"Opportunities are usually disguised as hard work, so most people don't recognize them." - Ann Landers
This quote is a reminder of the journey - and why you need to enjoy the journey, not make it about the destination. Something to think about over Easter!
As the calendar advances through the Golden Quarter, our next Property Business Workshop is live and tickets are already selling. This is about structure, and exit - yours, and others. No exit plan? You go out one way or another. Things have changed, as well, with pensions being brought into the scope of your personal estate. What does this mean for SSAS - according to people that use them, but don’t sell them - an objective viewpoint. Book in on the next Property Business Workshop with myself and Rod Turner - Wednesday 22nd April - Central Manchester - www.tinyurl.com/pbwten
Trumponomics - we were expecting, of course, to see a massive fanfare on the basis of the 1-year anniversary of liberation day. More of a fanfart, as it turns out - new, aggressive import taxes “instead”. Imported steel, aluminium and copper (or articles made “almost entirely” of these) now face a 50% tariff on their full value. “Substantially” means 25%. Metal-intensive grid/industrial equipment faces a 15% tariff. This is - apart from anything else - because the section 232 tariffs have not been struck down in the same way some of the others were.
This one is relatively easy to see the logic of. Make this stuff at home, please. You can understand it, at a base level. More secure, onshore jobs, etc. The problem is the price, of course. It’s also not scientific in any way - 15-25-50 is not going to be any sort of optimal here, it is just fingers jabbed in the air and guesswork. Interference and guesswork are not great bedfellows in making markets work efficiently, of course - but then who is the king of the free market? Or is he?
On anniversary day we also heard about a 100% tariff on certain imported drugs. Big Pharma owns the world (well, no it doesn’t, and there’s the problem) - so this punishes R&D budgets for any non-US companies looking to sell into the US market (or forces them to consider onshoring into the US). The other problem, though, is that this industry works on 10-20 year timelines, not 5-minute timelines before someone changes his mind or gets replaced at the next election (or neutered at the mid-terms, as so many hope). So how could a board make a proper strategic decision here? The game theory is VERY, very tough at the moment for big companies dealing with significant exports to the US market.
In the background, 24 states or thereabouts are contesting the new tariffs that have come in after the old tariffs were ruled unlawful by the Supreme Court back in February.
Meanwhile, back at the ranch, job openings are at a 6-year low - similar in many ways to many developed countries. A post-covid malaise of sorts, often being blamed on AI (and it’s having some impact, for sure - measuring how much is really difficult). Hiring overall dropped to its low from March 2020. Consumer sentiment is also down 6%, with prices at the pump not helping at all.
Donald says the spike in prices is a “small price to pay” - maybe a bit tone deaf, because it is when you are a billionaire, isn’t it…….I don’t think his voter base wants expensive oil and gas, but at the same time he mentions it all being over in a couple of weeks or whatever several times a week. My theory is that he still needs to escalate so he can de-escalate and get out of there - what that looks like may well be the threatened bombing of energy infrastructure etc. Iran has stated they have enough fuel for a year - attacking their water would be the way to do it, but it would cause incredible human casualty of course and really is another level here on top of what’s already been done. Let’s also not pretend that DJT is the only one calling the shots here. What does Netanyahu want? I’ll leave that one alone, because that isn’t immediately obvious to me, and I’m already outside of my lane here!
We retreat, as they should, once again to the safety of the UK real-time property market. Chris Watkin’s analysis/roundup of week 12 of the UK Property Market. Chris “runs” Sunday to Sunday, so this was the week ending 29th March. We outrun 2025 listings one more time - (441k on the market so far is 1.3% above 2025 and 19.4% ahead of the pre-pandemic average). The glut of listings is persisting. What we know is that there’s extra stock on the market - it must be landlord disposals - but we don’t know exactly who is buying them, although first time buyers are especially active and there’s only so many houses, of course.
Remember only a little over HALF of what’s listed actually sells (unbelievably) - so my personal theory is that a lot of this ends up getting re-let after it doesn’t sell, which is why total rental supply is moving downwards but not crashing, overall. However - right now, with yields elevated again, those facing refinance soon (remember these borrowers, if they were on 5 year mortgages, were pretty much at the “nut low” on rates and 30% or so of them, in my estimate, will be genuinely surprised when they go for a mortgage quote at the moment…..also - with so many first time buyers - are there fewer actual RENTERS out there? That’s a tough one to answer with official data, but it is a reasonable hypothesis (which also depends on net migration numbers). We do know demand is down - and with more FTBs, and fewer net migrants, it is a zero sum game ultimately.
Gross sales are at 298k SSTC YTD, 7% higher than 2024 but 5.4% lower than 2025. 16.6% ahead of the 2017-19 pre-covid market. The lack of that 31st March deadline, the urgency, and the time pressure looks sure to wash out by the time we get to the end of H1 of this year - because we know that last year’s figures had a peak and then a trough, as you always do around a stamp duty change/hike. April 2026 should be drastically superior to April 2025 - we know that - and that trend looks to have already started. The reason why pricing is sideways is because there is just so much supply, but transaction numbers still look very healthy indeed. Functional. Prices dropping in real terms (after inflation). Affordability improving. Everyone is happy (although those of us who benefit significantly from capital growth would mostly prefer it was faster, of course!).
Net sales are also 6.8% ahead of 2024, at 192k. 13.6% ahead of the 2017-19 market, and 21.4% ahead of 2023 which as we know was “limp lettuce” territory all year. 2.8% lower than 2025, though, with reference to the above caveats.
To start March there ended up being a 10-year+ record number of homes on the market (for a March, to be clear - we haven’t yet ascended or beaten the peaks set in 2025) - 682k thanks to this record Boxing day and solid January/February - 2025 Mar 1st saw 675k OTM, so it is 1% above that - a hair’s breadth. Next week we should have April’s numbers for the 1st of the month.
Sales pipelines are, however, a few percent below where they were 12 months ago. At the end of Jan 2026 agents had 422,067 properties sold subject to contract - that compares to 433,030 at end Jan 2025, 353,395 at end Jan 2024, and 459,094 at end Jan 2021.
Reductions were 23.2k for the week, 11.4% of stock was reduced in February, compared to the 2025 average of 12.8% (and the longer average of 10.74%). The fall-through rate is nice and low at the moment; 21% in week 12, (longer-term average 24.2% - all far too high of course, but all numbers have to be looked at in context of the “norm”).
February ‘26 saw sales agreed averaging £343.36 per sqft, 2.3% ahead of a year ago. Much closer to the current ONS numbers. This number is 18.2% ahead of 5 years ago - February 2021 was really accelerating very fast in terms of pricing and a huge slice of that 18.2% happened in that one year. We will keep monitoring. Exchanged prices were well above this for the month - £339.57 psqft, which is a big move down from £348 psqft in January. These deals were likely agreed BEFORE the November 2025 budget, or around it - so it makes sense for them to be a bit lower. Let’s not read TOO much into one month’s figures though, as I always say - that particular graph is always noisy - even with 100k transactions a month, things don’t quite smooth out as easily.
I spend a bit more time at the moment looking at the week-to-week, although that can be noisy data, just trying to get a read on the real-time “war impact”. 2025 Q1 has been no help for comparables because of the stamp duty deadline, although by now it isn’t making any difference of course because no-one agreed a sale in the last week of March 2025 expecting to complete in a few days. Week-to-week for the last 4 full weeks since it kicked off in Iran - I’m limiting this to one metric and the metric of choice is “net sales” - all sales agreed minus fall-throughs that week:
Week 9: 20,087 compared to 20,236 in 2025, 21,149 in 2024, 18,465 in 2023 (close enough)
Week 10: 21,172 compared to 20,892 in 2025, 19,915 in 2024, 18,367 in 2023 (best in group)
Week 11: 20,607 compared to 20,860 in 2025, 20,669 in 2024, 18,686 in 2023 (very very close to the functional years in the sample)
Week 12: 20,804 compared to 21,740 in 2025, 20,733 in 2024, 19,000 in 2023.
So - in the round, there’s really no sign at all that anyone can see that the war has wobbled the market in any way, shape or form. Rates are worse than they were - but not worse than 2023-24 by any material way. They are just at the high end of the range, right now, that they have been at since the 2022 clettuceusterfudge situation (not sure that one will take off). We are looking at petrol and second order consequences and are not happy, but the impact is minimal at the margin on the average household budget. The bottom 10-20% are perennially in trouble, and it DOES hit them harder at times like this - but everything does. I hope that level of detail adds value - it certainly makes me feel like I’m as well informed as I can be.
Chris - this is my weekly appreciation paragraph. Thanks for what you do! If you want some help positioning yourself as a local market expert - as an estate agent or any form of property professional - give Chris a shout! Either way give his channel www.youtube.com/@christopherwatkin a follow and some love, please!
Into April we go, and macro-wise, we have the Bank of England Money and Credit report - a perennial - and the Nationwide House Price Index. There’s now time for the ONS House Prices and Private Rents which I haven’t been able to squeeze in in the past 2 weeks, and of course our Easter Egg is the gilts and the swaps, as usual (that slot isn’t going anywhere before 2030, you can guarantee that).
The Bank’s Money and Credit Report, then. Healthy mortgage borrowing again in February (pre-war, I feel obligated to say one more time). Approvals - still lower than one would like, suggesting a cooling in the market - a slight one - that I’m struggling to see anywhere else. Mortgage approvals hit 62,600, so not bad by any stretch - but 65k is the benchmark for health that I’ve been operating on for some years now. The report points out that the 6-month average is 63,500 (but remember, 60,200 in January will have also dragged THAT figure down). So - better than Jan, not quite where I’d like it to be, in summary.
Remortgages looked healthy, on the other hand - 41,200 up from 38,500 in January. This does partially dovetail with my narrative on the bigger picture though - landlords trying to sell, many being unsuccessful to get the price they were promised or they think they “deserve”, so they re-let and remortgage? Only a small percentage of the market, of course. It could just be there are more 2-year loans from 2 years ago expiring and being refinanced - for a time after the Truss budget, 2-year loans nearly evaporated altogether because of the price of the shorter term debt but they’ve since come back, of course, which means 2.5x more remortgaging than in the case of a 5-year loan.
Credit growth to households and individuals was healthy enough. The money supply also increased dramatically again, as it did in December, after a step in reverse in January. Once again, we need to wait for another month’s data - although we don’t need to watch the money supply to know we have inflation, sponsored by Israel/the US.
Net mortgage lending is now growing at a healthy 3.4% per year. A normal looking and sustainable market - basically the rate of inflation. Effective interest rate paid on mortgages drawn in February (so likely offered in January, December, even November or before) was 4.1%, a tiny hair away from the 4.09% in January. That’s going up over the coming months as we know. Outstanding mortgage debt sits at 3.95% (up from 3.9%) as the cheapest 2021 deals start to drop out of the 5-year figures. Before Iran, this was the convergence I’d been waiting for and talking about for years - but now instead, from about May onwards, I’d expect we’d see divergence rather than convergence as the “current new world” of 4.5%+ kicks in.
Consumer credit growth still sits at 8.5% - which is unsustainable, by the way, but there’s still “covid averages” (just about) that we can include in the figures. Credit card borrowing is growing at 12.1% a year - again, unsustainable. A sign of stretched wallets? Or underwriting that’s too lax? You tell me. Keeping a close eye on this. WELL above inflation, or wage inflation, of course.
In February new time (bond-style) deposits dropped to 3.67% - this again will rise quite dramatically in coming months. Instant access was down at 1.72%. Again - up this goes fairly dramatically as we see the impact on the bond yields play out in the lending and saving market over coming months.
Year-on-year debt growth for large businesses was up at 10.4% - as the marginal cost of debt had come down, they were taking lots more on - again, you’d have to expect the brakes to go on (although not dramatically - but lower rates make less profitable projects more viable, ultimately). SMEs had ground their way to a 2.8% growth rate per year in debt after years in the wilderness, paying down and keeping heads above water.
I’ll finish with the annual growth rate of the money supply - 5.7%. This is best thought of as “inflation plus growth”, to an extent - so in a way, very promising (although not sustainable) - but this needs closer monitoring over the next months due to the inflation jump we will see play out in a quarter or two.
As always - informative - but in the face of a fast changing situation, a month feels like a long time to wait for a report. How about the Nationwide House Price Index? Well - a positive headline - more positive than we might have thought.
Nationwide have house prices up 0.9% on the month, and 2.2% up on the year. A regain in momentum, but a “cloudy outlook”, they correctly state. The chat, as you can imagine, inevitably converges on “How long this all lasts” - which for Nationwide, just as everyone else, is guesswork - and guesswork informed by “translating Donald Trump into English”, which is a job no analyst realised they would have before last year.
Regionally - the story is the same as it has been for 18+ months. 2 regions went backwards - Outer South East (-0.7%) and East Anglia (-0.4%). Up less than 1%? West and East Midlands, and the South West. The North rules the roost, as Nationwide sees it!
Nationwide asks the question - how will households weather this storm? Their Chief Economist points out that this change in rates obviously impacts affordability negatively, whereas it has been improving over the past 36 months or so. He notes that employment levels are holding up well (perhaps he reads the Supplement, because he is the only other person I’ve seen saying it!).
He points out that household debt levels are solid, are at their lowest relative to income for two decades, and there are significant savings buffers (although he accepts these are a long way away from being evenly distributed). He notes 90% are on fixed rate mortgages, so the impact is not immediate. What he doesn’t do is what I’ve tried to do in recent Supplements - put it all into 2022 context - although he does draw the parallel with the late 2023/early 2024 market which I also did (which wasn’t buoyant, but also wasn’t anywhere near as bad as the early 2023 market).
Nationwide still has Northern Ireland going up 9.5% per year, whereas in other figures, they have cooled off a bit. Unusually, they also have London up 1.7% on the past year which is contrary to the other indices. Once again, when they parse into property types - flats are falling in value (-0.5%), whereas detached and terraces are both achieving >2% across the nation. Flats are up 15% since January 2020 compared to 30% for detached houses, we are told.
That real house price - the anomaly I first highlighted in June 2023 - now looks the same as the real (RPI-adjusted) house price in quarter 1 of 2003. Now we know markets will not charge forward because of the war, and also that inflation will be up - that will soon be rowing back into 2002, I’m sure.
If you believed the Nationwide trend line that they use, Real House Prices are £100k below the trend line. I don’t believe the trend line, personally, because it goes upwards based on what happened 40-50 years ago - something which I believe is basically irrelevant in today’s world for a number of reasons. But on a completely flat trend line - we are now 23 years ago, in those terms. There was plenty of upward runway from Q1 2003, need I remind you….?
Remember though, this is a “long-wave” pattern, not a guarantee of growth next quarter! But you aren’t reading or listening here to get intel in order to bet on house prices over the next 3 months (I hope not anyway - if you are, please tell me how you are doing that and what derivative instruments you are using!).
OK. Onto the ONS report on private rents and house prices. This is February’s rents, and January’s house prices - confusing though that always is. Rents - stabilised now at +3.5%, which looks a reasonable figure in the inflationary environment we have found ourselves in. Enough to reward investors appropriately for the extra risks introduced by the renters’ rights act? No…….but still ahead of most things (although not ahead of average wage increases, or average benefits increases as it goes).
Average rents in England now sit at £1,430 per month, £828 in Wales, and £1,022 in Scotland. House prices moved up 1.3% in the 12 months to January 2026, a significant difference from the (revised downwards) figure of 1.9% to December 2025 (it was 2.4% when we recorded it last month!). Why there need to be revisions of that size - I can’t tell you. We’ve gone from +2.9% in November to +1.3% by January - quite a drop which we didn’t really see much evidence of in real time (bearing in mind the Watkin figures tend to run 5 months ahead of the official ONS figures by the time they settle down). Quite an adjustment.
On the regions - you know the ONS story by now, and it is dramatically different from the Nationwide picture. Not in terms of North vs South - that’s the same. But The North West won the regional chart once more at +3.1% annually on price movements (with the North East at +2.2%) - London dropped 1.7%, and the South East dropped 0.5%.
Rents….well, you know yields are still expanding. In the North East - more than other parts of the country, with a 7.6% increase in annual rents. London was +1.7% and the South East was +3.4% - these are the only parts of England below the average of +3.6%. East and West Midlands rents were both just below +5%. The South West - despite prices lagging - is still seeing rents move upwards +5.1% year-on-year according to the ONS.
We don’t have a handy breakdown by property type (apart from by number of bedrooms) from the ONS, which is a big gap in their analysis - it would be interesting to see the official figures to compare with Nationwide’s efforts. It can be done using the ONS HPI tool - and so I’ll summarize that here - but really, folks, it should make the report - so if anyone connected to the ONS is reading or listening - you know what to do!
For England: Flats were down 2.2% between Jan 2025 and Jan 2026. Terraces were +2.3%. Semis were +2.5%. Detached were up 0.5%.
This looks much more like the market I believe we experienced in 2025 to me. Flats struggled significantly. The more affordable, bread and butter stock did just fine. The more expensive houses stuttered thanks to budget concerns and the more expensive stock struggles more with higher interest rates (and is likely to have more people delaying and prevaricating due to tax concerns and business concerns under the current administration, in my view). This is a very believable picture - but the lesson here is a monstrous 5% difference, nearly, in the capital fortunes of flats versus houses. Next time you see those nice, helpful people who give you free information with a nice shiny new flat to buy at the end of their sales funnel - just remember. Flats simply are not performing like houses are at the moment.
Let’s road test that a bit further. How about the last 10 years? Flats +17.3%. Terraces +46.1%. Semis +47.4%. Detached +40.7%.
Let THAT sink in (oh, and don’t forget these figures next time some “Puffer” tells you that property doubles in value every 10 years). For good measure - how about inflation over that time period? CPI 40.2%. RPI 57%. So - in real terms versus RPI, house prices are down in the past decade - adjusted for CPI, flats have lost significant value (and don’t forget the ground rent and service charges), detached houses have broken even, and the rest have made 4%-5%.
Is that bad, you might ask? Well, they’ve maintained (pretty much) if you’ve owned freehold property in real terms. They’ve also yielded income. Compared to a bond? If you’d bought an index-linked bond in Jan 2016, paying RPI, you’d have paid about £108/£109 for every £100 of face value you’d have got. You’d have also got the RPI (57% in total) as coupons. So you’d have made about 45%. The same as the capital growth on the semis and terraces (but no leverage, and no rent). Now that bond (in 2016) would have had you “laughing”, nearly, in 2022 and 2023 when RPI was in double digits - and STILL didn’t perform as well as property did. Property holds more risk, and more effort, and also can be leveraged (a critical point in this comparison). But an index-linked bond wouldn’t have a much better decade than that, and still got beaten into a cocked hat (as long as you bought the right stuff).
What’s the right stuff? 2 and 3 bed terraces and semis in 3/10, 4/10 and 5/10 areas. Why? Strong enough yield, strong enough capital growth, impossible to replace at the purchase price (often it is double to rebuild one of these compared to the market value of it, these days). Bulletproof, to an extent. Layer on any extra “cherries”, e.g. guaranteed rents thanks to a housing provider contract and……there you go.
Here endeth the impromptu lesson from the ONS report! Those are the real numbers though folks, if you see any others elsewhere they are not the official numbers from the Government database.
Last up in the macro section - as always - the gilts. A short week thanks to Easter that saw us open at 4.528% and close at 4.386%. A down week, 14 bps or so. Take it for what it is. The 30s went from 5.577% to 5.461% on the 4 days, so that was a shave of 11 bps as the yield curve got a tiny bit shallower. Things have cooled a bit, and the week wasn’t as volatile (although trading will have been thinner) - in spite of some pretty aggressive language from the Prez at certain points.
The last 5 year swap traded on April 1st was 4.075%, compared to a close of 4.387%, so the discount is persisting at around 30-31 bps. Not terrible. Best guess at 5-year fixed money has eased to 6%, as the market settles (the lenders hate this volatility, because they know just how long an application takes until it gets funded). Resi mortgages look like best buys around 4.75% at the moment, pricing in a bit of a buffer (a 1%+ shock in around 6 weeks there). This will settle as the volatility settles - but the stress rate is looking much more like 7%-7.5% across the big lenders when it was down to 6.5%. That’s applied to the 2-year mortgage - the 5-year is still looking like the pay rate (4.75%-5% at the moment) - so that’s not killing TOO many deals. That stress test was right down, of course - to 3.75% just 6 weeks ago. So that’s still a dramatic shift in what the average borrower can borrow (although it is “only” back to where it was a couple of years ago, and incomes have still improved since then).
Great. A significant amount of application this week in the macro section, and some revisions (and some new learning) about exactly where we are in the market right now. It’s volatile, but that doesn’t mean it isn’t worthwhile! Moving forwards to the deep dive…..
Firstly, I’d ignored Rachel Reeves’ “record-breaking” second Mais lecture as Chancellor. Frankly, the past few weeks, we have had bigger fish to fry - but now it is time to take it on. We also take a look at the ATED (annual tax on enveloped dwellings - introduced in 2013 to try and capture those putting expensive properties in a limited company in order to transfer at a lower stamp duty level) return for the previous financial year, and also the GDP national quarterly accounts including the savings ratio, which I’m watching very closely. Last up, CBRE released a summary of their thoughts (evidence-backed) on the impact of rising oil prices on real estate values - worth a share, alongside the trademark Propenomix take, I thought……
Off we go with the Mais lecture - delivered back in March by Reeves:
Theme 1: The Great Planning Shake-Up and Land Reform
The Summary: The Chancellor argued that the inherited land use planning system was a direct obstacle to investment, effectively rationing homes and infrastructure while ramping up the costs of development. To counter this historical blockage, the government has already taken steps by reinstating mandatory housing targets and unlocking "grey belt" land for new development. Crucially, local planning committees will be restricted from blocking regional growth. Reeves also confirmed a combative stance on land acquisition, stating that the government is ready to use compulsory purchase powers directly, or alongside local leaders, if landowners prove intransigent or make unreasonable demands. Alongside this aggressive land reform, public consultations are launching this week for a new generation of towns to accommodate dynamic city expansion, specifically backing the Oxford-to-Cambridge and Northern growth corridors.
The Propenomix Perspective: I will believe it when I see the diggers on site. The rhetoric here is incredibly aggressive - threatening compulsory purchase orders is great political theatre, but the legal reality is often a quagmire of judicial reviews, local pushback, and endless bureaucratic delays. Opening up the grey belt and stripping power from local planning committees sounds wonderful for major developers, but it completely ignores the structural bottlenecks in the real economy, namely materials and skilled labour. We can zone all the land we want, but if SONIA swap rates remain elevated and developmental finance is choked off by risk-averse lenders, these new towns will remain purely theoretical exercises on a Whitehall whiteboard. It is all very well mandating targets from the centre, but the private market ultimately dictates what gets built, at what margin, and when.
Theme 2: Regional Fiscal Devolution and Infrastructure Spending
The Summary: Addressing the UK's geographical inequality, Reeves announced a decisive shift away from a highly centralised political and economic system. The government is deploying the biggest ever investment in regional transport, allocating £15.6 billion for new trams, train stations, and bus routes within city regions like Manchester and Sheffield. To grant regional leaders more autonomy over investment, the Chancellor announced £2.3 billion for new City Investment Funds focused on the North and West Midlands, allowing local authorities to retain business rates and generate their own returns. Furthermore, a roadmap for fiscal devolution will be published at the upcoming Budget, giving regional leaders control over a share of certain national taxes, such as income tax, to manage their own volatile receipts and drive targeted local growth.
The Propenomix Perspective: Giving local mayors a slice of the income tax pie is a remarkably bold move, but let us be absolutely clear about what this means for property investors. Regional fiscal devolution could easily lead to a postcode lottery of capital allocation and varying commercial tax burdens. While a £15.6 billion injection for northern transport sounds like a hefty and welcome war chest, public infrastructure projects in this country have a nasty habit of doubling in cost before a single mile of track is laid. My primary concern is whether these newly empowered regional bodies actually possess the commercial competence to deploy this capital efficiently. If they get it right, the agglomeration effects could boost regional commercial property yields significantly. If they get it wrong, we are simply decentralising the mismanagement of public funds.
Theme 3: Capital Market Interventions and 'Securonomics'
The Summary: The Chancellor identified anaemic levels of capital investment as the primary cause of the UK's severe productivity slowdown over the last three decades. To build an investment-led growth model, the government is deliberately modifying fiscal rules to account for the financial benefits of investment, enabling over £120 billion in public investment during the course of this parliament. Operating under the strategy of 'securonomics', the state intends to take a highly active role in shaping markets and derisking emerging industries. This strategy includes aggressively opening access to domestic capital by redirecting funds currently tied up in conservative pension funds and ISAs, funnelling them toward scaling businesses and strategic infrastructure projects to compete globally.
The Propenomix Perspective: Here is the real meat of the lecture, and frankly, it should make the bond markets very twitchy. Rewriting the fiscal rules so the Treasury can mathematically justify borrowing another £120 billion is a classic accounting sleight of hand. The gilt market will be watching this "active and strategic state" very closely indeed. If institutional investors suspect that this borrowing is funding political vanity projects rather than generating genuine economic returns, we will see gilt yields spike, which will immediately drag mortgage swap rates up with them. As for redirecting pension and ISA capital - forcing retail and retirement capital into riskier start-ups under the guise of national duty is a massive gamble. The state has a historically abysmal track record when it tries to play the role of a venture capitalist.
Theme 4: Closer EU Alignment and Trade Realities
The Summary: A significant portion of the lecture focused on navigating the UK's post-Brexit economic realities and the explicit intention to build a new, stable relationship with the European Union. The Chancellor frankly acknowledged that Brexit has resulted in higher costs for domestic businesses, reduced markets for exporters, and exposed strategic industries. Consequently, the government stated it is prepared to actively align with EU regulations, including in further areas of the single market, when it strictly serves the national interest. This regulatory alignment is designed to be forward-looking and durable, with the primary economic goals of reducing bureaucratic costs for companies, lowering inflation, and enhancing UK scale-ups' access to deeper, cross-border pools of capital and talent.
The Propenomix Perspective: Finally, someone in Westminster is openly acknowledging the enormous elephant in the room regarding cross-border trade friction. As a property economist, I look at the severe supply chain constraints that have battered the UK construction sector over the last five years, and a huge portion of that pain ties directly back to import friction. However, voluntary regulatory alignment is a dangerous tightrope walk. If we align with the EU single market to ease the flow of building materials and capital, we inevitably surrender a degree of domestic agility. For commercial real estate investors, particularly those in the logistics and light industrial sectors, a smoother trading relationship with Europe is an overwhelmingly bullish signal. It should slowly lower material costs, but do not expect these entrenched structural supply issues to evaporate overnight.
Next up, the tax receipts on enveloped dwellings, and a couple of interesting trends:
Theme 1: The Revenue Reality - Receipts Rise as Declarations Fall
The Summary: Total ATED receipts in the 2024 to 2025 financial year reached £133 million. This represents an increase of 1%, or £1 million, compared to the previous financial year. This modest growth marks the fourth consecutive financial year that total ATED receipts have risen. However, this revenue growth occurred alongside a decrease in the number of liable ATED declarations, which fell to 5,210 from 5,330 in the previous year. The data shows that the £500,000 to £1 million price band experienced the most significant change, seeing a 13% increase in receipts compared to the 2023 to 2024 period. Despite the recent upward trend, overall receipts remain well below the historical peak of £178 million recorded in the 2015 to 2016 financial year.
The Propenomix Perspective: Let us be absolutely clear about what is happening here. We are seeing a classic case of tax bracket creep disguised as revenue generation. The government is collecting more cash from fewer liable properties. How? Look at the revaluation dates. The 2024 to 2025 chargeable period uses property values fixed at 1 April 2022. We all know what happened to capital values leading up to that post-pandemic peak before the Bank of England went aggressive on the base rate. Properties that were previously safe are being dragged into the £500,000 to £1 million band - and it shows in the data. The ATED was designed as an anti-avoidance measure for Stamp Duty Land Tax, but it has essentially morphed into a stealth wealth tax on corporate structures. For property investors, the lesson is simple: if you hold residential stock in a corporate envelope and fail to utilise it commercially, you are paying a premium for the privilege.
Theme 2: The Geographic Divide - London's ATED Monopoly
The Summary: The geographical distribution of ATED receipts remains heavily concentrated in the capital. London accounted for 82% of all ATED receipts in the 2024 to 2025 financial year, a figure that remains unchanged from the previous year. When examining the breakdown by local authority, the dominance of central London is stark. The London Borough of Westminster alone generated 47% of total receipts, maintaining its position from the 2023 to 2024 financial year. The Royal Borough of Kensington and Chelsea followed with 22% of receipts. Beyond the capital, the country and regional breakdown is broadly stable. The South East contributed 10% of all receipts, while the East of England and the South West each contributed 2%, and Scotland accounted for just 1%.
The Propenomix Perspective: If you ever needed proof that the prime corporate-owned property market is effectively a micro-economy contained within Zone 1, this is it. Nearly 70% of the entire national ATED tax take comes from just two boroughs: Westminster and Kensington and Chelsea. The rest of the United Kingdom - and I mean literally everywhere else - is a statistical rounding error. This tells me two things. Firstly, the "levelling up" agenda has entirely bypassed the international, ultra-high-net-worth capital markets. Secondly, the appetite for holding prime London assets in corporate wrappers remains sticky, despite the tax penalties. But let us look at the broader macro picture. With gilt yields shifting and alternative safe-haven assets offering decent returns without the bureaucratic headache, I suspect the appeal of holding a vacant Mayfair townhouse in an offshore company will wane. The capital preservation argument only works when inflation and holding costs do not eat you alive.
Theme 3: The Relief Surge - A Shift Towards Rental Yields
The Summary: The number of ATED relief declarations continues to climb, reaching 30,350 in the 2024 to 2025 financial year. This marks a 5% increase when compared to the 2023 to 2024 period. Reliefs can reduce a non-natural person's ATED liability to nil. Across the board, all types of relief declarations saw an increase. The most notable growth was in rental relief, which increased by 6% and now accounts for a massive 83% of all relief claims. Developer relief represented the next highest share at 10% of total claims, experiencing a 1% increase from the previous financial year. The remaining 'other' relief categories accounted for 7% of total claims, growing by 2% year on year.
The Propenomix Perspective: This is where the data gets genuinely interesting for property strategists. Over 30,000 relief claims versus barely 5,200 liable declarations. The overwhelming majority of these properties - 83% of the relief claims - are being let out commercially to claim the rental relief. Why? Because the holding costs of leaving a prime asset empty have become mathematically indefensible. Between the ATED charges, creeping service charges, and the high opportunity cost of capital driven by elevated SONIA swap rates, owners are being forced to sweat their assets. The days of buying a London mansion in a corporate wrapper and leaving the lights off for 360 days a year are ending. The 6% jump in rental relief claims is a direct reaction to the current macroeconomic environment. Investors are waking up to the fact that they need yield to offset their debt profiles and tax liabilities. If you are holding property in a non-natural person structure, you simply have to behave like a commercial operator now.
Theme 4: Historical Volatility and Market Adjustment
The Summary: Looking at the historical context, ATED receipts peaked shortly after the tax was introduced, hitting £178 million in the 2015 to 2016 financial year. Following this peak, total receipts fell year on year until they bottomed out at £111 million in the 2020 to 2021 financial year. Since that low point, total receipts have rebounded, rising consistently up to the current £133 million figure in 2024 to 2025. The number of liable returns has remained broadly stable across most price bands over the period from 2020 to 2021 to 2024 to 2025. The overall profile of liable declarations across all valuation bands has also stayed consistent throughout these years.
The Propenomix Perspective: To understand the present, you have to look at the past. The massive peak in 2015 to 2016 was the shock-and-awe phase of the ATED policy. Back then, structures were caught off guard, and the exchequer raked it in. Then, the inevitable happened: the market adapted. High-net-worth individuals and their accountants are not fools - they restructured, they claimed reliefs, or they sold up, driving the receipts down by 2020. The recent steady climb back to £133 million is not a sign of a booming prime market. Instead, it is a reflection of persistent, underlying asset inflation up to the 2022 valuation point, combined with a stubborn core of owners who are willing to swallow the cost as a premium for privacy. But looking ahead, with a potentially hostile tax environment and stagnant capital growth in prime central London, I would bet against these receipts continuing their upward trajectory forever. The smart money is already looking for better, less heavily taxed returns.
OK. How about the GDP quarterly returns? I’ve got a very close eye on that savings ratio…..
Theme 1: Headline Economic Growth
The Summary: The Office for National Statistics has released the revised quarterly estimate of gross domestic product for the UK, covering the final quarter of 2025. The data confirms that UK real gross domestic product increased by an unrevised 0.1% in Quarter 4, matching the 0.1% growth recorded in the preceding quarter. Across 2025 as a whole, GDP is estimated to have expanded by 1.4%, a slight upward revision from the initial estimate of 1.3%. Nominal GDP grew by 0.6% in the latest quarter and stands 4.2% higher compared with the same quarter a year earlier. Furthermore, the GDP implied deflator, which acts as the broadest measure of inflation across the domestic economy, increased by 3.2% in the fourth quarter of 2025 compared with the same period a year ago, driven predominantly by household expenditure and gross capital formation.
The Propenomix Perspective: Let us be absolutely clear here - a 0.1% expansion is not an economic boom. It is a rounding error masquerading as momentum. The headline figures might allow politicians to claim we are growing, but anyone operating in the real economy knows this feels like pure stagnation. I look at these numbers and see an economy barely treading water. The 1.4% annual growth for 2025 is largely flattered by government expenditure rather than robust private sector vitality. The implied deflator sitting at 3.2% tells the real story - core inflation remains sticky - if only someone had predicted this 5+ years ago as a major macro issue…... When you look at the trajectory of five-year gilt yields, the market is pricing in this persistent inflationary hum. We are stuck in a low-growth, high-cost paradigm, and until we see a meaningful shift in capital allocation, this anaemic drift will remain the standard setting for the UK.
Theme 2: The Household Savings Ratio
The Summary: A notable finding in the latest national accounts is the significant upward shift in the household saving ratio, which grew to 9.9% in the final quarter of 2025. This represents an increase of 0.8 percentage points from the 9.1% recorded in Quarter 3. The data reveals that this rise was almost entirely caused by an increase in non-pension saving, which contributed 5.7 percentage points to the ratio, up from 4.5 percentage points previously. Conversely, the contribution of pension saving fell slightly to 4.2 percentage points. This increased propensity to save is further evidenced in the financial account, showing that households deposited a substantial £38.1 billion into their accounts during the final quarter of the year, a sharp acceleration compared with the £15.2 billion deposited in the previous quarter.
The Propenomix Perspective: This is the metric that should make everyone sit up and pay attention. A savings ratio nearing 10% is incredibly high for the UK consumer - it screams of deeply entrenched caution. People are not hoarding cash because they feel wealthy; they are hoarding cash because they are terrified of the future. When households dump £38.1 billion into deposit accounts in a single quarter, that is capital being starved from the real economy and the property market. High SONIA swap rates have translated into decent yields on savings accounts, giving consumers a rare incentive to sit on their hands. However, I view this as a red flag for investment velocity. If retail capital is hiding under the mattress, it is not flowing into deposits for house purchases or funding consumer-facing businesses. Fear has become the dominant macroeconomic driver. This is all BEFORE Iran, of course……imagine where it will be for H1 2026 when we get the figures!
Theme 3: Real GDP Per Head and Living Standards
The Summary: While aggregate GDP showed marginal growth, real GDP per head - often utilised as a proxy indicator for national welfare and living standards - decreased by 0.1% in the final quarter of 2025. Despite this quarterly contraction, real GDP per head is estimated to have increased by 1.1% annually across 2025, following a year of no growth in 2024. In contrast to the per-capita GDP decline, real household disposable income per head increased by 1.2% in Quarter 4, rebounding from a 1.2% decrease in the previous quarter. This boost in disposable income was primarily driven by a £2.9 billion increase in wages and salaries, alongside a £1.3 billion decrease in taxes on income and wealth, though it was partially tempered by a 0.4% growth in the implied deflator.
The Propenomix Perspective: Here we find the great illusion of the modern UK economy laid bare. The aggregate economy technically grew, but real GDP per head fell. Put simply - the pie got slightly larger, but because there are more people at the table, your individual slice just shrank. I continually argue that per-capita metrics are the only ones that matter for property fundamentals. While the bump in real household disposable income looks pleasant on paper, driven by aggregate wage growth, it feels largely academic to those on the ground facing structural cost-of-living pressures. When individual economic output contracts, the fundamental ability of the average person to service higher mortgage debt or swallow rising rents is heavily compromised. We are experiencing a demographic growth story, not a productivity growth story, and the cracks in that facade are becoming impossible to ignore.
Theme 4: The Sector Divide and Construction Struggles
The Summary: The output approach to GDP highlights a clear divergence across different sectors of the UK economy in the final quarter of 2025. The production sector was the primary engine of growth, expanding by 1.2%, largely due to a 3.4% surge in electricity, gas, steam, and air conditioning supply. The dominant services sector, however, recorded no growth at all, with non-consumer-facing services flatlining and a 1.4% decrease in professional, scientific, and technical activities. Most significantly, the construction sector experienced a severe contraction, decreasing by 2.0% in the quarter. Within this sector, new work fell by 2.3%, and the largest negative contributor was private housing new work, which saw a steep decline of 3.6%. Private housing repair and maintenance also decreased by 2.4%.
The Propenomix Perspective: A 3.6% collapse in private housing new work in a single quarter is nothing short of a disaster for the UK property landscape. The services sector might be flatlining, but construction is actively bleeding out. We already have acute, systemic supply constraints across the housing market, and this data proves that developers are pulling the handbrake. I look at these figures and immediately see the downstream impact - fewer homes built today guarantees higher structural pricing and rents tomorrow. The planning system is broken, material costs are elevated, and the financing environment remains hostile for developers. Until the government addresses these fundamental barriers, capital will continue to shun new development. You simply cannot fix a housing crisis when the people responsible for building the homes are retreating at this pace. It is a textbook market failure.
Last up for this week - CBRE answered a question that we have all been asking - what happens to real estate when oil prices shoot upwards?
Theme 1: The Macro Picture - Oil, Inflation, and Interest Rates
The Summary: CBRE research indicates that while the direct correlation between crude oil prices and property capitalization rates is relatively modest, the indirect consequences are severe. Global uncertainty is currently elevated due to the near closure of the Strait of Hormuz, a crucial checkpoint that processes approximately 25% of the world's seaborne oil trade. Since the conflict in the Middle East escalated on the 28th of February, Brent crude prices have experienced extreme volatility, swinging broadly between $70 and $115 per barrel. The report notes that while there has not yet been a direct negative impact on occupier demand, higher energy costs threaten to erode the operating margins of commercial tenants. Crucially, the expectation of rising inflation driven by these oil shocks is likely to force central banks to tighten monetary policy or maintain higher interest rates for an extended period. This dynamic will inevitably place upward pressure on property yields.
The Propenomix Perspective: It is entirely predictable that the institutional real estate market is finally waking up to the chaos in the energy sector. The analysts politely refer to these as "indirect impacts," but out here in the trenches, the lag is painfully obvious to anyone paying attention. If Brent crude is genuinely bouncing around the $115 mark, that feeds straight into CPI, which guarantees the Bank of England is going to sit firmly on its hands. Forget about those aggressive, speculative rate cuts the broader market priced in over Christmas. I am looking at SONIA swap rates every day, and they have already lurched upwards in response as regulars know. "Higher for longer" is not just a catchphrase - it is our reality. If you are heavily leveraged on a commercial portfolio, this inflation spillover is going to eat your free cash flow alive. Yields have to drift out - there is simply no avoiding the gravitational pull of elevated gilt yields when baseline energy costs stubbornly refuse to normalise.
Theme 2: Regional Vulnerabilities - Europe vs. The United States
The Summary: The analysis models the potential impact of crude oil supply shocks under two distinct scenarios: a base case featuring a 20% increase in oil prices by September 2026, and a downside scenario featuring a 40% price surge. A primary finding of this modelling is the stark geographical divergence in vulnerability. Capitalisation rates in Western Europe, explicitly excluding the UK, demonstrate a significantly higher sensitivity to oil price fluctuations than those in the US market. This disparity directly reflects the eurozone's heavy structural reliance on imported energy. By contrast, the United States presents a much more resilient profile. In the US, the impact of an oil price shock on capitalisation rates tends to reach its peak and subsequently dissipate much faster than it does across mainland Europe.
The Propenomix Perspective: The primary issue here is that this just doesn’t look like enough, does it - for a base scenario and a downside scenario? Colour me entirely unsurprised by the results either way. The eurozone has systematically compromised its own energy security for the better part of two decades, and now the chickens are coming home to roost - yet again. While the US essentially operates as a self-sufficient energy island backed by vast domestic production, Europe remains entirely at the mercy of global shipping lanes and geopolitical risk premiums. For UK investors, this data should serve as a glaring warning sign. We might sit outside the eurozone, but our energy pricing mechanics and broader supply chains are inextricably linked to the continent. If European property yields are blowing out because of imported utility inflation, we are not going to escape the blast radius. Capital will naturally flee across the Atlantic to the US for perceived safety and structural resilience, starving European assets of essential liquidity precisely when sponsors desperately need it to refinance.
Theme 3: Sector Sensitivities - The Resilience of Residential Real Estate
The Summary: When breaking down the data by asset class, CBRE highlights that the impact of rising oil prices will be felt unevenly across the commercial landscape. Energy-intensive environments, specifically data centres and industrial and logistics facilities, are highly exposed to cap rate expansion. Under the 40% oil price increase scenario, industrial and logistics peak cap rates in Western Europe could move outwards by up to 31 basis points. Conversely, residential real estate displays remarkably limited sensitivity to these macroeconomic shocks across both the US and European markets. In the same 40% downside scenario, Western European residential yields are projected to widen by a much more modest 17 basis points. The report attributes this defensive characteristic directly to the underlying need-driven nature of housing demand.
The Propenomix Perspective: Here is the reality check the big institutional players desperately need to hear. For years, they have chased the sexier, high-growth yields in logistics sheds and massive data hubs, completely ignoring the terrifying energy loads those assets carry. Now that operating margins are getting squeezed dry by runaway utility costs, those shiny valuations look incredibly fragile. Residential real estate is traditionally viewed as boring, but in an inflationary environment driven by energy shocks, boring is exactly what you want in your portfolio. People need a place to sleep, regardless of what the spot price of Brent crude is doing in the Gulf. Rents in the multifamily sector are far stickier and infinitely more resilient to these macroeconomic tantrums. Furthermore, when you factor in the chronic, systemic supply constraints we face in the UK housing market, residential property remains the ultimate inflation hedge.
Theme 4: The Pivot to Net Operating Income (NOI)
The Summary: Based on the projected volatility in capitalisation rates, the CBRE report concludes that overall commercial property returns in this current cycle will be fundamentally driven by net operating income rather than yield compression. Because cap rates are likely to face upward pressure due to sustained inflation and higher interest rates, capital appreciation will be difficult to achieve. To mitigate these risks, the research advises that investors may need to strategically pivot their acquisition criteria. The specific recommendation is to target and favour assets that boast longer weighted-average lease expirations. Additionally, securing assets in inherently defensive sectors, such as multifamily housing, is presented as a vital strategy for maintaining portfolio stability during this period of energy-induced economic uncertainty.
The Propenomix Perspective: Welcome to the long-overdue normalisation of the property market - a brutal landscape where you actually have to actively manage your assets to generate a return. The golden era of buying a secondary industrial shed, sitting on your hands for three years while market yields magically compress, and flipping it for a 30% unearned capital gain is completely dead. I have been warning subscribers about this exact pivot for months. If you are not forensically examining your tenant covenants and actively managing your voids to drive top-line revenue, you are going to bleed capital. Yes, locking in long leases sounds wonderful in theory, but a ten-year lease is essentially worthless if the tenant goes into administration because they cannot afford to keep the heating on. We are entering a rigorous phase where operational excellence is the only viable moat you have left.
As we get towards the end for this week - our Manchester Property Business workshop is continuing to sell very well. This is a workshop in huge demand, as we talk about exits. We cover tax, risk, deal structuring and exit options - not just for you, but for those who you will inevitably be dealing with to buy assets, portfolios, companies and the likes from. Can you help with their exit? I have, over the years, often because they have no real formal plan of their own - and added massive value, getting deals over the line. Have you got children or are you planning to leave a legacy? What does your plan look like? Do the kids know about it…….they often don’t, and - spoiler alert - they often don’t want to play ball either!
As always we have real life case studies about our own experiences, and close with our “no-holds-barred” Q+A. Anything individual to consider? Get a VIP ticket and join us for dinner, in a smaller setting with an opportunity to discuss any specific roadblocks or issues in your property business at the moment. Our VIP dinner was absolutely incredible in January, and got some superb feedback - the upgrade is well worth it. Early bird pricing is still available with a 10% discount! Book your tickets for Wednesday 22nd April, Central Manchester at: www.tinyurl.com/pbwten
Above all - please remember to Keep Calm, ALWAYS listen to or read the Supplement, and Carry On. There will be opportunities abound this year and towards 2030 and beyond - the landscape has been set for a surefire bull run. Capital growth looks set to remain slow(ish) at the moment, although if you are in the right part of the UK, you will be well looked after by the combination of that plus inflation, the big bull run needs some runway first (although let’s see what the FCA and PRA do around easing lending requirements again) - but let’s finish our super Golden Quarter together - it is a case of “here we go” in my opinion. The fundamentals haven’t changed - there’s a shortage of 2-3 bed terraces and semis, there was 15 years ago and it has only got worse since then. “Investing in property” is not a guaranteed win. Investing in undervalued areas, sexy on the spreadsheet, strong yields - that’s as close to a guarantee as you will get in any game, which will also ensure you keep pace and indeed stay ahead of inflation. KCCO!