"The money doesn't grow on trees. It has to come from somewhere, and where it comes from ultimately is the public finances." - Chris Giles, Financial Times (IFS Zooms In)
Here’s a magic money tree day-to-day reminder. Find out in the Deep Dive exactly where Chris Giles is coming from.
As we charge headlong through the biggest change in housing law in 38 years, our next Property Business Workshop is live and tickets are already selling. This is about due diligence - and REAL due diligence - performed on you by lenders and prospective investors, as well as what you should be doing on potential business partners and - most importantly - property deals. Book in on the next Property Business Workshop with myself and Rod Turner - Wednesday 1st July - Central London - https://tinyurl.com/pbweleven
TRUMPWATCH
A week largely about Kevin Warsh, although not in the way you might think. The new Fed Chair was sworn in last Friday at the White House (Clarence Thomas doing the honours, Trump in the room, the optics roughly as you would expect), and the more interesting story this week is what happened to US Treasury yields afterwards. They have moved up. The 10 year is being repriced, not because of anything Warsh has said in his first full week - he has been relatively careful in his public remarks so far - but because the market is pricing in the risk of a more politically pliable Fed, and what that implies for the structural inflation premium going forward. I’m in the same place as the market here - so far, all we’ve heard from DT is one-way traffic on interest rates, you’d be forgiven for interpreting what he’s said as “cut rates at all costs” but he’s badly confused between the Fed Funds rate and the 30-year mortgage rate/the rate that consumers are paying on debt. I’m really not convinced he understands the nuances here - so I can see why the market is hedging in the way that it is. We’ve seen numerous examples of why an independent central bank is far superior to a “captured” one, and this extra risk of holding US T-Bills with a potentially non-independent chair is now being priced in - it’s as simple as that.
Worth noting alongside this: Fed Governor Chris Waller, who was a dovish voice not long ago, gave a fairly hawkish speech in the same window suggesting the FOMC should drop its "easing bias" language. He estimated PCE running at around 3.8% in April, with core PCE near 3.3%. His phrase was "inflation is not headed in the right direction." Which is interesting framing from a Fed insider in the same week as Warsh's first proper week in the chair. Whether that's pre-emptive positioning, or genuine reassessment, or both, is hard to say.
UK relevance: the cost of UK leverage doesn't sit in a vacuum from US Treasury moves. We've seen that play out repeatedly. Watch the gilts section later for what actually happened on this side of the Atlantic this week.
The Digital Services Tax saga with Trump and the UK rumbles on. Trump's April threat of "a big tariff" if the 2% levy isn't scrapped hasn't moved to executive order yet, and Number 10's preferred play seems to be quietly pointing at the OECD process and hoping the heat dissipates. We'll see. I suspect this is going to keep flaring up periodically rather than getting resolved cleanly. Or perhaps we hear more on Independence Day - I can’t imagine anything other than pomp, circumstance, fireworks (of more than one form) being in the plans including setting fire to more international relationships, deliberately or accidentally.
The EU July 4 tariff deadline - the one Trump set on 7 May, giving Brussels until America's aforementioned 250th birthday to ratify the existing deal or face "much higher" tariffs - is now five weeks out. Front-loaded freight is reportedly picking up as European exporters try to get ahead of it. Whether that escalates or fizzles, I genuinely don't know yet. The big tariff bullets have been fired and broadly rejected, in the fullness of time, by the checks and balances of the American court system. The threats don’t carry the weight they did. They keep trying but you’d think they fired their best shots first up, and the new changes are less likely to stick than the old ones - but who knows?
And oil. The story this week is actually falling, not rising. Brent has come down roughly 20% from its peaks on Iran ceasefire talk, sitting in the $90-100 range. Still elevated versus where we started the year, still well above the EIA's previous expectations - and the indirect inflation effects of that will work through UK CPI for some months yet. But the directional story this week is softer, not harder. Worth noting because the headlines would have you believing the opposite.
Over to the UK real time property market - as ever, the thanks for this section go to Chris Watkin, who continues to produce the only weekly read on the UK market that actually tells you what's happening rather than what someone wishes was happening - data, not hopium. This week's stats show comes with Alice Bullard of Nested as co-host, and the Local Focus is Crystal Palace - we'll come back to that, because it's a good one.
The headline for Week 20: 27.2k gross resi sales agreed, which Chris notes is the second-strongest week of the year so far. New listings at 39.6k, slightly off last week's 41.8k but still running ahead of the ten year week-20 average of 34.9k. Net sales (gross less fall-thrus) at 21k, again ahead of the ten-year week-20 average of 19.5k. So on a week-by-week basis, this is a market doing the work, despite all the doom in the headlines.
The YTD picture is more nuanced, and worth being honest about. Gross sales YTD are at 499k, which is 5.3% behind 2025 YTD. That sounds worse than it is - and Chris is good at flagging this himself - because Q1 2025 was distorted upwards by the stamp duty holiday scramble before the April 2025 cliff. So the like-for-like comparison is messy. Versus 2024 YTD we're 3% ahead, versus 2023 we're 13.9% ahead, versus the pre-Covid 2017-19 average we're 11.2% ahead. That looks more like the actual underlying picture to me. The market is working, just not at 2025-on-stimulus levels.
Listings YTD at 753k - 0.7% ahead of 2025, 6.6% ahead of 2024, 16% ahead of the 2017-19 average. That last figure is the one I keep coming back to. We are running materially more listings than the pre-Covid baseline, and the market is broadly absorbing them. Stock at 731k as at 1 May (vs 714k a year ago), pipeline at 461k (vs 447k a year ago). Marginally heavier on both sides, but not by much.
The bit that should make every agent uncomfortable, and which Chris hammered hard this week: 54.1% of homes that left agents' books in April actually exchanged and completed. The seven year average is 57.6% (which includes the post-lockdown years when everything completed - although I say “everything” and still about 33% of homes left the market unsold, so unrealistic was their pricing in the first place). Roughly 46% of instructed homes went unsold. Think about that for a second. Almost half. Sell-through rate (the percentage of the homes on an agent’s books that went SSTC) in April was 14.6%, down from March's 15.5%, and the pre-Covid average was 15.5%. So we are running a touch below that baseline on the conversion side (as you might expect since we are overstocked, as discussed many times of late). Fall-thrus at 22.5% are actually better than the decade average of 24.5%, which is encouraging - but the gating issue isn't fall-throughs, it's getting to "sold STC" in the first place.
The gap between average listing asking price (£447k) and average asking-price of homes going SSTC (£368k) sits at 21.6%, against a long-term average of 16-17%. That's the overvaluation premium - the price you pay for putting your house on the market at a number it isn't going to sell at. Chris has been making this point for years. I've been making it for years. It still doesn't seem to land with enough vendors or enough agents. A house is most valuable when it's fresh to the market. After three reductions and sixty days it isn't worth more, it's worth less. Funny how the industry still hasn't fully internalised that.
Rents in Week 19 averaged £1,797 pcm. May 2026 averages £1,780 pcm, against £1,779 in May 2025 - essentially flat year on year, which is actually a story in itself given how the narrative around rental inflation usually runs. Stock at 302k against 303k a year ago. Whatever heat there was in the rental market through 2023-24 has well and truly come out, at least at the headline level. How is this congruent with rents up 3.5% according to the ONS? Well, remember, this is ASKING rents, as all portal data captures, not ACHIEVED rents. The ONS uses the Dataloft sample of 550k rents which are existing (and about 23% of those turn over to a new tenancy in the course of the year). There’s a discount between an existing tenancy of age and a new tenancy - the last time I saw a figure published by the ONS this was around 13%, but it is possible for asking rents to stay the same and new rents to move around 4.5%-4.6% in a year to come to that figure of 3.5% up (and, by the same definition, the discount for existing tenancies would then come right down to under 10%).
The new world in that way looks like rents going up once every 12 months as anyone with ears fears the introduction of rent controls or “rent stabilization” - it will still catch some out when it comes in, practically creating an old-school regulated tenancy situation for landlords that have not raised the rent on tenants for 10 years or more. They are still out there, but they are fewer and further between of late, of course.
Back to prices, rather than yields: Price per square foot at sale agreed: £345.18 in April 2026, up 1.8% on a year ago and up 11.3% on five years ago. That's the figure that tracks the HM Land Registry index with 98% accuracy five months ahead, which is why it matters. Modest growth, not a boom, not a bust. Which is roughly what the rest of the data says too.
The Crystal Palace case study Chris ran in part two is worth the Propenomix audience watching directly - the £63k swing between the best and worst performing agents in the same suburb is the kind of evidence that makes the case for choosing on competence rather than on the lowest fee or the highest valuation. I won't paraphrase it further - go and watch the show. If you think that choosing the right agent doesn’t matter - honestly, it couldn’t matter more. It is unbelievably important. £63,000 reasons to go and check out Chris’s show if you haven’t already.
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!
The Macro section is a bit all over the place because of how Whit Week has fallen within the calendar, with more holes than usual. We’ve got a UK Finance Later Life Lending update, which is interesting. We have the HMRC Monthly property transactions on the slate too. We’ve got the ONS Private Rents and House Prices report which didn’t make last week’s draft. Then - as always - we have the gilts and swaps of course.
UK Finance dropped their Q1 2026 Later Life Lending update on Wednesday, and it's one of those datasets I think gets less attention than it deserves, because the headline numbers don't immediately scream and the segment doesn't sit neatly in the usual mortgage-market narrative. Worth a slow read.
The top line: 36,050 new loans advanced to borrowers over 55 in Q1, down 4.8% year on year. But the value of that lending was £6.0bn, which is up 0.3% on Q1 2025. So fewer loans, but slightly more money - which means average loan size in this segment has risen. That's consistent with what we've been seeing across the rest of the market, but it lands harder here because the older borrower base typically has more equity to work with and more strategic reasons to borrow against it. Some of this is people consolidating, some is people topping up to help children with deposits, some is people refinancing onto longer terms because the affordability rules now allow them to run into retirement. I suspect all three are in the mix, though I doubt I could tell you the split without more granular data.
The bit that I keep coming back to is the share of the total market. Later Life residential loans are 8.2% of all residential loans advanced in Q1 - up 0.63 percentage points year on year. And Later Life BTL is now 20.1% of all BTL loans. One in five. That second number is the one that property professionals should be paying attention to. The portfolio landlord market has aged with the people who built it through the 2000s and 2010s, and Section 24 plus the gradual squeeze on yields means many of those landlords are now leveraging their later-life balance sheet in ways that didn't really exist as a category fifteen years ago. The figure was down 1.26 percentage points on the year - so the share has dipped slightly - but the value of BTL Later Life lending was up 4.85% to £2.16bn. Fewer landlords, bigger borrowings all round. Worth thinking about what that tells us about the structural shape of the BTL market - the incumbents are pressing on - is that because they are “so far in” they might as well carry on? Under current CGT rules it makes sense to die in debt and take it all out now (this isn’t overdramatisation - I regularly look at portfolios where they have such large wrapped up capital gains in personal names, they might as well just press on and leverage until they die at this point, even though they pay such a high price thanks to section 24/”tax on turnover”).
Lifetime mortgages had a noticeably weaker quarter. 5,300 new lifetime mortgages advanced in Q1, down 8% year on year and down 7.2% on Q4. Value at £490mn. I find this genuinely interesting because for years the narrative around equity release was that it was going to boom as the population aged and as house-rich/cash-poor pensioners turned to it as a default play. I personally am a massive fan as an estate planning tool. It isn't booming. I suspect the explanation is mostly arithmetic - the roll-up of interest at current rates is unforgiving, and the maths gets uncomfortable pretty quickly if you actually sit down and work it through. The product is right for some people, and a poor fit for many others, and I think the market is slowly working that out. I might be wrong about that pivot, but the trajectory of the volume data over recent quarters would seem to support it. One swallow does not a summer make, however.
Retirement Interest Only - the RIO product - went the other way. Only 353 loans (it's a small product), but up 5.4% in volume year on year, value flat at £33mn. RIO arguably fits a more rational use case than Lifetime in many situations - the borrower keeps servicing the interest, so there's no roll-up, and the capital is repaid on death or move into care. The growth here is from a tiny base, so let me hedge that slightly, but it points in a direction worth watching.
By age, the only cohort growing in volume was the 65-70s, up 0.64%. The 55-60s, who do most of the volume, were down 6.75%. Where do we want to read that? Probably as the younger end of "later life" still feeling the tail of the 2022-2024 affordability shock, while the 65-70s have more accessible equity and more reason to deploy it. By employment, retired borrowers were up 0.72% on the year, "Other" was up 12.64% (small base, so I must qualify that yet again), but the employed and self-employed cohorts were both down 6-7%. Same broad pattern - work-age constraints biting harder than retired-age constraints. Which is roughly the opposite of what most casual commentary on the mortgage market would have you expect.
OK. HMRC's monthly transactions data landed on Friday, and it's a lovely example of why you have to read past the headline number. The headline is that seasonally adjusted UK residential transactions in April 2026 were 101,030, which is 53% higher than April 2025. Fifty-three percent. If you stopped reading there you'd think the market had gone parabolic.
It hasn't, and HMRC say so themselves, which is useful. April 2025 was artificially depressed - as we all knew it would be at the time - because transactions were pulled forward into March 2025 ahead of the SDLT threshold reductions that kicked in on 1 April 2025. So you're comparing this April against a month that had a hole punched in it by the stamp duty cliff. The 53% is a simple base effect, not a recovery. We saw the same distortion show up at the other end of the pipeline in Chris's numbers earlier - the year-on-year comparisons across the whole market are contaminated by that 2025 scramble, and they will be until we're comparing clean months against clean months.
So what does the data actually say once you strip the noise out? Month on month, April 2026 was down 3% on March on the seasonally adjusted measure, and down 16% on the non-seasonally adjusted measure. So momentum, if anything, softened slightly into April. Not dramatically. Just gently off the previous month.
The comparison I find more useful is against the pre-distortion baseline. April 2026 at 101,030 sits comfortably above April 2024 (89,880) and well above the 2023 trough (82,940), and it's broadly in line with the pre-Covid Aprils - 2017 was 104,750, 2018 was 98,990, 2019 was 98,410. In other words, once you take out the stamp duty noise on both sides, this is a market completing transactions at a roughly normal, pre-pandemic April rate. Not booming, not collapsing. Normal. Which, after the last few years, is arguably the most interesting thing the data could say.
Worth remembering too that these are completions, and completions are a rear-view mirror - they sit on average two to four months after the offer was made. So April's completions broadly reflect deals agreed back around December to February. The leading edge of the market is Chris's sold-STC data; this is the trailing edge catching up. The fact that both ends are telling a "normal-ish, working, not on fire either way" story is, I think, the actual signal here. When the market keeps calm and carries on, it rarely makes headlines, and doesn’t provide any clickbait - might be why headlines about property prices seem fairly standard, or even a bit flat at the moment. The market isn’t doing much different in spite of elevated cost of interest rates thanks to the Orange Man et. al.
Non-residential transactions, briefly, because there's not much to say: 9,960 seasonally adjusted, up 1% on the year, down 6% on the month. Business as usual, really, on the commercial front, as well.
ONS Private Rents and House Prices makes the cut this week in the macro section. The ONS report was released on 20th, and the story here is divergence. House price growth has stalled to a flat zero, while rent inflation has ticked up slightly. Two halves of the same housing market pulling in opposite directions, which is worth sitting with for a moment.
House prices first. Average UK house price £268,000, annual growth of 0.0% in the year to March 2026, down from 1.7% the month before, and the lowest annual rate since April 2024. Now, before anyone reaches for the "house prices are falling" headline - and some will - the slowdown is substantially a base effect. Prices fell 0.4% between February and March this year, but they rose 1.2% over the same two months last year, when activity was running hot ahead of the SDLT changes that landed on 1 April 2025. The ONS say this explicitly. So you're measuring against a month that was pumped up by the stamp duty scramble. That's the third time that 2025 distortion has shown up in this Supplement - in the HMRC transactions, in Chris's year-on-year sales, and now in the house price index. It is the single biggest thing distorting the year-on-year property numbers right now, and it'll keep doing so until we're past the anniversary properly (when we get June’s numbers, we should be safe - so, the second half of this year).
That said, even allowing for the base effect, England is genuinely soft. Average price £290,000, down 0.6% on the year. London down 2.1%, its eighth consecutive month of annual falls - though London tends to lead the cycle in both directions, so I wouldn't over-read it. The East Midlands was the strongest English region at a mighty 0.7%. Wales up 2.9%, Scotland up 1.6%, Northern Ireland up 7.4% in Q1. So the regional picture is, as ever, a series of quite different markets wearing one national label.
Now rents, which went the other way. Average UK private rent £1,381 a month, up 3.5% on the year to April, nudging up from 3.4% the previous month. Worth putting that next to April CPI of 2.8% - rents are rising slightly faster than general inflation, so they're up a touch in real terms, whereas house prices at zero nominal are falling in real terms. That divergence - rents up in real terms, house values down in real terms - is, I think, the genuinely useful signal in this release. Yields are improving - and they need to, because the risk has gone up thanks to RRA, so the reward needs to go up too for the rental market to function adequately (quite aside from the foaming at the mouth idealogues who spend their spare time calling for “the world’s smallest violin” on all social media posts regarding landlords selling up or in distress, completely missing the point that their progenies or friends’ children will have fewer, more expensive, options in the future when it comes to renting a property).
The regional rents picture is the one I always find most telling. The North East has the highest rent inflation in England at 6.5%, while London is the lowest at 2.0% - and yet London is comfortably the most expensive place to rent at £2,290 a month against the North East's £776. So the cheapest region is rising fastest and the dearest is rising slowest. That's the affordability ceiling doing its work, and it's consistent with that structural story I keep coming back to: there's a shortage of stock at the affordable end, demand has nowhere cheaper to go, and so the pressure shows up hardest in the regions that were cheapest to begin with. Scotland, for what it's worth, is up just 2.0%, its lowest in over four years and a long way down from the near-12% peak back in 2023 - though their data collection there is mainly new-lets, so I'd treat the Scottish figure with a bit more caution than the rest. You can’t help but read that “rent control” lesson into it one more time though - introduce it and there’s a huge shock - soften it and rental inflation is actually right under control/lower than CPI inflation, and lower than wage inflation.
One reconciliation worth making, because a sharp-eyed reader might spot it: Chris Watkin's rental figure earlier was around £1,797, and the ONS here says £1,381. Those aren't in conflict - they're measuring different things. Chris's number leans towards advertised and new-let rents, while the ONS PIPR measures the price change across the entire private rented stock, existing tenancies included. New lets are always going to print higher than the stock average, because that's where the repricing happens. Both are true. They just answer different questions.
OK. Gilty pleasure this week, or not? The short week, lightly traded, gapped up on the 30-year bonds to open at 5.58% yield, but calmed down by the end of the week back to 5.518% which is roughly where we ended the week before. The 5-years were similar - 4.468% gap-up-open closed at 4.367% by the time we ended the week. The swaps closed at a 4.08% yield to end May, their lowest close for the entire month, as we entered a world where interest rates at high 5s are once again on the cards for a 5-year limited company fixed rate mortgage.
What to do? Anything you’ve applied for during May, ensure your broker is checking to see if there are any cheaper products available/if you can switch the rate down. There might be 0.25% or even more in it if you are lucky; on the sums of money we are talking about, it’s enough to buy more than a beer, let’s face it!
OK. We can press on into the deep dive. Four items in the spotlight, as always. Firstly the IFS and a podcast analysis which you might find interesting about the UK’s broader financial position at the moment. Then CBRE’s first quarter report, broken down. Savills report on the £5m+ market in London - navel-gazing, perhaps, but I am interested because I’m interested in the data rather than the rhetoric of the very wealthy leaving the UK (or not) and also who is coming in to the UK rather than out. Last - but definitely not least, this week - the makeup of the dwellings in the UK and the official MHCLG figures, which contain some data which will surprise some (and that’s exactly why they have to be scrutinized!).
"The UK public finances, explained" - IFS Zooms In podcast (Institute for Fiscal Studies)
Source: The IFS Zooms In podcast, hosted by Helen Miller (Director, IFS), with Max Warner (IFS) and Chris Giles (Economics Commentator, Financial Times).
Summary: This episode is framed as a public-service explainer of the UK's public finances, timed against an anticipated Labour leadership contest, with the argument that whoever leads will face the same fiscal constraints. The participants set out the core numbers. The government is set to spend roughly £1.4 trillion this year against around £1.2 trillion in receipts, producing a deficit of about £130 billion, of which roughly £80 billion is investment and £50 billion day-to-day. The deficit is just over 4% of GDP, a level the panel describes as too high to stabilise debt as a share of the economy. Public debt sits near 100% of GDP, up from a pre-2008 norm closer to 40%. Debt interest now runs at about £110 billion a year, roughly 8% of all government spending, double the pre-pandemic share. The government plans to reach a current budget surplus by 2028-29. The discussion covers the shift in gilt ownership from defined-benefit pension funds towards leveraged hedge funds, the UK's relatively long debt maturity profile, why UK borrowing costs sit above the eurozone (chiefly expected Bank of England rates), the political-instability premium, defence spending pressures, the ageing population, and economic growth as the central long-term remedy.
Propenomix Perspective: I'd urge anyone who deploys capital in UK property to actually listen to this one, because the public finances are the water we're all swimming in, whether we think about them or not. Most of what determines your mortgage rate, your refinancing cost, the gilt curve I write about every week down in the Macro section - it all traces back to the picture these three lay out. And they lay it out unusually honestly, without the party-political point-scoring that normally smothers this subject.
The number that should stop you is debt interest at around £110 billion a year. That's roughly 8% of everything the government spends, and Chris Giles makes the point that if it were a department it would be the second largest after health. Sit with that. We are spending more servicing the debt than on most of the things people actually associate with government. And it has doubled as a share of spending since before the pandemic - not because we suddenly borrowed vastly more in one go, but because the rate on what we roll over has risen. That, in a sentence, is why higher-for-longer matters to property people specifically. The government's cost of money and your cost of money are far more connected than most landlords appreciate.
The bit I found genuinely clarifying - and a little unsettling, if I'm honest - is the shift in who actually buys the gilts. The old world was defined-benefit pension funds: steady, regulated, long-horizon buyers who wanted exactly the kind of long-dated paper the UK likes to issue. That world has largely gone in the private sector. What's replaced a chunk of that demand, by their account, is leveraged hedge funds running relative-value trades. Now, I don't want to over-dramatise this, and to their credit neither do they - the panel are at pains to say the UK is far from unable to borrow, that our long maturity profile (we've got debt out to 2073, which is a bit like having a fixed-rate mortgage for fifty years, although in reality it is a very blended set of maturities, with a concentration on debt that expires in 10 years, or was 10 years long when it was taken out) genuinely protects us, and that the doom-mongering is overdone. I think that's the right and responsible read. But the structural point stands: the marginal buyer of your country's debt is now more skittish, more price-sensitive, more inclined to head for the exit all at once than the pension funds were. We saw a small live demonstration of what that can do in the Truss episode in 2022. That's not a prediction of disaster. It's just a reason the gilt market can move faster and harder than it used to, and that feeds the volatility we all live with on the rate side.
On the higher UK borrowing costs versus Europe - the panel attribute most of it not to some mysterious "Britain is broken" premium but to the simple expectation that the Bank of England will need to hold its rate higher than the ECB. Markets are pricing a UK terminal rate around 4.25% in perpetuity against roughly 2% for the eurozone. Two whole percentage points (and change). That gap is most of the story on why UK debt costs more to service than German or French debt. There's a bit of political-instability premium on top - they concede Truss was real, and that churning through prime ministers doesn't help - but the honest answer is it's mostly about expected BoE policy, not punishment. I find that reassuring and unsettling in equal measure. Reassuring because it isn't a credibility spiral. Unsettling because if the market genuinely thinks we need 4.25% to keep this economy stable, that tells you something uncomfortable about the UK's underlying inflation problem that no amount of clever Treasury accounting fixes.
What does all this mean for our broader property strategy that I keep banging on about? I think it reinforces it rather than changing it. If rates are structurally higher than the 2010s taught a generation of investors to expect - and the gilt market plainly believes they are - then the cheap-leverage playbook that made a lot of people look like geniuses between 2009 and 2021 is not coming back in a hurry. The edge shifts back towards buying well, buying below replacement cost, and underwriting deals that work at sensible rates rather than deals that only work if money gets cheap again. I've based my strategy around that for years anyway (because I always expected the return to the “norm” on interest rates, I just didn’t know how and when it would happen), and nothing in this episode makes me want to change it. If anything, it's a fairly stark forty-minute argument for why discipline matters - and it always will.
One caveat worth airing. This is the IFS, and the IFS has a worldview - fiscally conservative in the small-c sense, sceptical of "we can just borrow our way out" arguments, firmly of the view that the long-term ageing-cost problem has to be paid for one way or another. I happen to find that worldview broadly persuasive, but it isn't the only available reading. There are serious economists on the other side who'd argue the panel understates the role of public investment in generating the very growth that fixes the debt ratio, and that the fixation on the current-budget rule is too cautious. The episode does nod to growth as the ultimate solution, which is fair, but I'd have liked more on the case for borrowing to invest, which gets slightly short shrift. Listen to it with that in mind. It's an outstanding explainer, but it's an explainer from a particular school. Borrowing at a rate well below the expected rate of return, after all, is ultimately how we all build our portfolios unless we have a magic money tree from elsewhere!
Paper 2: UK Property Market Figures, Q1 2026 - CBRE Research
Source: CBRE UK Research, "Figures | UK Property | Q1 2026" quarterly report.
Summary: CBRE's quarterly snapshot covers the four main commercial and living sectors. The overall framing is a subdued quarter for transactions but underlying resilience. In offices, take-up fell 36% quarter on quarter and investment volumes fell 33%, while availability was flat and rental growth held up; West End commands the highest Central London prime rents. Retail saw Q1 investment of £1.53 billion, down 21% year on year, led by retail warehouses; prime high street yields stood at 6.25%, with secondary at 12%, while Bond Street remained the keenest prime pitch at a 2.75% yield. In logistics, take-up rose quarter on quarter to 5.3 million square feet (down from 6.0 million in Q1 2025), led by the secondhand market, across 23 deals; the vacancy rate was 6.76%, availability 44.5 million square feet, and the East Midlands prime big box rent £10.50 per square foot at a 5.25% yield. In living, CBRE describe activity as largely resilient: the UK average house price was £267,957 (February 2026), annual rent growth 3.4% (March 2026), Q1 mortgage approvals 186,593 and sales volumes 304,130, with multifamily prime yields of 4.15% to 4.50%.
Propenomix Perspective: I like dropping a commercial report into the Deep Dive now and then, because most of what we cover in the Supplement leans residential, and the commercial world is where the cost-of-capital story shows up first and most brutally. And this CBRE quarterly is, in a quiet way, the same story the rest of this week's Supplement has been telling - just wearing a suit.
Look at the headline office numbers: take-up down 36% on the quarter, investment volumes down 33%. Now, a single quarter-on-quarter move can be noisy, and Q4 is often a strong quarter that flatters the comparison, so I wouldn't treat those as a trend on their own. But the direction is consistent with what the IFS were telling us in Section 1 of this week’s deep dive. When the cost of money sits where it sits - when the gilt market is pricing a Bank rate north of 4% for the foreseeable - the first thing that happens is that institutional buyers go quiet and deal flow dries up. Commercial transaction volumes are the canary here. They react to the rate environment faster than residential does, because the buyers are professionals doing the maths in real time rather than families who need somewhere to live regardless.
And yet - and this is the bit I find genuinely interesting - rents are holding up. CBRE flag healthy office rental growth even in a soft leasing quarter, retail warehouse rents recovering above their pre-pandemic base, industrial vacancy still under 7%. That's the same divergence we saw in the ONS residential data earlier: transaction activity cooling, but rental values firm or rising. I keep coming back to this pattern because I think it's the defining feature of the current market across every asset class. The flow has slowed. The income hasn't. For anyone who actually holds property for yield rather than for the quick capital flip, that's not a bad combination, even if it doesn't make for exciting headlines. As the risk-free rate of return increases, it only makes sense for the yields on assets that require you to make effort and bear risk to also increase - not immediately, not mark-to-market - but a drift upwards just as we’ve been seeing since 2022.
The retail numbers deserve a moment, because retail has been the sector everyone loves to write the obituary for. £1.53 billion of investment in the quarter, down 21% year on year, led - and this would have sounded absurd five years ago - by retail warehouses. The out-of-town shed with a car park has quietly become one of the more resilient corners of UK property, while the shopping centre remains the problem child. The yield spread tells the story: Bond Street prime at 2.75% (institutional money still pays up for genuinely prime pitches), against secondary high street at 12%. That's an enormous gap, and it's the market doing exactly what it should - pricing the difference between irreplaceable locations and everything else. The "below replacement cost" instinct I apply to residential has a commercial cousin here: the keenest yields are for the assets you simply cannot recreate.
Logistics is the one I'd watch most carefully. Take-up rose on the quarter to 5.3 million square feet, which sounds encouraging until you notice it's down on the 5.3-versus-6.0-million Q1 last year, and that the rise was led by the secondhand market rather than new built-to-suit. Vacancy at 6.76% has crept up from the absurdly tight sub-2% levels of the post-pandemic boom. I don't read that as a problem, particularly - it's a normalisation from a frankly silly peak - but the days of industrial being the can't-lose trade are behind us. The East Midlands big box rent at £10.50 with a 5.25% yield is a perfectly sensible number, not a euphoric one. That feels about right for where we are. I’d expect it to drift, not contract - but perhaps only by 0.25% or 0.5%, and that’s massively dependent on the middle east situation too (as that’s generated much of the recent inflation and the resultant hardening in the gilt yields).
Living, briefly, because CBRE's residential numbers mostly echo what we already covered from ONS and Chris this week - average house price just under £268,000, rents up 3.4%, sales volumes a bit over 304,000 for the quarter. The one figure I'd pull out is mortgage approvals at 186,593 for Q1, which is a reasonable, functioning-market number. Not boom-era, not crisis-era. Normal. Which, again, is the word that keeps recurring this week.
The caveat, and I'd be doing you a disservice not to say it: CBRE is a brokerage. They earn fees when property changes hands, and "largely resilient despite recent volatility" is precisely the framing you'd expect from a firm whose business model depends on people believing it's a fine time to transact. That doesn't make the data wrong - the numbers are the numbers, and CBRE's research is genuinely good - but the editorial gloss is always going to lean optimistic. Read the figures, take the adjectives with a pinch of salt. The honest summary, stripping out the house style, is: a slow quarter for deals, firm income, sharp divergence between prime and secondary, and a regional picture as uneven as ever. Which is roughly what every other source we've looked at this week has said too.
So what’s going on in London at the top end of the real estate market if we want to put to bed (or verify!) some of the claims around high net-worths leaving the UK (or put some meat on those bones)?
Paper 3: London £5m+ Market, Q1 2026 - Savills Research
Source: Savills Research, "Market in Minutes: London £5m+ market, Q1 2026 analysis" (May 2026). Lead author Frances McDonald, Director, Residential Research.
Summary: Savills reports that London's £5 million-plus residential market lost momentum over Q1 2026. After a relatively resilient January, when sales were down just 7% year on year, activity slowed markedly over the rest of the quarter, which Savills attributes to caution prompted by the conflict in the Middle East in a segment that is unusually sensitive to geopolitical uncertainty. There were 68 transactions above £5 million in Q1 2026, 35% fewer than Q1 2025 and 33% below Q1 2024. The £10 million-plus segment saw just 16 transactions, down 54% on the prior year. Total spend reached £645 million, a 42% fall from the £1.12 billion of Q1 2025 and the lowest first-quarter figure since 2020. Savills identifies the underlying tax environment as the principal barrier to stronger demand, while noting some diversion of demand into the super-prime rental market. Prime central postcodes held their share, with Belgravia accounting for 15% of £5 million-plus sales, Kensington 12% and Mayfair 10%. The outlook anticipates continued subdued, price-sensitive demand, no further severe price falls, and a gradual recovery in values from 2028.
Propenomix Perspective: Now, most of you reading this are not in the market for a £5 million house in Belgravia, and neither am I. So why does the very top of the London market earn a Deep Dive slot? Because the prime end is a leading indicator, and behaviour is a truth-teller. It's the part of the market most exposed to global capital flows, to currency, to confidence and to politics, and it tends to move before everything else does. When the penthouse buyers go quiet, it's worth asking what they can see that the rest of us can't yet.
And they have gone quiet. 68 transactions above £5 million in the quarter, down 35% on last year. The £10 million-plus end, where nobody is a forced buyer, fell by more than half. Total spend of £645 million, the weakest first quarter since 2020 - and 2020, you'll recall, had a fairly good excuse. Savills point the finger partly at the Middle East conflict, which is fair enough; this is exactly the sort of buyer who sits on their hands when the geopolitical picture darkens, because for them buying is optional in a way it simply isn't for an ordinary family that needs a roof.
But the more important driver, and Savills are admirably direct about this, is the tax environment. I want to be careful and even-handed here, because this is a topic where people reach for their prejudices quickly. The confirmed position is real and it is heavy: a 2% non-UK resident stamp duty surcharge on every band, sitting on top of the 5% additional dwelling surcharge, on top of a 12% top rate above £1.5 million. On a £5 million purchase, an overseas buyer of an additional home is handing the Treasury comfortably over £850,000 in stamp duty before they've bought a single curtain. Layer on the wider changes to how non-domiciled individuals are taxed, and pensions coming into the inheritance tax net from April 2027, and you have a regime that has materially changed the arithmetic of basing your wealth in London. Whether that's good policy or bad policy genuinely depends on what you think the country is trying to achieve - there's a respectable argument that taxing globally-mobile wealth more heavily is overdue and fair, and an equally respectable argument that London's status as a wealth magnet was a national asset worth protecting. I'm not going to settle that here, and I'd be suspicious of anyone who claims it's obvious in either direction (Gary…..). What I'd simply observe is that capital responds to incentives, and the data in this report is what that response looks like.
The genuinely interesting tell - the bit I'd circle if I were marking this report - is the diversion into super-prime rental. Savills note that some of the globally wealthy are choosing to rent a base in London rather than commit to buying. Sit with what that means. The demand for London hasn't vanished; it has changed form. People still want to be here, to have a foot here, but they don't want to plant capital here under the current rules. That's not the same as London losing its appeal. It's London's appeal expressing itself through a twelve-month tenancy instead of a purchase, because renting is reversible and a £900,000 stamp duty bill is not. For anyone who owns or is building super-prime rental stock, that's quite a useful signal. For the sales market, it's a warning that the buyers may not come back until either the rules change or they make their peace with them.
What do I take from this for the ordinary investor, which is most of us? Two things, and I'll keep them measured. First, the prime market's weakness is a confidence signal worth respecting but not panicking about - it tells you the smart, optional money is cautious, and that caution usually has a reason. Second, and more practically, it's another data point in the story this entire Supplement has been telling this week: transactions soft, the market repricing to a higher-rate, higher-tax world, but no sign of a disorderly collapse. Savills themselves don't expect further severe falls, which brings me to my standard health warning.
Savills is an estate agent, and a very good one, but an estate agent nonetheless. "No further severe price falls" and "recovery from 2028" is precisely the forecast you'd expect from a firm whose prime central London business needs buyers to believe the bottom is in. They may well be right - I have no strong reason to bet against them, and the stock-shortage point they make about best-in-class properties is genuine. But I'd read the forecast as the more optimistic end of the plausible range rather than the centre of it. The numbers in this report are facts. The 2028 recovery is a hope wearing the clothes of a forecast. Keep the two separate in your head and you'll read this report - and every agent's report - more clearly. Is the bottom in, in London? It’s a fools’ errand guessing as much. I certainly am hearing about more deals in the pipeline in the city than I can ever remember - and for that to happen there still needs to be willing sellers and willing buyers, ultimately. Anyone buying in 2014, 15, 16, hoping for guaranteed capital growth has had a disappointing time and has an open-ended amount of time to wait until “recovery”, but a lost decade or more will always weigh on those longer-term returns.
Our last review of the week contains some numbers that some will find difficult to believe - but that’s exactly why I’ve selected it for the final slot.
Paper 4: Dwelling Stock Estimates, England - MHCLG, 31 March 2025
Source: Ministry of Housing, Communities and Local Government, "Dwelling stock estimates, England: 31 March 2025" (published 21 May 2026). Accredited Official Statistics.
Summary: The MHCLG estimates there were 25.8 million dwellings in England as of 31 March 2025, an increase of 208,600 dwellings, or 0.81%, on the previous year. This is the slowest annual rate of stock growth since 2014. By tenure, 16.6 million dwellings were owner-occupied (an increase of 131,000), 5.0 million were private rented (an increase of 54,000), 4.2 million were social and affordable rented (an increase of 25,000), and 28,200 were other public sector dwellings (a decrease of 900). The private rented sector exceeded 5 million dwellings for the first time. Owner occupation stood at 64.1% of stock, the private rented sector at 19.5%, and social and affordable renting at 16.3%, with tenure shares broadly stable year on year. The release also reports 754,264 vacant dwellings in England as of 6 October 2025, up 4.8% on the year, of which 303,185 were long-term vacant, an increase of 14.5%. England's mean dwelling density was 1.98 dwellings per hectare, ranging from 74.51 in Kensington and Chelsea to 0.24 in West Devon.
Propenomix Perspective: I wanted to close the Deep Dive on this one, because while it's the least glamorous report of the four - it's a government count of how many houses exist, which is about as dry as it sounds - it's actually the bedrock underneath everything else we've talked about this week. All the transaction data, all the price indices, all the prime-market drama sits on top of this: the physical stock, and who owns it. And two numbers in here are worth your time.
A quick honesty note first. This data runs to the end of March 2025, published over a year later, so it's the slowest-moving picture in the whole Supplement. I'm not reading current market conditions off it. What it gives us is the structural foundation, and foundations change slowly, which is rather the point.
The first number that matters: stock grew by 0.81% over the year. That's 208,600 net additional dwellings, and it's the weakest growth rate since 2014. Now, regular readers will know I have form on this - we spent a good chunk of the 10 May Supplement on why Britain has effectively stopped building at the rate it needs to. Here's the official confirmation, in the driest possible form. The country added dwellings at four-fifths of one percent while the population and household formation kept growing underneath it. You cannot run that gap indefinitely and expect house prices or rents to behave. This single line is, in many ways, the entire bull case for UK residential property as an asset - not because I want it to be true, but because the arithmetic of demand outstripping supply doesn't care what any of us want. I'd far rather we built enough homes and I had to find my returns elsewhere. We don't, and so here we are.
The second number, and this is the one that genuinely bothers me: long-term vacant dwellings rose 14.5% in a year, to 303,185. Read that again. Three hundred thousand homes in England are sitting empty long-term, and that number is growing more than three times faster than the total vacancy figure. We have a housing shortage so acute it distorts the entire economy, and at the same time the number of homes left to rot empty for the long term is climbing sharply. I'm not going to pretend I have a tidy explanation for it - some of it is probate and legal limbo, some is properties caught in disrepair they can't economically escape, some is owners simply sitting on assets - but whatever the mix, it's a policy and incentive failure of a fairly fundamental kind. You can build all the new estates you like, but if your existing stock is leaking 300,000-plus homes into long-term emptiness, you're filling a bath with the plug out. There's a serious argument that the cheapest housing supply this country could unlock isn't on a greenfield site at all; it's bringing empty homes back into use. Whether the political will exists to do that is, as ever, another question entirely.
The third thing, and this one is a quiet myth-buster. The private rented sector grew by 54,000 dwellings and crossed 5 million for the first time. Sit with that against the dominant narrative. For two years the property press has told us a story of landlord exodus - Section 24, the 5% stamp duty surcharge, the Renters' Rights Act, EPC anxiety, the lot - all supposedly driving a great selling-up. And yet the official dwelling count says the PRS is still growing, and growing slightly faster than the year before. Now, I'd add some care here, because a growing dwelling count doesn't necessarily mean more individual landlords - it's entirely consistent with smaller landlords selling up while larger, incorporated portfolios and build-to-rent operators expand and more than fill the gap. That, I suspect, is closer to what's actually happening, and it dovetails with the Later Life lending data we looked at in the Macro section, where the typical BTL borrower is older and the loans are getting larger. The sector isn't shrinking. It's consolidating and professionalising. Those are very different things, and if you take only one idea from this report, I'd make it that one. This conclusion makes a habit of upsetting everyone on all sides - we need to be clear on the difference this is actually highlighting versus a narrative either end. Buy-to-let isn’t dead - capital isn’t stupid. Instead, entry prices are acceptable for those building portfolios if they do the right deals (most readers will be doing exactly that!) - smaller landlords who compare their returns today to their returns 10 years ago or more are deciding that the juice isn’t worth the squeeze any more, but they are almost certainly asking the wrong question. The right question is “is it worth putting my money into today versus anything else?”. The answer that the market gave in the 2024-25 financial year is “yes, it is”.
Pulling the four Deep Dives together, because they do tell a single story this week: the public finances constrain everything and keep rates higher for longer (the IFS); commercial deal flow has cooled while income holds firm (CBRE); the very top of the market has gone quiet on tax and geopolitics (Savills); and underneath it all, we're building at the slowest pace in over a decade while leaking homes into long-term emptiness (MHCLG). It's a coherent picture, and it's the same picture I keep painting: a market that's working, repricing to a tougher world, structurally short of supply, and rewarding the patient and the disciplined over the leveraged and the lucky. Nothing this week changes that. If anything, it's four more bricks in the same wall.
As we get towards the end for this week - I can’t wait for our next workshop in London on 1st July. The VIP dinner afterwards, last time out, set new standards afterwards in terms of its length, breadth and depth of conversation. Don’t miss the next one! Due diligence is the topic, and this is broader than how you are being measured by others, just as how you should measure others; we include deal due diligence - deals, partners, companies and counterparties including lenders and borrowers. The full gamut. The live DD exercise - how I do it, no stone unturned - is always very popular and adds value (and has even had predictive value in terms of just which smoke-sellers one should avoid, in past workshops…..)
We always have real life case studies about our own experiences, and close with our “no-holds-barred” Q+A. The VIP dinner for this one will sell out once again, without doubt. Get access to Rod and myself afterwards to discuss your individual and unique circumstances over dinner. Book your tickets for Wednesday 1st July, Central London at: www.tinyurl.com/pbweleven
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 increasing inflation, the big bull run needs some runway first (although let’s see what the FCA and PRA do around continued easing of lending requirements) - now it’s time to deal with the consequences, both intended and unintended, of the Renters’ Rights Act. 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!