UK economic update Autumn 2023

Sunny view of the facade of the Bank of England building and historic Royal Exchange under bright blue sky in The City financial centre of London, UK

Stronger signals that interest rates are nearing their peaks

Updated 18 October 2023

The key economic move over the last few months was the Bank of England’s decision not to raise interest rates in September. Keeping the rate fixed at 5.25% (still the highest rate in 15 years) was the first time the Bank’s rate-setting committee had not raised rates since November 2021, and it indicated that the Bank felt that inflation was starting to come under control. The official inflation data showed that the pace of price rises in the UK fell to 6.7% in August, down from a peak of 11.1% in October last year. Core inflation also fell back slightly in August. Inflation stayed pegged at 6.7% in September, a slight surprise to the upside. Core inflation ticked down again to 6.1%. The Bank’s rate setters will take this into consideration when it next meets in early November.

Cluttons residential autumn update 2023_UK inflation - annual change

The central bank was careful not to rule out increasing interest rates again in the future, and economists believe that rates will stay elevated until well into next year before they start to fall back. There is an additional concern than increased geopolitical tensions could push oil prices higher, which would reverse some of the falls in inflation.

Slightly weaker economic data, both in terms of GDP growth and employment levels, also indicate that the Bank’s moves over the last two years are having an impact. The IMF released new forecasts indicating that the UK economy would grow by just 0.6% next year, which attracted some criticism for being too gloomy. But the Treasury’s monitor of independent forecasts showed that UK economists expect 0.5% growth in 2024. The IMF also said interest rates would stay elevated at around 5% until 2028, but some economists predict a rapid decline in rates in 2025.

Homeowners shifting off very low-rate fixed-rate mortgage deals agreed two, three or five years ago will also feel the impact of higher interest rates over the coming year. It’s estimated that 1.6 million homeowners will have re-mortgage, often paying a significantly higher monthly sum, this year alone. The Bank of England has calculated that around one million borrowers will pay an extra £500 a month on their mortgage by 2026.

The good news for borrowers is that there is increasing competition in the mortgage market, which is putting some downward pressure on home loan rates. Still, a return to ultra-low mortgage rates experienced between 2010 and 2021 at any time in the short or medium-term is very unlikely, which will put more pressure on some household finances through 2024 and beyond.

Cluttons residential update Autumn 2023 - Bank of England base rate


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Wider South East Q1 2021

The wider South East saw strong house price growth in Q1, and the average time taken to rent a property reached record lows. The pandemic may be impacting the locations people choose, perhaps leaving traditionally popular commuter towns overlooked.
Prime Central London Q1 2021
Research

Prime Central London Q1 2021

Prime Central London sales values continued to fall in Q1, but transaction numbers and stock levels were up on the same period last year which suggests increased confidence in the market. The rental market is still weak, but sentiment has improved relative to late last year.
Greater London sales & rental review Q1 2021
Research

Greater London sales & rental review Q1 2021

Annual house price growth is positive in Greater London, at above 4%. But transaction levels are below their long-run average and rental growth is negative. Leading indicators show the capital underperforming the rest of England on all three metrics.
Residential development Q1 2021
Research

Residential development Q1 2021

K residential development output appears to have fully recovered, albeit recent activity has not made up for the drop in supply in Q2 2020. New build sales and development activity in London remains slow, but agents and developers are positive about the longer-term outlook.
UK rental review Q1 2021
Research

UK rental review Q1 2021

The UK lettings market started 2021 in robust fashion, with sentiment in Q1 pointing towards higher demand and price growth. There is, however, growing evidence of a potentially significant problem with arrears in the private rented sector.
UK sales review Q1 2021
Research

UK sales review Q1 2021

A year on from the first lockdown and the UK housing market continues to defy the negative economic news, with values up again in Q1 and activity remaining strong. On an annual basis prices are up 5.7% according to the Nationwide index, and mortgage approvals in February were 20% higher than the same month a year ago.
UK retail market review Q4 2020
Research

UK retail market review Q4 2020

Internet sales are 56% higher than they were in February 2020. Non-food store sales are 27% lower than at the start of the pandemic however, despite this, traditional retailers are continuing to grow their online presence and shrink their bricks and mortar portfolios.
UK office market review Q4 2020
Research

UK office market review Q4 2020

UK office market more resilient than expected with declines in values less severe than commentators had predicted.
UK industrial market review Q4 2020
Research

UK industrial market review Q4 2020

Demand for industrial and warehouse space is driven by the economic performance of the retail, logistics and manufacturing sectors.
UK economic outlook Q4 2020
Research

UK economic outlook Q4 2020

The restrictions due to the second lockdown – the so-called ‘circuit-breaker’ – caused a further fall in GDP in November, 2.6% below the previous month. On an annual basis, output has fallen 8.9%, and is currently 8.5% below the pre-pandemic level (February 2020).
Forecasts & outlook Q4 2020
Research

Forecasts & outlook Q4 2020

The table below shows Experian’s latest house price forecasts for Cluttons, all based on their latest central economic scenario of GDP returning to end-2019 levels in early 2023 – this is a slower recovery than expected last quarter.
Prime Central London Q4 2020
Research

Prime Central London Q4 2020

There were further decreases for sales values and rents in Q4, according to Cluttons Prime Central London Index, shown in Figure 1. Although the pace of quarter-on-quarter decreases slowed, the annual falls reached 13.2% for sales and 17.8% for rents.
Wider South East Q4 2020
Research

Wider South East Q4 2020

The wider South East saw strong price growth in Q4, in line with the performance of the UK market, according to the Nationwide indices.
London development Q4 2020
Research

London development Q4 2020

Q4 was a slower one for new build sales and development activity in London, with all three main metrics lower than Q4 2019, according to the latest data from Molior, shown in Table 1. Molior’s January report noted distinct patterns of behaviour across 2020’s four quarters, not all driven by the pandemic.
Greater London sales & rental review Q4 2020
Research

Greater London sales & rental review Q4 2020

In terms of sentiment 2020 was a case of London vs. the rest, with stories of buyers keen to move to larger homes in the country now they can, or must, work from home and avoid the commute.
England residential development Q4 2020
Research

England residential development Q4 2020

Q4 saw the residential development sector try to make up lost ground from the first lockdown, partially succeeding.
UK rental review Q4 2020
Research

UK rental review Q4 2020

After much volatility in Q2 and 3, sentiment in the national lettings market (outside London) settled back towards pre-pandemic trends in Q4, despite continuing lockdown restrictions.
UK sales review Q4 2020
Research

UK sales review Q4 2020

UK house prices finished a volatile year over 5% up on where they started, according to the main indices (+7.3% Nationwide, +6.0% Halifax).
UK retail market review Q3 2020
Research

UK retail market review Q3 2020

2020 has been a difficult year for bricks and mortar retail. It is a commonly repeated aphorism but nonetheless true that the pandemic together with Lockdown 1.0 and 2.0 have crammed five or more years of anticipated changes in markets into the last nine months.
UK residential sales review Q3 2020
Research

UK residential sales review Q3 2020

strong summer, defying the economic weakness caused by the COVID-19 lockdown and continuing restrictions. The third quarter of 2020 saw recovering activity levels and price increases, according to the main indicators.
London development Q3 2020
Research

London development Q3 2020

Activity levels in the London development market bounced back strongly in Q3 across all three main metrics (starts, completions and sales), according to Molior data as shown in Table 1. This suggests the impact of lockdown was short-lived and contained to the previous quarter.
Greater London sales & rental review Q3 2020
Research

Greater London sales & rental review Q3 2020

Much of the commentary around London property in the pandemic has suggested that increased working from home and a desire for more space – particularly gardens – could really reshape the market as people and businesses abandon the city.
UK development overview Q3 2020
Research

UK development overview Q3 2020

We saw last quarter that residential development activity quickly recovered to pre-pandemic levels once sites were able to open up again.
Forecasts & outlook Q3 2020
Research

Forecasts & outlook Q3 2020

Experian’s latest house price forecasts for Cluttons are shown in the table below, based on their central economic scenario of a ‘delayed V-shape’, which sees UK GDP recover to pre-pandemic levels at the start of 2022.
Wider South East Q3 2020
Research

Wider South East Q3 2020

tracking the national average for several years, whereas London has seen more volatility, according to the Nationwide indices.
Prime Central London Q3 2020
Research

Prime Central London Q3 2020

The Cluttons Prime Central London Index, shown in Figure 1, reported that sales values in PCL were 8.4% lower in Q3 2020 than a year earlier, the seventeenth consecutive quarter of annual price falls.
UK economic outlook Q3 2020
Research

UK economic outlook Q3 2020

The economic data reported since our last update appears to have finished off any hopes of a ‘V-shaped’ recovery.
UK rental review Q3 2020
Research

UK rental review Q3 2020

The national lettings market continued its post-pandemic recovery in Q3, apart from in London where high supply and low demand continued to put downward pressure on rents.
UK industrial market review Q3 2020
Research

UK industrial market review Q3 2020

The drivers of demand for industrial real estate will continue to evolve.
UK office market review Q3 2020
Research

UK office market review Q3 2020

Structural changes effecting the UK office market will play out over several years.
UK office leasing review Q2 2020
Research

UK office leasing review Q2 2020

Coronavirus leads to dramatic declines in leasing activity.
UK office investment review Q2 2020
Research

UK office investment review Q2 2020

Transaction volumes decline during lockdown.
UK retail leasing review Q2 2020
Research

UK retail leasing review Q2 2020

Landlords and tenants shared the strain of pandemic lockdown. COVID-19 is accelerating the trend in the shake-out of retail.
UK industrial & distribution review Q2 2020
Research

UK industrial & distribution review Q2 2020

Transaction volumes declined during lockdown, with investment into distribution most favoured.
UK retail investment review Q2 2020
Research

UK retail investment review Q2 2020

Retail investment market shuts down during the COVID-19 lockdown.
Forecasts & outlook Q2 2020
Research

Forecasts & outlook Q2 2020

PCL values set to bounce back next year but UK recovery delayed until 2022. Will Brexit and potential tax reform throw things off course?
Wider South East Q2 2020
Research

Wider South East Q2 2020

Stamp Duty holiday and desire for space see interest rise across wider South East.
UK rental review Q2 2020
Research

UK rental review Q2 2020

Rental market bounces back but outlook is mixed as increases in remote working and studying could limit demand in some sectors.
Greater London sales & rental review Q2 2020
Research

Greater London sales & rental review Q2 2020

London’s rental market set to struggle while buyer demand remains robust despite stretched affordability – and is given further boost by Stamp Duty holiday.
Prime Central London Q2 2020
Research

Prime Central London Q2 2020

Rental and sales values dip across all Prime Central London areas but activity continues where buyer and seller expectations are aligned.
London development Q2 2020
Research

London development Q2 2020

Sales and construction hit by pandemic in Q2 but latest completions data is more positive.
UK economic outlook Q2 2020
Research

UK economic outlook Q2 2020

Slow initial recovery and scale of government support suggest difficult time ahead for economy.
UK development overview Q2 2020
Research

UK development overview Q2 2020

Housebuilding sites reopen and developers get boost from increased planning flexibility.
UK sales review Q2 2020
Research

UK sales review Q2 2020

Early indicators suggest post-lockdown surge for sales market, but how long can it be sustained?
UK residential forecast Q1 2020
Research

UK residential forecast Q1 2020

The extent and duration of the health and economic crises caused by COVID-19 are still unknown, casting a shadow over the economy.
UK Home Counties review Q1 2020
Research

UK Home Counties review Q1 2020

Sales market sees values across all counties close to flat over the past year, with activity slightly down overall.
Prime Central London review Q1 2020
Research

Prime Central London review Q1 2020

Initial research suggests activity in Prime Central London (PCL) will be particularly affected by COVID-19, but discretionary buyers and sellers may help the market recover quicker than other parts of the UK.
London residential development Q1 2020
Research

London residential development Q1 2020

The pandemic introduces additional risks to the Central London new build market, on top of its general impact.
Residential London review Q1 2020
Research

Residential London review Q1 2020

As COVID-19 stalls sustained price growth in Greater London, we review recent data indicating already decelerating growth in high-value locations.
UK residential development review Q1 2020
Research

UK residential development review Q1 2020

As many sites’ shutdown at the start of lockdown, new build development is subject to the twin effects of an uncertain economy and the physical disruption.
UK rental review Q1 2020
Research

UK rental review Q1 2020

As new landlord instructions and rent expectation figures drop to their lowest ever levels, how will rents be impacted later in the year?
UK economic outlook Q1 2020
Research

UK economic outlook Q1 2020

Initial data measuring the economy post-shutdown suggested a large impact. But as the Coronavirus pandemic continues, the Government’s unprecedented response gives hope that that the outcome will be better than initially expected.
UK residential sales review Q1 2020
Research

UK residential sales review Q1 2020

At the end of 2019, the UK’s housing markets were starting to emerge from a long period of ‘wait and see’. By January, UK sales expectations were the highest they’d been since the end of 2015. But before the quarter ended, COVID-19 brought transactions levels to an immediate halt. Here, we assess the potential impact on housing throughout the rest of the year.
Residential market outlook, September 2019
Research

Residential market outlook, September 2019

Price corrections leading to an increase in buyer enquiries.
Residential market outlook June 2019
Research

Residential market outlook June 2019

Brexit continues to dominate the headlines. Resilient buyers sought to close deals across the capital before the 29 March deadline, others are watching and waiting for a clarity and certainty that, despite the extension, remains elusive.
The commercial connectivity impact report
Research

The commercial connectivity impact report

The majority (65%) of the UK’s commercial landlords have undertaken work to improve the digital connectivity of their buildings, with almost three quarters (72%) of tenants saying that poorly connected offices will become obsolete spaces.
London residential market outlook winter 2018/19
Research

London residential market outlook winter 2018/19

Cluttons has released its Winter 2018/19 Residential Market Outlook report.
London office market outlook autumn 2018
Research

London office market outlook autumn 2018

ons has released its London Office Market Outlook report for autumn 2018, which looks at the health of the office sector by examining some of the key performance indicators.
Autumn budget 2018
Research

Autumn budget 2018

The Chancellor unveiled the 2018 Autumn Budget on 29 October, the last before Britain officially leaves the EU in March next year. In our response document, we present our view on some of the key announcements.
London residential market bulletin summer 2018
Research

London residential market bulletin summer 2018

London office market outlook summer 2018
Research

London office market outlook summer 2018

Cluttons has released its London Office Market Outlook report for Summer 2018.
The London connectivity report – part one: residential tenants 2018
Research

The London connectivity report – part one: residential tenants 2018

Cluttons has published the first part of The London Connectivity Report, focusing on residential tenants, carried out in partnership with YouGov.

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