NCR construction material retail price growth quickens in April

Retail Price growth of construction materials in the National Capital Region (NCR) accelerated to three-month high in April, the Philippine Statistics Authority (PSA) reported on Friday.

According to preliminary data from the PSA, the construction materials retail price index (CMRPI) in April grew by 1.2%. This was twice faster than the 0.6% growth in March but slower than 2.6% last year.

April CMRPI growth was the quickest or since the 1.4% in January.

NCR’s CMRPI averaged 1.1% for the first four months of the year, lower than the 4.4% average last year.

Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message that the faster growth of retail prices of building materials may have been due to building inflationary pressure in the construction sector.

“Although the growth rate is slower than the previous year, the price increase could indicate improving demand and easing supply chain disruptions as the economy recovers gradually,” Mr. Roces added.

Meanwhile, the PSA attributed the quicker CMRPI growth rate to the faster miscellaneous construction materials index with 0.8% growth, a turnaround from the 1.5% contraction in March.

This was followed by plumbing materials (0.3% from -0.2%); tinsmithry materials (2.6% from 2.4%); painting materials and related compounds (2.2% from 2%); and carpentry materials (0.3% from 0.2%).

Of the seven commodity groups, only masonry materials declined to 0.3% in April from the 0.2% contraction in March, while electrical materials steadied at 0.9%.

Source: Business World

UK House prices fall for second month

House prices in April fell at the sharpest rate since last summer as a recent rebound in mortgage rates put a dampener on demand. Prices retreated by 0.4 per cent last month, according to Nationwide, the high street lender.

That was the second monthly fall in a row and the largest Nationwide has recorded since August 2023. Prices are now just 0.6 per cent higher than they were this time last year. Robert Gardner, Nationwide’s chief economist, said: “The slowdown likely reflects ongoing affordability pressures, with longer-term interest rates rising in recent months, reversing the steep fall seen around the turn of the year.”

April’s drop came as a surprise to economists, who had forecast that prices would rise by 0.2 per cent. They had expected the annual rate of growth to slip to 1.2 per cent. Nationwide estimates that the average price of a house in the UK is £261,962, or about 4 per cent below the peak in the summer of 2022.

However, would-be buyers are still struggling to be able to afford to move, with mortgage costs much higher than they were 18 months ago. Mortgage rates fell sharply over the winter in anticipation that the Bank of England would soon start cutting interest rates, but the timing of those cuts has become more uncertain because of stubborn inflation.

As a result, lenders have started to put their prices back up, with first-time buyers hit particularly hard. The average rate for a two-year fixed, 95 per cent loan-to-value mortgage is now above 6 per cent for the first time since November, according to Rightmove.

Half of prospective first-time buyers who had hoped to move over the past year have delayed doing so, according to research carried out by Censuswide on behalf of Nationwide. The most commonly cited reason for delaying their purchase was house prices being too high.

Prospective buyers also complained of higher mortgage rates limiting their affordability and the extra costs involved in buying a home. Almost all of the respondents said the cost of living has affected their plans to buy because they have not been able to save as much as they would have wanted.

Two-thirds of those polled by Cen suswide have less than £10,000 saved towards a deposit. Nationwide estimates that a 10 per cent deposit on a typical first-time buyer home is about £22,000. About 60 per cent of prospective first-time buyers have yet to save even a quarter of that. Imogen Pattison, assistant economist at Capital Economics, expects affordability to improve as the year wears on, which will lead to house prices rising again.

“In the coming months, we suspect mortgage rates will hover around their April level, keeping demand subdued [and preventing] renewed gains in house prices in the near term,” she said. “However, if we are right to think that interest rates will be cut further than most expect this year, mortgage rates should fall to just over 4 per cent by end- 2024 [from 4.8 per cent at the moment], leaving house prices up 3 per cent yearon- year.” 

Source: The Times

House prices overvalued by 10% in richest nations, Oxford economics says

House prices in the richest nations may be overvalued by about 10 per cent after a decade-long boom that’s one of the strongest since 1900, Oxford Economics says.

The British research firm identified the Netherlands, Canada, Sweden, Germany and France as the most risky property markets, basing its findings on long-term trends and price-to-rent ratios. It estimated that values across 14 advanced economies have rise 43 per cent in 10 years.

The current boom is on course to become the second-longest and third-largest in terms of price rises in 120 years, rivaled mainly by the last peak in 2006 right before the global financial crisis.

American homes in April saw the biggest price jump in more than 30 years, while U.K. properties in the same month rose the most in nearly two decades. In both markets, low mortgage rates, strong demand for larger properties in the suburbs and supply shortages have been among the drivers.

Despite smaller growth in the last two months, U.K. average house prices are projected to jump 21 per cent over the next four years, long outlasting a tax break on new property purchases phased out from July, according to real estate broker Savills published earlier this year.

High valuations and continued price inflation raise the prospect of a “big price reversal” further down the line, though slower rises in mortgage credit compared with the lead up to the financial crisis suggests much lower risks of bust, said Adam Slater, an economist at Oxford.

“A key issue for the coming years will be how real rates behave given opposing influences such as demographics, the savings glut, and the possibility of higher inflation,” the report said.

Source: Bloomberg