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A chart showing UK house prices Photograph: Lloyds<\/p>\nIntroduction: UK house prices fall in August<\/p>\n
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n
UK house prices have fallen on an annual basis for the first time in almost three years, as the housing market is hit hit by rising borrowing costs and geopolitical uncertainty.<\/p>\n
Lender Lloyds has reported this morning that house prices fell by 0.4% in August, compared with a year ago, which is the first year-on-year decrease since November 2023.<\/p>\n
On a monthly basis, prices fell by 0.2% in August, following a 0.1% drop in July, meaning the average property now costs \u00a3298,468, on Lloyds\u2019s index.<\/p>\n
This is weaker than expected \u2013 economists had forecast a 0.1% monthly rise, and a 0.2% increase compared with a year ago.<\/p>\n
Andrew Asaam, mortgages director at Lloyds, explains that the market remains subdued in August:<\/p>\n
double quotation mark\u201cThe housing market has faced a more difficult backdrop in recent months, with the impact of global events on inflation and borrowing costs creating greater economic uncertainty.<\/p>\n
What we\u2019re not seeing is a rush of homeowners cutting prices. But more are choosing to sit tight, with sellers reluctant to accept offers they feel are too low, while some buyers are waiting to see how conditions develop.<\/p>\n
As a result, fewer homes are changing hands, with latest industry figures showing mortgage approvals now at their lowest level since the start of 2024.<\/p>\n
A chart showing UK house prices Photograph: Lloyds<\/p>\n
And there may be worse to come \u2013 as the recent bond market turmoil has pushed up lenders\u2019 borrowing costs.<\/p>\n
That increase in \u2018swap rates\u2019 could make mortgages more expensive, leaving buyers with less firepower in the market.<\/p>\n
The agenda<\/p>\n
7am BST: Lloyds house price index<\/p>\n
7am BST: German industrial output data for July<\/p>\n
Today: UK chancellor John Healey outlines his economic agenda<\/p>\n
Share<\/a><\/p>\n Updated at\u00a002.32 EDT<\/p>\n Key events<\/p>\n ‘The Rottweiler’ pounces on UK\u2019s biggest private hospital operator<\/p>\n A hedge fund manager known as \u201cthe Rottweiler\u201d is getting his teeth into UK\u2019s biggest private hospital operator, following a takeover battle.<\/p>\n Spire Healthcare, which operates 38 private hospitals and more than 60 clinics across England, has agreed to be taken over by activist investor Toscafund Asset Management in a \u00a31.02bn deal.<\/p>\n The agreement was announced this morning, following a lengthy period of negotiations.<\/p>\n Having agreed the deal, Spire says:<\/p>\n double quotation markWhile the Spire Directors remain confident in the long-term prospects of the business, the Spire Directors also note the ongoing challenges of delivering the Company\u2019s standalone plan against a backdrop of macroeconomic volatility, cost pressures – in particular inflation, and the dynamic nature of the payor environment.<\/p>\n Toscafund was founded by investor Martin Hughes, who has earned the nickname \u2018The Rottweiler\u2019 for his aggressive approach to the firms in which he hold stakes.<\/p>\n Change is already underway at Spire \u2013 CEO Justin Ash is to retire, while chair Sir Ian Cheshire is also stepping down.<\/p>\n Shares in Spire are up 3.1% this morning to 245.5p, close to Tosca\u2019s 250p-a-share offer.<\/p>\n Share<\/a><\/p>\n Updated at\u00a003.25 EDT<\/p>\n In the financial markets, shares have risen across Asia-Pacific markets today after China announced a new government stimulus push.<\/p>\n It emerged yesterday that China will inject $54bn (\u00a340bn) into its financial sector, in a push to shore up banks and insurers in the face of faltering economic growth.<\/p>\n A host of financial institutions said they were due to receive billions of yuan in capital from state institutions including the ministry of finance and even the company that runs the country\u2019s tobacco monopoly.<\/p>\n Gains on the Shenzhen stock market helped to push China\u2019s CSI 300 index up by 0.6% today.<\/p>\n Japan\u2019s Nikkei is up 2.1%, while South Korea\u2019s KOSPI index has gained 5.1% \u2013 with technology stocks leading the way.<\/p>\n Share<\/a>UK house prices fall: What the experts say<\/p>\n Here\u2019s some early reaction to this morning\u2019s news that UK house fell, on an annual basis, in August for the first time since November 2023:<\/p>\n Jeremy Leaf, north London estate agent:<\/p>\n double quotation mark\u201cWe are seeing a bit of a stand-off between buyers who are nervous about making offers while worried about the effects of inflation on mortgage costs and sellers who believe they have reduced as much as they can.<\/p>\n \u201cTherefore, prices overall in the fewer properties which are changing hands are not only softening but sales are taking longer.<\/p>\n \u201cThere is more movement when sellers set realistic asking prices from the outset and appreciate after a period of marketing that even a cheeky offer is worth considering. Thankfully, activity is picking up now that the main holiday season is over, which is helping to improve confidence a little.\u201d<\/p>\n Jason Tebb, president of OnTheMarket:<\/p>\n double quotation mark\u201cBuyers and sellers are taking a pragmatic approach and adjusting expectations. The resilience of the market, and determination of needs-based buyers and sellers who are proceeding with their transactions, remains evident.<\/p>\n Ongoing Middle East tensions have created further volatility among Swap rates in the past week, but so far this year, the Bank of England has held interest rates steady, creating a calming effect. Affordability concerns remain however, particularly if lenders increase their mortgage pricing in the short term and the Bank raises interest rates at next week\u2019s meeting, but borrowers seem to be adapting to shifting market conditions remarkably well.<\/p>\n As we head into autumn, and another Budget beckons, political uncertainty and challenging economic conditions continue to form a backdrop to activity.\u201d<\/p>\n Mark Harris, chief executive of mortgage broker SPF Private Clients:<\/p>\n double quotation mark\u201cWith tensions in the Middle East simmering once more and the price of oil moving higher, Swap rates – which underpin mortgage pricing – jumped, before coming back down a little.<\/p>\n \u201cUntil we have a confirmed end to the conflict we expect this pattern of volatility to continue \u2013 borrowers need to be aware and take steps to secure rates well ahead of their current deals expiring.<\/p>\n \u201cFirst-time buyers will be encouraged by the dip in house prices. Lenders are working hard to offer solutions to those trying to get on the ladder for the first time, which is leading to a small improvement in their numbers.\u201d<\/p>\n Share<\/a>North-South house price divide continues<\/p>\n Lloyds also reports that prices fell more sharply in the South of England in August, but rose in the North, and in Wales, Scotland and Northern Ireland.<\/p>\n Prices fell in the South because of the \u201cgreater affordability challenge caused by higher average prices\u201d, the bank reports.<\/p>\n According to Lloyds:<\/p>\n The South East saw the largest decline, with prices down -1.6% year-on-year to \u00a3381,729.<\/p>\n In Greater London, where prices fell -1.5% to \u00a3534,177.<\/p>\n The South West and Eastern England both recorded annual declines of -1.2%.<\/p>\n But, there was growth elsewhere\u2026.<\/p>\n Northern Ireland continues to record the strongest annual growth, with prices up +6.9% year-on-year.<\/p>\n Prices in Scotland rose by +3.5% over the past year.<\/p>\n In Wales, annual growth stands at +0.6%.<\/p>\n In the North East of England, prices rose by 2.7% on an annual basis.<\/p>\n In the North West, prices were 2% higher than a year ago.<\/p>\n Share<\/a><\/p>\n This chart of average UK house prices underlines how the flat the market has been over the last year:<\/p>\n Photograph: LloydsShare<\/a>But prices still up in the long term, Lloyds says<\/p>\n Lloyds\u2019s Andrew Asaam adds that it\u2019s important to keep the recent drop in house prices in perspective, explaining:<\/p>\n double quotation markAverage house prices remain around 25% higher than they were at the end of 2019, despite the substantial increase to interest rates seen over recent years. The market\u2019s adjustment to higher borrowing costs has been gradual, with wage growth helping to offset some of the pressure on affordability. The recent modest declines in prices are best viewed in that wider context.<\/p>\n \u201cWe expect the market to remain fairly subdued in the months ahead, but this will likely only have a limited impact on house prices. While affordability remains a challenge, wages continue to grow and employment has held up better than many anticipated. This will help to support demand from those who need or want to move.\u201d<\/p>\n