut expected by June.

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

The UK property market is picking up this month, at least for sellers who price their homes correctly.

Property portal Rightmove reports this morning that the average asking price for a home rose by 0.9% or £3,091 this month to £362,839.

The increase means sellers are asking 0.1% more for their homes than a year ago, on average, as the fall in asking prices last year is reversed.

Rightmove reports that momentum is building in the market, with 7% more new listings coming to market than last year, and a 7% rise in the number of buyers making enquiries too.

Agreed sales in the first six weeks of 2024 are 16% higher than over the same period last year, when the market was reeling from the jump in mortgage costs after the mini-budget of September 2022.

Rightmove’s Tim Bannister suggests sellers should take advantage of the situation while it lasts. He says:

Mortgage rates have fallen considerably from their peak and are now remaining broadly stable after the uncertainty of late 2022 and 2023.

Momentum to move in 2024 is continuing to build, but prospective sellers mustn’t get carried away. Buyers now have more choice of property for sale and many are still very price-sensitive, with mortgage rates remaining elevated.

Sellers who are serious about moving this year would be well-advised to ride this wave of increased buyer confidence with an attractive asking price before any pre-election jitters or unexpected events dampen the momentum.

Zoopla, the property search site, has also reported a pick-up in activity this month:

However, although activity levels are higher, Rightmove reports it is taking the average seller 16 days longer to find a buyer than a year ago.

That suggests that while “accurately and competitively priced” properties are being snapped up, over-priced ones are being shunned.

Also coming up today

The war between Brussels and Big Tech could be escalating, with Apple facing its first ever fine from the EU for allegedly breaking the law over access to its music streaming services.

The FT reports that the penalty is in the region of €500mn and is expected to be announced early next month.

It follows an inquiry into whether Apple blocked apps from telling iPhone users there were cheaper alternatives to access music subscriptions outside the App Store.

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