UK house asking prices in largest November fall since 2018; Opec insists oil market still strong – as it happened

Time for a recap.

Asking prices for homes in Britain have fallen at their fastest pace in five years for the time of year, property website Rightmove reports.

Rightmove said the housing market was faring better than forecast this year, despite average asking prices for homes fell by 1.7% last month.

That pulled the average new asking price down by around £6,000, to £362,143, as high borrowing costs cooled the market.

Asking prices fell year-on-year in the Midlands and all Southern regions, but rose in Wales, Scotland and the North of England.

Rightmove predicted that new seller asking prices will keep dropping in the last couple of months of the year, while some experts suggested the market would bottom out in 2024.

Rising interest rates also hit the rental sector, where landlords are on target to have bought the fewest number of homes since 2010.

Higher interest rates have also knocked £200m off the property portfolio of British Land, although profits have been lifted by soaring rental rates and increasing demand for office and retail space.

In other news….

The Opec group has insisted that the fundamendals of the oil market remain strong, as it maintained its forecast for demand growth in 2024, and pushed up its 2023 forecast slightly.

In its latest monthly report, Opec said:

“Recent data confirms robust major global growth trends and healthy oil market fundamentals.”

Ikea’s parent company has bought its second UK shopping mall, in Brighton, for an estimated £145m as part of a push to bring its furniture stores into city centres.

Blackpool is more popular than Benidorm for British holidaymakers booking trips away next year as soaring air fares lead people to opt for stayactions, according to accommodation search website Trivago.

Avon, the beauty company famous for building a global business by making house-to-house visits, is to open its first physical UK stores in its 137-year history.

The UK government is looking to roll back powers to intervene in company takeovers less than two years after they were introduced, in an attempt to be “more business friendly”.

Royal Mail has been fined £5.6m by the regulator for missing its first- and second-class delivery targets by a “significant and unexplained margin”, causing “considerable harm” to its customers.

And…the boss of Co-op is calling on the government to take more action to tackle retail crime amid a warning it has reached record levels as criminal gangs are operating “exempt from consequences”.

Opec argue that concerns over China’s economy have been over-egged.

Today’s report says that recent data confirms “robust major global growth trends and healthy oil market fundamentals” adding:

On the global economic growth front, and as the US economy continues the very strong growth it experienced in 3Q23, the IMF has recently upgraded Chinese economic growth projection for 2023 to 5.4%. However, potential downside risk to current robust global economic growth forecasts, although minor, may include sustained restrictive monetary policies to fight inflation, and geopolitical developments.

With this, and despite the overblown negative sentiment in the market regarding China’s oil demand performance, and global oil market in general, the latest data shows Chinese crude imports increasing to 11.4 mb/d in October, and remaining on track to reach a new annual record high for this year, at around the same level.

Opec, the oil cartel, has insisted that fundamentals in the global market “remain strong despite exaggerated negative sentiments”.

In its latest monthly report, Opec has lifted its forecast for world oil demand growth this year, slightly. It now expects demand to rise by 2.46 million barrels per day, up from 2.44m b/d forecast previously.

Opec has left its 2024 forecast unchanged, at growth of 2.25m b/d, despite concerns that economic growth could weaken, hitting energy demand.

Opec says:

In 2024, solid global economic growth, amid continued improvements in China, is expected to support oil consumption. World oil demand is expected to rise by more than 2.2 mb/d y-o-y, with total world oil demand projected to average 104.3 mb/d.

The boost to UK bank profits from higher interest rates is coming to end, Fitch Ratings says.

In a new report, Fitch argues that profit margins will come under “growing pressure” as banks face rising deposit costs – offering better rates to savers – and increasing loan impairment charges (LICs) as borrowers struggle.

The banks’ “Net Interest Margins” have swelled since central banks started lifting interesrt rates. That’s because commercial lenders were quicker to lift costs for borrowers than to sweeten offerings for savers.

Fitch, though, says this trend is ending, as customers move their money to higher-yielding accounts.

NIMs appear to be peaking, and, in some cases, are already declining, driven by rising deposits costs and tighter margins on new mortgage loans due to strong competition among banks.

Higher interest rates have led to more customers switching accounts for better deposit rates, but deposit volumes since early 2023 have largely held up at the major banks, reflecting their strong franchises, and liquidity has remained sound. However, the mix of deposits is continuing to shift towards higher-paying deposits.

We expect this to continue in 2024, driving a modest decline in NIMs and increasing pressure on banks to improve their cost efficiency as they grapple with the effects of high inflation.

Last month, NatWest bank cut its forecast for NIM, saying it would be “greater than 3%” for the full year, down from a previous forecast of 3.15%.

Wholesale gas prices have fallen today, after Chevron restored production at the Tamar offshore gasfield off the coast of Israel.

Chevron turned the taps back on after being told by Israel’s Energy Ministry to resume production, with production expected to reach full capacity within a few days.

The move comes a month after Chevron was instructed to shut the field, after Hamas’s attack on Israel on 7 October.

The day-ahead UK gas price has dropped by 9% this morning, to 94.5p per therm. The month-ahead price is 2.8% lower.

European gas prices are also weaker, with the benchmark month-ahead price down 2.5%.

Gas prices rose last month, early in the Israel-Hamas war, but had dipped back more recently.

London’s stock market has opened higher, as investors cling onto hopes that global interest rates may have peaked.

The FTSE 100 index has gained 52 points, or 0.7%, to 7412 points, recovering more than half of Friday’s losses.

Pensions and retirement services firm Phoenix Group is the top riser, up almost 7%, after upgrading its guidance for cash generation this year.

Engineering firms Melrose (+2.5%) and Rolls-Royce (+2.4%) are also in the top risers.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, says:

‘’The FTSE 100 has found a dose of Monday motivation amid hopes that peak interest rates have been reached, despite warnings about America’s huge debt pile and ongoing geo-political fracture.

British Land has helped cement a more upbeat mood, helped by the performance of its retail parks portfolio, with shares rising 5% in early trade.

Results appear to have spread wider cheer about the resilience of the UK economy, with the company expecting rents for commercial property to rise next year.

Traders are shrugging off the news, on Friday night, that credit ratings agency Moody’s has cut its outlook on the US government from stable to negative.