"The great cause of inequality in the distribution of wealth is inequality in the ownership of land. The ownership of land is the great fundamental fact which ultimately determines the social, the political, and consequently the intellectual and moral condition of a people." - Henry George, Progress and Poverty.
The quote pertains to the Deep Dive, as ever - a week in which a Select Committee, a charity and a think-tank all circled the affordability of housing without quite saying the quiet part that George said out loud back in 1879: that under all the schemes and subsidies and savings products, it comes back to land. We tax labour, we subsidise demand, we tinker with deposits - and the one thing that's actually scarce, the ground to build on, goes quietly unaddressed. A hundred and forty-odd years on, with home ownership back below where it was two decades ago and a Bank of Mum and Dad doing the work the market won't, the old boy reads as bang up to date. More on all of that below.
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://www.tickettailor.com/events/boardroomclubconsultingltd/2177426
Welcome back to Trumpwatch. This week the column has two genuine main characters, and for once neither of them is the President himself. One is the man he installed at the Fed - Kevin Warsh chairs his first meeting on Tuesday and Wednesday, the 16th and 17th, and what he stops doing matters more for your mortgage than almost anything else this week. The other is the war, which after three grinding months has lurched, maybe, towards something like a ceasefire - and the "maybe" is doing an enormous amount of work in that sentence. The two threads tie together by the end, I promise, because the thing that boxes Warsh in is the same thing that's been driving your gilt yields: the oil price, and the war underneath it.
Let me take the war first, because it's the bigger story and because it's the engine under half the numbers in the rest of this Supplement.
Where are we, actually? As honestly as I can put it: the guns have mostly gone quiet, but nobody sensible is calling it peace yet. Israel has halted its attacks on Iran, though Netanyahu has pointedly declined to use the word "ceasefire" - which tells you how much trust there is in the room, i.e. roughly none. Iran has suspended its own operations but warned, in terms, that it'll start again if Israeli strikes continue in southern Lebanon, where this thing has a nasty habit of leaking out sideways through Hezbollah. There's a draft agreement doing the rounds - fourteen points, reportedly, including the lifting of oil sanctions and an Iranian commitment to reopen the Strait of Hormuz within thirty days - and Trump has been briefing that it could be signed "this weekend." Now, forgive me a moment of hard-won cynicism, but we have heard "two weeks" and "this weekend" from this White House on this conflict more times than I can count. The April ceasefire was also "supposed to last two weeks" while they finished a deal. It didn't. So I'm filing the draft under "encouraging, unsigned, and entirely capable of falling over by Tuesday." We'll see.
But here's the bit I actually want you to take away, and it's the bit the oil price is getting wrong - or at least getting ahead of. The market has treated the peace hopes as an all-clear. Brent fell more than 4% on Friday to below $86 a barrel, the lowest since early March, on the back of the deal chatter. And I understand the relief - this is a market that saw Brent spike past $140 at the worst of it back in March, the highest since 2008, when Hormuz was effectively shut and a fifth of the world's oil was stuck behind it. So $86 feels like the war being priced out. My problem with that is simple: the shooting stopping is not the same as the supply coming back, and the two have been quietly conflated in the rush to call the top.
Think about what actually has to happen for oil to "normalise," even in the rosiest scenario where the ink dries this weekend and holds. The strait has to be cleared of mines. Idled production fields - shut in for months, some of them - have to be restarted, which is not a flick of a switch. Energy facilities hit by drones and missiles have to be repaired. War-risk insurance, which insurers yanked entirely at the peak, has to come back, and underwriters are not famous for their haste or their optimism. Even the traders pushing the price down know this; the reporting is full of caveats about mines and idled fields and damaged plant. So I'd put it like this: the price has fallen on the expectation of a return to normal, but the return to normal is months of physical work away even if the politics cooperates perfectly, which it rarely does. And if Hormuz traffic doesn't actually resume next week - which, frankly, I'd assume it won't - then some of that 4% comes straight back.
Why does this matter to you, sitting in a flat in Birmingham or a terrace in Leeds, rather than a trading desk? Because the damage is already in the system and it doesn't heal itself. The oil shock has already fed through into UK inflation expectations - you'll see it hard in the Bank of England's attitudes survey later in this Supplement - and expectations, once they drift, are sticky. Even a genuine, durable ceasefire signed this weekend wouldn't un-spike the inflation we've already imported, wouldn't un-drift the public's expectations, and wouldn't hand the Bank back the room to cut that it had at the turn of the year. The war could end and the rate consequences would still be sitting there for months, like a hangover after the party's been cleared away. That's the unglamorous truth the oil price is glossing over in its hurry to celebrate. The shooting stopping is good news, real and welcome. It is not the same as the economic damage reversing, and anyone planning around "war ends, oil falls, rates fall, happy days" is, I think, going to be disappointed on the timing if not the direction.
One more honest caveat, because I'm wary of the sourcing on a fast-moving story like this. A lot of the most specific claims this week - the precise terms of the draft, the thirty-day Hormuz timeline, who's agreed what - are coming through channels (Iranian state media, anonymous officials, the usual fog) that I wouldn't bet the house on. The broad shape I'm confident about: guns mostly quiet, deal drafted not signed, oil down on hope, physical damage real and lingering. The fine detail, treat as provisional. This story has reversed on a single Truth Social post before now.
Right - the tariff sideshow, briefly, because it's now exactly that: a sideshow. The pattern is well established: the courts keep finding against the blanket tariffs, the administration shrugs, and US Trade Representative Jamieson Greer simply opens another front. This time it's a fresh batch of Section 301 investigations - the narrower, slower, better-drafted statute for going after individual trading partners on specific "unfair practice" grounds rather than blanket emergency powers. Standard Fare, at this point.
The translation for us is the same as it's been for months: the headline drama (will the tariffs survive the courts?) matters far less than the grind (something is always coming, just through a different legal door). Here's what I can't help thinking - the overall plan - reshoring, or international companies moving to the US permanently or opening a base there, because Trump is "relentless" - is that working? Is he? Or do his tariff plans simply fall at pretty much every hurdle. We are 34.8% (yes, I am watching it that closely) of the way through the pain of his presidency (assuming he leaves office in an orderly fashion, I mean let's face it he has form on that front already, doesn't he?) - but perhaps more if he's about to get nerfed in the upcoming midterms. We will see. Let's stress test what I've assumed to be his actual agenda:
Assumption one is that the point was always reshoring - get the factories back, get the supply chains home, make the stuff in America again. Fine. So is that happening? Sort of, and this is where I have to be careful, because the answer depends entirely on what you'll accept as evidence. If you'll take announcements out of the White House (I think that might be less than wise, personally), then yes, triumphantly - there's a wall of them, Apple talking hundreds of billions over four years, the big pharma names (AstraZeneca, GSK, Bristol Myers Squibb) all pledging tens of billions each, a tin mill restarting in Gary, Indiana. If that's the bar, mission accomplished, hang out the bunting.
But a pledge isn't a poured foundation, is it? I keep coming back to a line I saw from one of the independent shops looking at this - pledges of investment are not investment - and I think that's the whole game in nine words. Announcements are cheap. They're a handshake in a nice room with a flag behind it. The question is what shows up in the actual capital expenditure data eighteen months later, and on that the picture is a good deal thinner than the podium suggests. Easy to argue that we haven't HAD that eighteen months yet, of course…
And here's the bit that I think matters most, and it's the bit the headline numbers hide: where reshoring IS happening, it's concentrated in exactly the two sectors that were going to expand anyway. Semiconductors and pharma. The chips are riding the AI buildout - that capex was coming with or without a tariff, Trump or no Trump. So is this policy working, or is it a man standing in front of a parade he didn't organise, claiming he's leading it? I'm not entirely sure, and I'd be suspicious of anyone who tells you they are. My honest read is: a bit of both. There's real activity. It's just not the broad reindustrialisation it's being sold as, and the manufacturing jobs line - the one number you genuinely can't fake with a press release - has been roughly flat to slightly down, which is not what a reshoring boom looks like when it's actually working.
Then there's the second lever, the tariffs themselves, and this is where my "falls at every hurdle" instinct turns out to be half right. They DID fall - the Supreme Court struck down the emergency-powers tariffs back in February as a step too far without Congress signing off, which is exactly the kind of institutional handbrake I keep saying still functions over there, whatever the mood music. But - and this is the bit that ought to give you pause if you were hoping a court ruling makes this all go away - the response wasn't to stop. It was to reach for a different statute (a temporary balance-of-payments provision, capped, time-limited, but a door nonetheless) and carry on through it. The White House more or less said the quiet part out loud: the legal authority will change, the direction of travel won't.
Which brings me to the thing I actually want you to take away, because it's the same thing it's been for months and I make no apology for repeating it. These are two separate levers and you have to watch them separately. Reshoring can succeed even if the tariffs keep losing in court, because firms hedge against the policy they think is coming, not the one a judge just struck down. And the tariffs can survive while reshoring quietly underdelivers, because a company can simply eat the cost and pass it to you at the till. Conflating the two - treating "did the tariff survive?" as the same question as "is the stuff coming home?" - is how you end up reading the wrong scoreboard.
So, is he working? On the law, he keeps losing and keeps going - relentless is, I'll grant him, the right word, even if the relentlessness is mostly about finding the next legal door. On reshoring, he's winning loudly in two sectors that didn't need him and treading water in the rest. But what about the money - because he's all about the money, money, money - right?
Right. And the money is where this gets genuinely interesting, because it cuts straight against the story he tells. Let's start with the headline he'd want me to lead on: the tariffs raised a fortune. Something like $264 billion across 2025, roughly four times the year before. That's a real number, and he'll quote it to you to the nearest dollar at every podium he can find. Fine. Credit where it's due.
But hold that thought against two others. First - it didn't touch the deficit. The federal government still ran about $1.8 trillion in the red for the year, call it 6% of GDP, even after the tariff haul and a one-off lump of student-loan savings. A fortune raised, swallowed whole, barely a ripple in the pond. So the "tariffs are paying for America" line was never quite the truth; it was a rounding adjustment dressed up as a windfall.
Second - and this is the part I genuinely didn't expect to be writing - a great chunk of that money is now being clawed back out of the door. When the Supreme Court struck the emergency tariffs down as illegal in February, it didn't simply disapprove and move on. It opened the way for refunds. And the bill for that is roughly $166 billion in principal - money that something like 330,000 importers paid and are now owed back. With interest. The interest is the bit that ought to make you put your coffee down: because the government held money it was never lawfully entitled to, it pays interest on the way back, and the running cost of the delay has been estimated at around $23 million a day. Sit with that sentence for a second. Twenty-three million dollars. A day. In interest. On money the supposedly fiscally-responsible option should never have taken in the first place.
And it's actually happening, not just threatened. Customs had to build a refund system from scratch this spring to cope with the scale of it, and as of the first week of June they'd accepted nearly $95 billion of claims for processing and pushed getting on for $24 billion of it back to the Treasury to pay out. So this isn't a hypothetical liability sitting in a footnote - it's real cash, leaving real coffers, right now.
Naturally, it's being fought every inch. The Justice Department is arguing the courts can only order refunds for the importers who actually sued, which would conveniently shrink the bill - that's now grinding through the appeal courts. And the judge overseeing it was unimpressed enough with the pace of repayment that she hauled the head of Customs into court on the 9th to explain why it's all moving so slowly. Can you blame her? It's the government's own mess, the courts have told them to clean it up, and the meter is running at twenty-three million a day while they do.
Then there's the kicker, the bit that closes the loop on everything I've said about doors. Remember the replacement tariff - the temporary one Trump reached for the same afternoon the court ruled against him? That one's on a 150-day fuse by statute, can't go above 15%, and is itself already being appealed through the same courts. So the new door has a lock on it and a lawyer's hand already pushing against it, while the bills for the old door pile up at twenty-three million a day.
So let me put the whole scoreboard in one place, because it's quite something when you line it up. Enormous sums raised. The deficit untouched. A hundred and sixty-six billion clawing its way back out with a daily interest penalty attached. A replacement mechanism on a short fuse with the courts already circling. And underneath all of it, the same pattern I keep pointing at: struck down, re-loaded through the next statute, struck at again. I'm honestly not sure "winning" is the word for that. "Expensive" might be closer. And the translation for us - the one that actually matters for your mortgage and your gilt yields - is that none of this churn resolves cleanly. It just sits there as noise in the bond market, a permanent low hum of "what next?", and that hum has a price even when no single case does.
Phew. Right - enough transatlantic legal theatre. Which brings us, at last, to the other main character, because the man chairing the Fed this week has to set policy with that oil shock and that imported inflation sitting right in front of him. Onwards.
Now the main event. Kevin Warsh was sworn in on the 22nd of May as the 17th Chair of the Fed - confirmed 54-45, the closest vote in the modern era, and sworn in at the White House, which tells you something about how political this appointment is. Powell, decently, has stayed on the board. And Warsh walks into the job thoroughly boxed in: US inflation hit a three-year high this spring, the labour market is "low-hire, low-fire" but still adding jobs, and his April predecessor-meeting produced four dissents, the most disagreement on the committee in decades. The market is near-certain (97% on the futures) that he holds the funds rate at 3.50-3.75% on Wednesday. So the rate isn't the story. The story is the framework.
Because Warsh has been telling anyone who'll listen - including the Senate at his confirmation hearing in April - that he wants to tear up two things the Fed has leaned on for fifteen years: detailed forward guidance, and the "dot plot" (the Summary of Economic Projections, the chart where each official marks where they think rates are going). His thesis is that forward guidance is precisely what compounded the "transitory" inflation blunder of 2021-22 - the Fed told everyone rates would stay low, everyone believed it, and the Fed was trapped by its own promise when the data turned. So he wants a leaner Fed that says less and commits to nothing. Fewer press conferences, shorter statements, no dot plot, far less telegraphing. There's a name doing the rounds for it - "strategic ambiguity" - and whatever you think of it, it's a genuine philosophical break, not a tweak.
Is he right? Honestly, I have some sympathy for the diagnosis - the Fed absolutely did talk itself into a corner in 2021, and I said so at the time. The cure is the worrying bit. Markets price risk; they need information to do it, and a central bank that deliberately tells them less doesn't abolish the uncertainty, it just transfers it onto everyone else. Expect more volatile bond markets, not calmer ones, if he really follows through. And watch for the other half of the Warsh thesis, which is where it gets interesting for the long game: he leans heavily on the argument that AI-driven productivity gains are a powerful disinflationary force, which - eventually, in his telling - justifies cutting rates without reigniting inflation. It's a convenient bridge between sticky prices today and the political demand for cheaper money, and I'd file it under "plausible but unproven." We've heard "this time productivity changes everything" before. We'll see. I'm not convinced the robots have cut anyone's shopping bill just yet.
One more thing before we leave the politics, and it's closer to home. There's a by-election in Makerfield this coming Thursday - the same day as the Bank of England MPC meeting, as it happens - and ordinarily a single Greater Manchester seat wouldn't trouble this column. Except the candidate everyone's watching is Andy Burnham, the bookies' front-runner to replace Keir Starmer if and when the parliamentary party finally finds its nerve. We talked about the betting markets on Starmer back in the spring and not a great deal has shifted - he's a stubborn one, and it still needs the MPs to move first, which none of them want to do. But a Burnham win on Thursday hands the "looser fiscal policy" wing of the party a figurehead with a Commons seat, and the gilt market is paying attention to that in a way it simply wouldn't have six months ago, because it's trying to price the fiscal trajectory of the next government and doesn't much like any of the options on the menu. Too cynical? Perhaps. But the bond market doesn't do sentiment, and political risk premium is a real line in the UK's borrowing cost now.
Why does any of this matter from a flat in Birmingham or a terrace in Leeds? Because of what happens the very next day. The Bank of England's own MPC meets on Thursday the 18th - the day after the Fed, as is so often the way - and it faces a near-identical bind. The same war I opened with, the same Middle East energy shock feeding the same imported inflation, the same hawkish drumbeat (Megan Greene has openly floated that a hike might be needed if the Iran conflict drags on). The Bank is widely expected to hold at 3.75%, but I'll come back to exactly how live that meeting is when we get to the gilts. The point for now is that contagion in the bond markets is instantaneous - when the world reprices the Fed, UK gilts get dragged along in the wake, whatever Threadneedle Street actually decides. And you can see it in the currency: the Pound has spent the week pinned in a tight $1.33-1.34 range against the Dollar, capped by safe-haven Dollar buying through the war, and only held off something worse by UK gilt yields steadying ahead of Friday's GDP print. A risk-sensitive Pound, a war-bid Dollar (now wobbling on the ceasefire hopes), two boxed-in central banks meeting on consecutive days. That's the backdrop to everything else in this Supplement.
Phew - stepping away from the transatlantic chess game, the Lancashire sideshow and a Middle Eastern ceasefire that may or may not survive contact with Tuesday, let's get back to the real-time UK property market, where Chris Watkin and the portal numbers tell you what's actually happening on the high street rather than in the headlines.
As is customary, the portal numbers have been crunched and published over at Property Industry Eye - this week reviewed with Verona Frankish of Yopa - and the data for Week 22 of 2026 (the week ending 7th June) is where it's at, as always. If you want to know how the macroeconomic gridlock translates to the local high street, and the REAL property market on the ground, look no further. A small housekeeping note, because I'm a stickler for it: Chris "runs" Sunday to Sunday, and Week 22 had a Bank Holiday tucked into the comparison from last week, so a few of these week-on-week jumps are a calendar artefact rather than a real surge. Context, always.
Let's start with supply, which remains the story it has been all year. 38,900 new properties came to the market in Week 22 (up from 31,300 last week, but last week was the Bank Holiday, so don't read too much into that bounce). The Year-to-Date supply pipeline now sits at 823,000 listings. That's 0.5% ahead of 2025, 5.9% ahead of 2024, and a hefty 14.5% above the pre-COVID 2017-19 norm. My year-plus adage of "10% more stock than a normal market" ready reckoner is, if anything, still a shade light - we're nearer 15% over the pre-COVID baseline.
Sellers, in aggregate, are still very keen to sell. But I want to be careful here, because the year-to-date figures above measure flow - how many homes came to the market over the period - and that's not quite what I mean when I trot out my "10% more stock than a normal market" adage. What I'm actually getting at is the standing inventory: the aggregate pile of homes sitting on the market at any given moment, which is a different beast from how many got listed since January. And on that measure the picture holds up rather well. The cleanest read of it is the average number of homes per estate agent branch, and that's been sitting in the low thirties through this year - against a pre-pandemic norm (think 2017 to 2019) of the high twenties, and a pandemic-era low of around fifteen per branch back in 2022 when there was simply nothing to buy. So low-thirties against a high-twenties baseline is, depending on exactly how you cut it, somewhere between 10% and 15% more standing stock than a normal market. My ready reckoner, in other words, is about right - if anything a shade conservative, which is roughly where I'd want it.
One caveat I can't ignore, though, because it changes the texture of that pile if not its size. A good chunk of it isn't fresh. It’s veritably stale. Going into this year, something like a third of the homes on the market had been listed before, taken off, and put back on - sellers who pulled their properties during the Budget jitters at the back end of last year and have since had another go. So the stock is genuinely elevated, yes, but it's not all eager new vendors flooding in; a fair slice is last year's unsold and the relisted, having a second crack. Which, if you're a buyer, is worth knowing - some of what looks like fresh choice is actually homes that have already failed to sell once. The question, as ever, is whether anyone's buying. This data we don’t necessarily have (or not as easily, but I can always ask Chris via the Batphone, of course!)
Here's where Week 22 gets interesting, because the answer this week is "fewer of them are selling." Gross Sales (Subject to Contract) came in at 25,600 for the week - above the 10-year Week 22 average of 23,500, so on the surface - fine. But the year-on-year comparison is where the headline sits: gross sales agreed in the first week of June were down 8.9% on the same week in 2025, and - this is the bit that caught my eye - down in every single UK region. Not one region bucked it. Northern Ireland was off a startling 48.75% (though small absolute numbers make that percentage jumpy, so let me hedge that one heavily), Outer London down 18.45%, Inner London down 13.12%. At the steadier end, Scotland was basically flat at -0.6% and Yorkshire & Humber off just 2.06%. So it's a softening, and a broad one, but it's not uniform - the North and the devolved nations are holding up far better than London and the South. We'll come back to that North-South split more than once today, because it's the structural story of 2026.
What does this mean, from a textbook perspective? It means the market is getting more selective, not collapsing. And the data backs that up beautifully, if you know where to look. Year-to-date gross sales sit at 546,000 - yes, that's 5.8% below 2025 (which has been the pattern all year, and we know exactly why: last spring's stamp duty deadline pulled a mountain of transactions forward into early 2025 and flattered the comparison - but we’ve now had 2 months of post-stamp action to bring that figure back to normal). But that same 546,000 is still 2.1% ahead of 2024, 12.4% ahead of 2023, and 9.6% above the pre-COVID 2017-19 average. So before the doom-mongers gather round their doom fire (Chris's phrase this week, and a good one) - this is a functioning market transacting at healthy recent historical volumes (whilst those years hardly set the world on fire, of course). The market is functioning - just more fussily.
Net sales tell the same story - 19,700 for the week, against a 10-year Week 22 average of 18,100. YTD net sales are 427,000, which is 4% below 2025 but 6.9% above the pre-COVID norm. People are still moving. The Five Ds - death, debt, divorce, downsizing, and diddy ones - plug away week in, week out, entirely indifferent to whatever the Orange Man tweeted overnight (let’s face it, who can even keep up!)
Now the friction, because this is where the market's character really shows. The gap between the average listing price (£452k) and the average sale-agreed price (£374k) sits at 20.8%. That's down a touch from the truly intergalactic 27.4% we saw back in the spring, but it's still a good clip above the long-run 16-17% norm. Sellers are still mainlining the hopium, helped along by estate agents buying instructions with fantasy valuations. I keep asking the same question - why, when they've already got so much stock on the books? - and the honest answer is still that the corporate model rewards the listing, not the sale, and so be it. Price reductions remain the mechanism doing the real work: 28,000 reductions in the week (a massive number), and 13.4% of all stock reduced in May (the 2025 average was 12.8%, the longer-run average 10.7%). And the withdrawals number is the one that should make every overvaluing agent wince: 45.5% of all homes that left agents' books in May went unsold. Nearly half. The fall-through rate, by contrast, is actually behaving itself at 23%, below the decade average of 24.5% - so the deals that do get agreed are mostly sticking, even if fewer are being agreed in the first place.
Here's the bonus content that I think really matters this week, and it's the bit Verona and Chris rightly flagged as the thing "many people will miss." Despite all that softening in volume, the average price achieved per square foot ROSE from £343.77 in April to £349.64 in May. That's a 1.7% monthly increase in actual achieved values. Year-on-year it's up 1.9%, and over five years up 13.2%. So read that carefully: fewer homes are selling, but the ones that sell are achieving more per foot, not less. That isn't a collapsing market. It's a selective one - buyers haven't vanished, they've just got pickier about what they'll pay up for, and the homes that are priced right and presented right are still commanding strong money. And before anyone gets too excited, this £/sqft-at-sale-agreed figure matches the Land Registry index with about 98% accuracy roughly five months ahead (direction, not quantum - this is correlation), but still that’s exactly why it's worth more than any headline "asking price" index you'll see in the papers.
On the rental side, the average rent in Week 22 was £1,775 pcm, with the May average at £1,785 (against £1,779 in May 2025). So rental growth has, broadly, gone flat year-on-year at the headline level - which after the relentless climb of the last few years is itself notable, and chimes with what the RICS survey is telling us about the very top of the rental market softening. But the supply picture hasn't changed at all: just 305,000 rental properties available, down from 311,000 a year ago. The structural shortage in the PRS isn't going anywhere, whatever happens to the monthly average.
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!
Dust off the Macroscope, then. This is a slightly unusual macro week, so let me tell you what's coming. GDP - the first monthly contraction since last summer, and we need to get right under the bonnet of it, because the composition tells you more than the headline does. Then the RICS Residential Market Survey, which is still firmly negative but showing the first flicker of stabilisation in months. Then one of my favourites - a small gap in the macro-cannon this week means we can look at something we've not done before in the Supplement, and it's a really interesting one: the Bank of England's own quarterly survey of what the public thinks about inflation, which has moved hard in the wrong direction (the key takeaway - expectations are as important as reality when it comes to inflation, certainly in the Bank's eyes, and they have a point). And then, bringing up the rear as the contract demands, the gilts and swaps - which this week are not the sleepy afterthought they sometimes are (and that sometimes we absolutely yearn for!), because the entire rates conversation has flipped.
OK. GDP first. The ONS reported that monthly GDP contracted by 0.1% in April - the first monthly fall since August 2025, and it follows growth of 0.3% in March and 0.4% in February, so the run of form was decent right up until it wasn't. Now, one month is one month, and I want to keep this in proportion: the three-month-on-three-month figure is still positive at +0.7%, the fifth consecutive three-month rise, and the largest contribution to that came from a solid +0.8% in services output over the quarter. Annually, the economy is 1.2% bigger than a year ago - which is fine, not fast, exactly the "1-ish percent" economy we've been describing for months. "Treacle" was the word I coined for this economy back in 2023, and very little has changed since then in economic reality terms, in spite of all the political fuss and bluster. We keep calm and carry on - thankfully.
But the composition of that April fall is where it gets interesting, and it's worth doing properly rather than waving at the headline. The 0.1% drop was driven entirely by services, down 0.2% on the month. Production was flat - no growth at all - and construction actually edged up 0.1%, which I'll come back to in a moment because the "up" there is doing something sneaky. Within services, the ONS points the finger at weaker activity in public administration and in the arts, entertainment and recreation sector. Now, I want to be careful here, because I've seen the war blamed for the lot, and that's not quite what the data says. The honest reading is that some of the recreation-sector weakness does tie back to the Middle East - cancelled and disrupted events feeding into UK-based businesses - but the ONS frames public administration as the other big drag, and that's a domestic story, not a war story. So the war is in there, but it's one ingredient, not the whole recipe. I'd resist the urge to pin a single month's wobble entirely on Tehran, tempting as the narrative is.
Here's the bit I'd flag for the Propenomix Core Audience, though, because it's the structural tell underneath the monthly noise. Look at manufacturing: it actually grew 0.4% in April, and the single largest positive contribution came from a 4.2% surge in the manufacture of basic pharmaceutical products - the second strong pharma month in a row after a 2.1% rise in March. Hold that thought, because it rhymes with something I said up in Trumpwatch about where the real industrial activity is clustering - pharma and chips, the AI-and-demographics winners, not broad-based reindustrialisation. The same pattern that's visible in the US reshoring numbers is visible in a UK GDP print. Funny how that works…..
And then construction, which is the bit that genuinely matters for everyone reading this, and where that innocent-looking +0.1% monthly rise is hiding the actual story. Because that growth came solely from repair and maintenance, which rose 0.6%. New work - the stuff that actually adds to the housing stock, the stuff the entire "1.5 million homes" project depends on - fell 0.3%. Read that again, because it's the whole game in one line: the only thing keeping construction in positive territory in April was people patching up buildings that already exist, while the building of new ones went backwards. Real estate activities, separately, barely moved at all. So when the government tells you construction "grew" in April, it did, technically - but not in the one category that would actually move the dial on the supply crisis we'll spend the entire Deep Dive picking apart. We'll see that theme again and again today, because "Britain isn't building" is emphatically not a one-week story.
If you want that confirmed from a completely different direction - and I always like two independent readings before I'll commit to a view - the S&P Global UK Construction PMI is the leading indicator that sits alongside the ONS's backward-looking output data, and it is grim, and grim in a way that's accelerating. The May reading came in at 38.2, down from 39.7 in April, where anything below 50 signals contraction. That's the sharpest fall in construction activity since May 2020 - the depths of the first lockdown - and it marks the seventeenth consecutive month of contraction. Housebuilding was, once again, the single weakest-performing segment of the lot. New orders fell at the fastest pace in six years as clients delayed projects, deferred investment decisions and cut budgets. And on the cost side, which is the war showing up in the plumbing of the sector - sorry, I'll find a better word, I’ve started to really dislike the “plumbing” of the economy, although I’m not sure why - showing up in the day-to-day costs builders face: input cost inflation accelerated to its highest since June 2022, driven by higher fuel and transport costs, while supplier delivery times lengthened at the fastest pace since December 2022 on the back of shipping delays and material shortages. Put the ONS data and the PMI side by side and the picture is unambiguous: the sector that needs to expand to fix affordability is instead contracting, its costs are rising because of the war, and its order book is shrinking because clients are frightened. That is about as far from a building boom as it's possible to get, and in the real world, clients and friends I speak to are taking evasive action in the sector or moving out of it altogether - so once we are through this wobble, thanks to private sector ingenuity not misguided policy from forked-tongue politicians, it will be even harder to get the skills and heads into the right places in a timely fashion at a workable price.
So the GDP takeaway, pulling it all together: a one-month contraction that doesn't break the slow-positive trend, but a contraction whose innards tell you exactly what kind of economy this is - treacle-paced, propped up in the bright spots by pharma, dragged in services by a mix of war and domestic weakness, and with a construction sector that is building less even as the political class promises it'll build more. None of that is a crisis. All of it is a constraint.
Next up, the RICS Residential Market Survey for May - and this is the one where, for the first time in a while, I can point to something other than a downward arrow. Don't misunderstand me, because the headline numbers are still genuinely ugly. New buyer enquiries came in at a net balance of -34%, agreed sales at -37%. The net balance, for anyone new to this, is simply the proportion of surveyors reporting a rise minus those reporting a fall, so -34% means the fallers outnumber the risers by a comfortable margin. Those are not good numbers in anyone's language.
But - and this is the actually new bit, the flicker I promised you - the deterioration has stopped getting worse. New buyer enquiries at -34% were unchanged on the previous month, and that's the first time since January that the demand gauge hasn't fallen further into the red. Agreed sales held at -37% rather than dropping again. The surveyors' own framing, via RICS, is that the recent deterioration "may be beginning to stabilise." Now, I want to be precise about what that is and isn't, because there's a world of difference between "things are getting better" and "things have stopped getting worse at speed," and this is firmly the latter. It's not recovery. It's the absence of further decline, which is a different and lesser thing - the patient has stopped losing blood, which is not the same as the patient getting up and walking. But after the spring we've had, with the war kicking confidence in the teeth month after month, I'll take a steadying of the pulse and be glad of it.
The observation I made this time around, after reading probably my 75th RICS residential market report in a row, is that the RICS report seems to speak a lot more to the inflation-adjusted market than it does to the nominal-priced market, which we are insistent about putting our focus on in the UK (or that the press keep in the Overton Window because inflation and real prices are deemed a complex concept).
A few further details worth your time, because the regional and rental splits are where the real intelligence lives. On the twelve-month view, surveyors are net positive on prices over the year ahead - the longer-horizon expectations have held up better than the grim near-term balances, which tells you the trade thinks this is a soft patch rather than a structural break. The regional split is the now-thoroughly-familiar one, and it's the same seam that runs through Chris's portal data and the Bank's agents: London and the South - the South East, East Anglia - remain the weakest, expected to keep falling, while Northern Ireland, Scotland and the North West are where surveyors actually report rising prices. We have, in effect, two housing markets in one country, and they are pointing in opposite directions. I'll keep saying it because it keeps being true. Two-tier, everywhere we look?
And on rents, the survey is almost the perfect mirror image of the sales market, which is the tension I never tire of pointing at because it's the single most investable fact in UK property. Tenant demand is positive while landlord instructions are deeply negative - more renters chasing fewer available homes, because landlords continue to head for the exit. Rent expectations remain firmly positive as a result. The supply of rental homes keeps shrinking, demand keeps not shrinking, and there is only one direction that arithmetic resolves in, over time, and it is up. That tension isn't resolving. If anything, every month it tightens another notch, and every "tenant-friendly" intervention that reduces supply tightens it further. File that one alongside the Shelter numbers in the Deep Dive, because they're the same story told from two ends. Affordability remains the problem in the short term, but the short term is exactly that - the short term. In the medium term, people’s pay rises depend to an extent on their expectations for inflation - which is a nice segue into the next section!
OK. The Bank of England's Inflation Attitudes Survey, which the Bank publishes quarterly, conducted on its behalf by Ipsos, and which I find more revealing than half the official data - because it doesn't tell you what's happening to prices, it tells you what real people believe is happening to their money, and in the inflation game belief is (at least) half the battle. This one was surveyed in the last days of April and the first few of May, so it's fairly up to date, and my goodness, the public has noticed. Asked to estimate the current rate of inflation, the median answer was 5%, up from 4.6% in February. Expectations for the year ahead jumped to 4%, up from 3.2%. The two-years-ahead number rose too, and even the five-year-out expectation ticked up to 3.9% - which, and this matters, is around the highest that long-horizon reading has been, the bit of the survey the Bank watches most nervously because it's meant to be the anchored one. Why have their expectations moved? Well, they aren’t stupid. And they’ve listened to the analysis about what the Middle East situation means to our pockets.
But here's the figure that should genuinely worry Threadneedle Street, the one I'd circle in red if I was leaving any documents on Bailey's desk on Thursday morning. Asked about the future path of interest rates, 53% of respondents now expect rates to RISE over the next twelve months - up from just 30% in February. In a single quarter, the British public has flipped from broadly expecting rates to sit still or fall, to a clear majority expecting them to climb. The share expecting cuts collapsed from 29% to 11%. Alongside it, 49% now say interest rates on mortgages, loans and savings have already risen over the past year, up from 32% - so people aren't just forecasting higher rates, they're reporting that they can already feel them. And the wider mood has darkened with it: by a margin of 78% to 4%, respondents reckon the economy ends up weaker, not stronger, if prices rise faster - up from 72% in February. That's a public that has connected inflation to pain and is bracing accordingly.
A quick chat at this point about “the weight of the cake”. This is the observation that if you ask 100 people at a fete to guess the weight of the cake, in spite of the fact that you will get some idiotic outlier guesses, the median and the mean will both be really quite accurate. That’s the same logic here. On the bright side, only 53% were pointing to an interest rate rise - and that’s because it is genuinely a very close one, as I’ve been saying. The central bankers would rather do nothing (we all would for a salary of 200k+ plus a world class pension, of course……) - but it is also BETTER if they do nothing.
Why does this inflation “stuff” matter so much, and the pain that is being forecasted, beyond being a snapshot of national grumpiness? Because inflation expectations are, to a meaningful degree, self-fulfilling, and that's not hand-waving - it's the entire reason the Bank runs this survey rather than just looking at the CPI. If everyone believes prices and rates are heading up, they behave in ways that help deliver exactly that: they push harder for pay rises, they bring forward big purchases before things get dearer, businesses feel emboldened to pass cost rises through faster because they expect customers to swallow them. The belief greases the outcome. The Bank fought a long, grinding battle through 2022 to 2024 to keep expectations "anchored," and this survey is the clearest sign yet that the anchor is dragging along the seabed. The war and the oil price are doing that - it's the imported inflation I opened the whole Supplement with, now visible in the heads of ordinary people, not just in the futures market. I suspect the Bank is more rattled by this survey than by the GDP print, and I think they're entirely right to be, because a contraction is a number you can revise away next month, but a population that has stopped believing you is a far harder thing to win back.
OK. Time to get Gilty, or not Gilty - and this week, for once, the gilts section is the headline rather than the footnote, because the whole mood of the rates conversation has turned through 180 degrees in about half a year. Let me set the scene plainly. The Bank Rate sits at 3.75%, where it's been since the final cut of the easing cycle back in December. But the long end of the curve has been climbing hard: the 10-year gilt yield was up around 4.94% mid-week, close to its highest since the back end of May, as the war and the oil price drive inflation fears straight into the part of the curve that's most sensitive to them.
The 5s which we watch very closely closed the week at 4.375% yield, after opening at 4.508% for the week - all the work was done overnight on Thursday/Friday after the aforementioned Truth Social posting (and subsequent validation from Pakistan’s official sources, alongside others). We will take that. Is that enough? There was a sell-off mid-morning (bringing yields back up) because of course people remembered that this was a case of buying the rumour and selling the fact - and we had a volatile day in the bond markets - but overall, we will take that direction of travel, yes please. The 30s were of course less volatile, but still came back about 10bps on the week from 5.63% to 5.53% yield. Still incredible yields for three decades in my humble opinion.
Swaps-wise, we had a close on Friday lower as well - but not the dramatic shift of the gilts market. The last trade was at 4.1% on the 5-year, so that cost at around 6% to 6.1% of limited company financing that I’ve been talking about is still an accurate one, folks, I’m afraid. We are about 40 basis points adrift of one year ago, which could be one significant reason why year-on-year figures right now are starting to look poor in the property market - 12 months ago, the DIRECTION of travel was unanimously downwards, and the confidence was there for the property market buyers compared to the current environment. Of course, if Mr Trump has “sorted it out innit” or whatever his 983247th “Truth” (ha ha) of the year goes, then there will be repair - but please remember, that repair will be slow. We could argue that direction matters more than the absolute number - and there’s an extent to which that’s true, but ultimately if the maths prices you out as a first time buyer, the maths prices you out.
Here's the shift that’s gone on over the war period, reframed once more, and I want to be careful about how I put it, because it's a turn rather than a screeching handbrake. At the turn of the year the market's best guess was a base rate heading DOWN towards 3.25% by year-end, the only argument being how fast we'd get there. That has gone - completely. At the last MPC meeting, on the 30th of April, the Bank held at 3.75% on an 8-1 vote - and the single dissenter (and remember, that person is the Bank’s Chief Economist Huw Pill, not a non-exec or someone at arms length from the Bank) wasn't reaching for a cut, they were voting for a HIKE to 4.00%, the first vote for higher rates since the tightening cycle ended back in 2023.
That was a genuinely significant moment and it slipped by with very little fanfare: a member of the committee has broken ranks in the hawkish direction for the first time in years. The money markets have followed the scent. They're now pricing something in the order of tightening rather than easing over the next twelve months, with the debate centring on whether a move comes as soon as the autumn and whether 4.00%+ is on the table by year-end. The clearest single expression of it: the Bank's own one-year-ahead Bank Rate expectation, read off the curve, has crept above where the rate sits today. Read that again, slowly, because it's the whole story in one sentence - the curve is now pricing the base rate HIGHER in a year's time than it is right now. We have gone, in roughly six months, from "how many cuts will we get" to "is the next move actually up" - and it is almost entirely the war and the oil price doing the work.
Now listen, because we've seen this exact movie before and I keep saying so to anyone who'll sit still long enough. This is cost-push inflation - commodity prices, energy, shipping costs - which is precisely the mechanism we lived through in 2022. And so the lazy line is back in circulation: "the interest rate doesn't fix cost-push inflation." And no - no-one ever seriously argued that it did. Raising the base rate does not pump a single extra barrel of oil through the Strait of Hormuz. But that was never the point, and it wasn't the point in 2022 either. The point is that once inflation expectations start to drift - and the attitudes survey I've just walked you through is precisely that drift made visible, in black and white, a majority now expecting rate rises - the Bank starts to feel it has no real choice but to act on rates for messaging and risk-management reasons, whether or not the rate "fixes" the underlying oil price. It acts to protect its own credibility, to show it takes the anchor seriously, because a central bank that's seen to shrug at drifting expectations is a central bank that gets a worse outcome later. They do not WANT to put rates up. They know full well it'll hurt an economy where confidence is already in the toilet and construction is contracting and growth is treacle. Governor Bailey has been at considerable pains to say they're "in no rush." But - and forgive the repetition, it earns its place - "no rush" is not "never," and an 8-1 vote with a hawk breaking ranks is the committee quietly telling you which way the balance of risks has tipped.
The MPC meets this coming Thursday, the 18th, the day after Warsh's first Fed, and I'd still be mildly surprised by an actual hike at this meeting - the modal call, the most likely single outcome, remains a hold. But it is a genuinely live one in a way it simply hasn't been for the entire easing cycle, and the things to read are the language of the statement and the voting split, far more than the headline decision itself. If that lone hawk becomes two, or three, that tells you more about your mortgage in 2027 than whether they move 25 basis points this particular Thursday. And here is the bit that matters most for you regardless of what they do at noon, the genuinely practical takeaway: mortgage pricing follows the swaps, not the base rate directly, and the swaps have already been drifting upward in anticipation of all this. So fixed-rate mortgage pricing has quietly been edging higher whatever the Bank does or doesn't announce - the market has, in effect, already started the tightening on the Bank's behalf. We'll see. I might well be wrong about the precise timing of the first move. I don't think I'm wrong about the direction, and when it comes to planning - to your loan-to-values, your stress-testing of a deal, your fixed-versus-tracker decision - the direction is the thing to build around, not the exact date.
I’ve had a pop over the years at forecasting the correct scores at the meetings, and I’ll let you into a Propenomix Secret - at many meetings, it is dead easy. At this one it is really difficult. But that’s not going to put me off, as any regulars will know - indeed, that’s exactly WHY I’m going to do it!
So let me actually stick my neck out, member by member, because the only honest way to call a hard one is to go name by name and show the working. Start with the certainty: Huw Pill, the Chief Economist, voted to hike to 4.00% in April and nothing since has given him a reason to soften - if anything the attitudes survey hands him fresh ammunition, so he's a nailed-on second vote for a rise, or rather a repeat of his own. Then the three I'd call the swing hawks. Megan Greene has openly floated that a hike might be needed if the Iran conflict drags on, and it has - she's the single likeliest member to join Pill, and my prediction hinges on her more than anyone. Of course, by Thursday we might be done and dusted - but I doubt it. Clare Lombardelli (Deputy Governor) and Catherine Mann have both been firmly in the "prolonged restriction" camp and haven't voted for a cut in over a year; neither is itching to ease, but moving all the way to an active hike vote is a bigger step than just holding, and I think at least one of them stays at hold this week while reserving the right to turn. Mann particularly is difficult to predict - arguably the most difficult. Then Governor Andrew Bailey himself, who has been at pains to say the Bank is "in no rush" - that's a man signalling a hold, and where the Governor sits, the centre of gravity sits. Long-time readers know that I often question Bailey as a follower not a leader, but as the least talented economist at the Bank by a long, long way - that might well be the right thing to do, rather than a fair critique. He holds.
On the dovish side, the picture is just as telling: Swati Dhingra voted for cuts at seventeen straight meetings before the war broke her streak, and Alan Taylor, Dave Ramsden and Sarah Breeden have all leaned towards looser policy through this cycle - but here's the thing, not one of them is going to vote for a cut into a live oil shock with inflation expectations visibly un-anchoring. They've been parked at hold by events, which is exactly why a "hold" this week doesn't mean calm - it means a committee pulled taut between a hawk wing that's found its voice and a dove wing that's been silenced by the war. So my correct-score prediction: 7-2 to hold, with Pill and Greene voting for a hike to 4.00%, and I'd put real money on Pill, rather less on Greene, and I'd want a hedge on the outside chance Lombardelli or Mann makes it 6-3. But honestly? A 6-3 wouldn't shock me, and even an 8-1 with Pill alone is well within the range. The decision is a hold. The story, as I keep saying, is the split - because if I'm right and Pill picks up company this week, the question for your 2027 mortgage isn't whether the cutting cycle resumes, it's whether the next move is a hike at all. Watch the dissents, not the headline. It’s really on the Iran news before Thursday - and it seems I’m with the economic consensus at 7-2, but if the facts change - like all good forecasters - I reserve the right to change my mind! Keep an eye on the socials if you are anywhere near as nerdy as I am, if I do change my mind - I’ll tell you!
OK. Here endeth the lesson on current rates - here comes the Deep Dive. And there's a clear thread connecting this week's four reports, because they all landed in the same few days and they all, from completely different angles, circle the same question: why can't people afford to own a home, and why won't simply building more fix it as fast as the slogans promise? We've got a Select Committee report that frames the whole paradox; the Bank of England's own agents telling us what's actually happening on the ground; a charity number so large it's almost hard to take seriously (but it's real); and a think-tank proposal to raid your future pension to get you on the ladder, which - spoiler - is exactly the kind of demand-side wheeze the Select Committee warns against. And keep Henry George in your back pocket the whole way through, because you'll watch all four of them get so close to the land question and then reach for a deposit subsidy instead. Off we go.
First up - the Housing, Communities and Local Government Committee published its report on the Affordability of Home Ownership this week, and it's the best single framing of the whole problem I've read in a while.
Theme 1: The Affordability Collapse, In Numbers
The Summary: The Committee found that home ownership in England has fallen from a peak of 71% in 2003 to 62.5% at the 2021 Census, with the decline sharpest among the young - the Institute for Fiscal Studies found just 25% of 27-year-olds owned their home in 2018, down from 43% a decade earlier. The core affordability metric is stark: in 1997 the median home cost 3.54 times median earnings; by 2024 that ratio had reached 7.71. The average home at the end of 2025 cost £273,077, more than double its inflation-adjusted level of fifty years earlier. The report also quantified the role of family wealth, citing Home Builders Federation figures that the "Bank of Mum and Dad" provided £38.5 billion of assistance over the past four years, 71% more than the previous four, with around 52% of first-time buyers now receiving family help averaging over £55,000.
The Propenomix Perspective: None of these numbers will surprise anyone who's tried to buy a first home recently, but seeing them stacked up is sobering. The 7.71x earnings figure is the one I keep coming back to - we have, in less than thirty years, gone from homes costing under four times income to nearly eight, and no amount of Help to Buy tinkering has touched it - but this is the WRONG METRIC. Over a decade it is less obvious, over three decades it is much more significant - I've said it a number of times before. If 50% of people go to university rather than 25%, guess what - that 25% of people who are studying and racking up their own personal "fiscal drag" of debt WILL make a huge difference to how many people own a house by age 27. Why can't anyone say that, or try to control the data to reflect it? Let alone my own hatred for that 7.71x figure because it is a SINGLE earner - so when households became primarily two-earner rather than one-earner, because of a number of reasons including the liberation of the (generally) female household adult member, a cause for celebration of course - why are we not counting her earnings in multiples of house price affordability or cross-sectional studies? It's a nonsense, frankly.
And while I've got the knife out for that ratio, there's a third flaw nobody mentions: it compares a price to an income and quietly ignores the cost of the money in between. A 7.71x house on a 2% mortgage and a 7.71x house on a 5.5% mortgage are not remotely the same purchase - the monthly payment, which is the only number a buyer's bank account actually feels, is wildly different - yet the headline ratio treats them as identical. And that's the bit that genuinely moved this last eighteen months: prices barely budged, but the rate roughly doubled, so real affordability deteriorated far harder than 7.71x would ever show you. The metric the politicians wave about is the one that conveniently hides the variable doing the most damage. Funny, that.
What the Committee DOES get right, and what most politicians studiously avoid, is the role of inherited wealth: when over half of first-time buyers need family money to get in, home ownership stops being about your job and starts being about your parents' house. That's a profound change in what property even is as an asset, and it's worth sitting with - because it quietly rewrites the deal this country offers its young. The old contract was "work hard, save, buy." The new one, for the half without a Bank of Mum and Dad, is "work hard, save, rent, and wait for an inheritance a third of you will never receive." £38.5 billion over four years, up 71% on the four before - that is not a top-up any more, it's a structural pillar of the market, and a market held up by parental equity is a market that takes yesterday's inequality and bolts it onto tomorrow. I'd add one hedge of my own - the report itself notes its evidence was gathered before the war and the recent rise in mortgage costs, so if anything these figures flatter the current reality. The ladder got pulled up further still since they closed the inquiry. Guess what - luck plays a part, but also guess what - being BORN in the UK is already a lottery win on the planet (It's 5 numbers, no bonus, but it's still a win!)
Theme 2: The Supply Paradox
The Summary: The report's central tension is that the two things we want - cheaper homes, and more people owning them - can pull against each other. Demand-side help (deposit subsidies, mortgage guarantees, savings products) tends to push prices up, while supply-side building takes years to move the dial. The Committee heard sharply divided expert evidence: the Greater London Authority's own research found that building homes at any price point improves affordability through "chains of vacancies," and the OBR estimated planning reforms raising the housing stock 0.5% would cut average prices by around 0.8% by 2029. Against that, the Resolution Foundation argued it would take perhaps ten years of sustained high building before any material affordability impact showed up, and the IFS's Peter Levell put it bluntly: "Even if you build loads of houses, they are still going to be very expensive." The Housing Minister conceded the best realistic outcome is "a sustained levelling-off of house price growth," not falls.
The Propenomix Perspective: This is the bit every property investor should read twice, because it cuts straight through the political noise from both directions. Building more homes is necessary - I'm not going to argue against supply, that would be daft. But the idea that the 1.5 million target, even if it were hit (and I'm not convinced it will be), suddenly makes homes affordable is a fantasy, and it's refreshing to see a cross-party committee say so. The real numbers are that even if you manage to build 300k homes a year, or more, you are adding 1% to the stock of households. If you build 150k - you are adding 0.5%. There's very, very little difference - 99%-99.5% of the UK property market is secondary, not primary.
Let me put that OBR number under the microscope, because it's the single most clarifying statistic in the whole report and almost nobody quoted it properly. Raise the housing stock by 0.5% - a colossal, sustained effort, near enough an entire year's target landing on top of everything we've already got - and you move average prices by around 0.8% by 2029. Not 8%. Zero point eight. That is the supply lever, measured by the government's own forecaster, and it's a butter knife where the slogans promise a chainsaw. Now hold it against the demand side: hand buyers a deposit and prices respond fast and fully, because you've added firepower to a fixed target. That asymmetry IS the paradox in one line - demand-side help works almost instantly and in the wrong direction, while supply-side building works at a crawl, over a decade, for a rounding error on price. It is not an argument against building. It's an argument against expecting building to fix affordability - a very different and much more honest thing, and exactly what Levell and the Resolution Foundation were straining to tell a room that mostly didn't want to hear it.
The honest position is the Minister's own: the best we can hope for is prices flatlining in nominal terms while wages slowly catch up. Which - and here's the thing that matters for you and me - is more or less exactly what's been happening since "The Era of the Lettuce" - I know, Eras are normally longer than hers was. Nominal flat, real-terms decline, affordability improving by stealth through inflation rather than through falling prices. That's not a crisis to a patient investor holding the right stock in the right place; it's the slow, quiet repricing I keep banging on about. The danger is only ever leverage at the wrong loan-to-value when the music changes - and with the rates conversation flipping to hikes, that danger just went up a notch. I've heard people this week predicting a crash, and even answered a couple of DMs about it - my starting position is "a crash from where", and the flaw in the analysis is that crashes come in overheated markets, and this is a living room with a heat pump that isn't doing a lot because the house is so leaky from an insulation perspective!
Theme 3: Stamp Duty, The Tax Nobody Will Touch
The Summary: Among its recommendations, the Committee called on the government to move "faster and bolder" on reforming Stamp Duty Land Tax, which it said "continues to slow the whole housing market and damage the economy." It also backed replacing the Lifetime ISA with a homebuying product free of the LISA's punitive withdrawal charge and outdated regional price cap, supported easing some mortgage finance restrictions while retaining oversight, and pushed for measures to bring empty and under-occupied homes back into use and to help SMEs access development finance.
The Propenomix Perspective: Regular readers will know stamp duty is a particular bugbear of mine, so I was pleased to see a committee actually name it as the friction it is. SDLT gums up the entire chain - it punishes downsizers who'd free up family homes, it punishes the mobility the labour market needs, and at the second-home and investor end it's now a material drag on transactions (we can see that in Chris's numbers all year). And here's the under-appreciated part: the tax doesn't just cost the Treasury the transactions it kills outright, it costs the wider economy all the activity that would have followed each move - the removal firm, the kitchen fitter, the carpets, the white goods, the solicitor, the broker. A house move is one of the most economically generative things a household ever does, and SDLT sits at the very top of the chain quietly suppressing the lot. The downsizer who stays put because the bill for trading down is absurd isn't just one frozen transaction - it's a family-sized home kept out of the hands of a family that needs it, AND all the secondary spending that never happens behind it. That's why the Committee's "damage the economy" line is precisely right and not hyperbole. Will any of this happen? I doubt it, frankly - stamp duty is too lucrative a revenue line for a Treasury staring at the fiscal hole we'll come back to, and "cut a property tax for landlords and movers" is not a headline any Chancellor wants right now. But the Committee is right that it's a drag on the whole economy, not just the property market, and one day someone brave will have to grasp it. Don't hold your breath. If you want house prices to go up, in order to help you win an election you are currently massive favourites to lose - then cut Stamp Duty, folks. Position it as "a gift to the North" and upset all the Southerners from Day 1, Andy - if you win your by-election.
Next up - and it's the perfect companion piece, because where the Select Committee gives us the theory, the Bank of England's own agents give us the coalface - the Bank published its June Agents' summary of business conditions this week, the intelligence the MPC actually had in front of it.
Theme 1: The Regional Fracture In Housing
The Summary: The Bank's agents - its network of staff who talk to businesses across the UK - reported a sharpening regional divide in the housing market. London is described as "much weaker than other regions," while demand has held up better in the devolved nations. At the higher end of the market, price reductions are now necessary to achieve sales, buyers are taking longer to commit, and cancellations have picked up. In the new-build market, demand is weaker than in the secondary market, the same regional pattern applies, and development "has all but stalled in London." House builders are reported to be offering fewer incentives because margins are under more pressure from rising build costs.
The Propenomix Perspective: If you've read this far down the Supplement you'll notice this is the third independent source this week telling us the same thing - Chris's portal data, the RICS survey, and now the Bank's agents all describe a softening market with a hard North-South seam running through it. I've been saying it for more than a year now, of course, because the ONS data has been pointing it out without drawing any conclusions or offering up any analysis from it. When three datasets gathered by completely different methods agree, you can stop wondering whether it's a real pattern. It's real. And the reason I keep labouring the "three independent sources" point is that each instrument has a different blind spot - Chris's portal data is asking-price-led and fast, RICS is surveyor sentiment, the agents are anecdote straight from businesses - so when three things built on completely different principles all swing the same way, the measurement errors cancel and you're left looking at signal, not noise. That's about as close to proof as this trade ever offers.
London and the prime South are repricing properly, the higher end needs genuine cuts to move, and new-build in the capital has essentially stopped. That last point matters enormously and we'll see it again in a moment - because if you're not building in the place with the most acute shortage and the highest values, the long-term supply problem doesn't get better, it gets worse. There's a nasty little loop buried in that "development has all but stalled in London" line, too: build costs rise (the war, in part), margins thin, builders pull incentives and mothball sites, supply falls further in the exact spot that needs it most, the medium-term shortage deepens, and the floor under prices firms right back up. The capital is busy manufacturing its own next price spike by refusing to build through this one. For an investor, none of this is news exactly, but the agents' confirmation that builders are pulling incentives and watching margins is the tell that the new-build discounting party of the last eighteen months may be winding down. Worth knowing if you've been hoovering up new-build at a chunky discount to list. I'm actively speaking to multiple developers in London who are just NOT building units right now, and some who are struggling to shift what they have already built.
Theme 2: What The MPC Was Actually Looking At
The Summary: Beyond housing, the agents reported that contacts continue to see weak growth, with the Middle East conflict eroding confidence and dampening expectations of any pickup in real activity this year. Employment intentions are broadly flat and recruitment difficulties are at or below normal. The cumulative average pay settlement for 2026 is running at around 3.5%. On costs, the agents were explicit: higher oil prices are pushing up input cost inflation and, together with broader cost rises from the conflict, are expected to offset the disinflationary pressures elsewhere in the economy - though they stressed considerable uncertainty remains.
The Propenomix Perspective: This is the document the rate-setters had on the table, and you can see the whole dilemma of this Thursday's meeting in two lines of it. Pay settlements at 3.5% and recruitment difficulties at or below normal say the labour market is cooling nicely - that's the disinflationary side, the argument for sitting still or even cutting. But "higher oil prices offsetting disinflation elsewhere" is the agents telling the MPC, in their careful way, that the war is undoing the good work. And notice the precision of that word, because the agents pick their language like men defusing a bomb: not "outweighing," not "overwhelming," but offsetting - a committee being told the two forces are roughly cancelling each other out. Which is the worst possible news for anyone wanting a clean decision, because it means the data genuinely won't tell them what to do, and they're left setting policy on the risk of expectations de-anchoring rather than on a central forecast that points anywhere useful. Put that next to the inflation attitudes survey I covered above - expectations drifting up, the public now expecting hikes - and you can see exactly why the swaps market has repriced toward tightening. The agents won't tell the Bank what to do, but they've laid out the trap very clearly: the domestic economy wants lower rates, and the imported inflation won't let them have it. I don't envy the MPC on Thursday.
Next up - and brace yourself for the number - Shelter published research this week on the pace of social rent delivery, and the headline is extraordinary.
Theme 1: The 119-Year Number
The Summary: Shelter's analysis found that, at the current rate of delivery, it would take 119 years to clear England's social housing waiting list. More than 1.3 million households are currently waiting for a social home, while only 12,198 social rent homes were delivered by councils, housing associations and private developers across England last year - an average of around 110 households waiting for every single home delivered. The charity reported that annual social rent delivery has fallen by 64% over the past fifteen years, while the number of homeless households in temporary accommodation has risen 155% over the same period. In 30% of council areas, fewer than ten social homes were built in the last two years; in 60 of those areas, not a single one was built. Shelter's own benchmark is that England needs 90,000 social homes a year for a decade to clear the backlog - against the 12,198 actually delivered, a gap that rather speaks for itself.
The Propenomix Perspective: 119 years. Sarah Elliott at Shelter put it that none of us alive today would live to see the end of the housing emergency at this pace, and for once the campaigning language is, if anything, an understatement of the arithmetic. And let me hand you the one comparison that recontextualises the whole thing, because it ought to be on every front page: back in 1967, social housing was 46% of all the new homes built in this country, and councils provided very nearly all of it. Forty-six percent. We have gone, in a working lifetime, from building close to half of all new homes as social housing to delivering twelve thousand of them in a nation of sixty-eight million, with one-point-three million households queueing. That is not a market failure - markets didn't decide this - it's a national choice, made and re-made over fifty years, and the 119-year figure is simply the bill for that choice landing in instalments. Those social homes served us really well, and social mobility was facilitated by right-to-buy. That was done as a one, or two generation hit - and then the ladder was pulled up. Mistake - to say the least!
I try to keep these Deep Dives grounded in what it means for you as an investor rather than reaching for outrage, so let me do that - but I'll be honest that this one is hard to read. The investment reality is uncomfortable and I'm not going to dress it up: the sheer scale of the shortfall in social housing is precisely why the private rented sector carries the weight it does, why rents do what the RICS survey shows them doing, and why every government scheme to "help" tenants that reduces PRS supply makes the underlying problem worse, not better. Here's the mechanism stated as plainly as I can put it, because it's the single most important sentence in this section: the social home that doesn't get built does not make the need vanish - it simply transfers that need onto the private rented sector. Which is why PRS rents aren't really a "rental market" story at all; they're the pressure gauge reading off a fifty-year failure to build social homes, and every one of those 1.3 million households is either competing in the private market or being housed in it at public expense. There's a hard-nosed strategic read here too, and I flagged it back in the spring - the more the state fails to build social homes, the more it ends up leasing private stock to house people, often at index-linked rents with the voids and management covered. I've been steadily positioning more of my own asset base toward that kind of arrangement, because it's the place where the state's failure and a landlord's need for security actually meet. That's not a cheerful conclusion, but it's an honest one.
Theme 2: The £29 Billion Anchor
The Summary: Shelter identified a specific structural barrier: £29 billion of historic housing debt transferred to councils by central government in 2012 as part of the Housing Revenue Account self-financing settlement, which the charity argues is crippling local authorities' ability to borrow and build. Backed by over 100 councils, Shelter is calling for this debt to be written off. The report set its findings against the government's new £39 billion Social and Affordable Homes Programme, which promises to help deliver 300,000 homes over a decade with at least 60% for social rent, and the reintroduction of rent convergence.
The Propenomix Perspective: This is the technical heart of it, and it's worth understanding even if council finance isn't your idea of a thrilling Sunday read. The 2012 settlement loaded councils with debt on the theory that they'd run their housing stock as self-financing businesses, and then the right-to-buy discounts and a decade of constrained rents knocked the legs out from under that model. So councils are sitting there servicing historic debt instead of building. Think about how that trap actually springs, because it's almost perfectly self-defeating: central government tells a council its housing is now a self-funding business, loads it with £29bn of debt on that promise, and then - the very same central government - spends the next decade selling off its best stock at a discount through right-to-buy and capping the rents it's allowed to charge on the rest. It removed both the prize assets and the income the business model depended on, with one hand, having handed over the debt with the other. It's a bit like selling someone a buy-to-let, then forcing them to sell the best flats at half price while freezing the rent on what's left, and then asking why on earth they haven't bought more. The model didn't fail by accident; it was undermined by the same hand that designed it. Whether wiping £29 billion off the books is the right answer, I genuinely don't know - it's real money and there's a fairness argument in every direction - but the diagnosis is sound: you can't ask councils to lead a building revolution while they're pinned down by a balance sheet from a different era.
And now run that £39 billion headline through the filter I apply to every "transformational" announcement - divide the money by the time and the target. £39 billion, 300,000 homes, over a decade: that's 30,000 homes a year, of which at least 60% social, so call it 18,000 social homes a year. Set against a 1.3 million backlog and Shelter's own 90,000-a-year benchmark. So the flagship programme, delivered in full and on time (and you know my form on that assumption), gets you to a fifth of the annual rate the charity says is needed merely to clear the existing queue - before a single new household joins it. The £39 billion sounds enormous right up until you set it against the waiting list and remember how long these things take to turn into actual keys in actual doors. I want to believe the convergence and the funding change the trajectory. I've watched too many "transformational" housing programmes to bank on it. We'll see.
Let me reframe it. Reform councils are still putting council tax UP, in spite of promises - but they ARE putting council tax up less than other councils. What have they REALLY discovered? That the majority of council expenditure is statutory (that doesn't mean there's no waste in that statutory provision of course), and that the waste they have been able to cut out has been really quite minimal without long-term implications of cuts being considered (in spite of the long-term implications of poorly-targeted austerity which the UK is still struggling with and will do for decades to come).
Last up - and it's a genuinely novel one, which makes a change - the Social Market Foundation published a proposal this week with the rather striking title "Citizens Advance: A state alternative to the Bank of Mum and Dad."
Theme: The Pitch
The Summary: The SMF proposes giving younger people the option to receive the first year of their state pension early, as a lump sum - worth around £12,548 at current rates - in exchange for postponing the point at which their state pension later begins. Crucially, the authors stress it is not a giveaway - it rests on the contributory principle, with eligibility limited to those who have built up at least ten years of National Insurance credits. The motivation is the "Great Wealth Transfer": an estimated £5.5 trillion passing down from Baby Boomers over the next two decades, but with only around a third of adults expecting to inherit anything. The SMF's polling found most 25-to-40-year-olds in favour (54% positive against just 6% negative), with between 50% and 70% saying they'd take it depending on the terms, and debt repayment the single most popular intended use. The authors model a possible cost of around £1.3 billion in year one depending on design, recouped over time through pension savings, and the idea originated with Andrew Lewin, the MP for Welwyn Hatfield.
The Propenomix Perspective: Well, this is certainly inventive, I'll give them that. As a professional financial engineer on property deals - the bit of the job I enjoy more than any other - I was always going to have time for this sort of solution, although I think we can do better. You can see exactly why it polls well - of course people will say yes to money now in exchange for a later retirement they can't quite picture. But this is precisely the kind of demand-side intervention the Select Committee spent its whole report warning about, and the irony of the two reports landing in the same week is almost too neat. Hand a cohort of would-be first-time buyers a lump sum for their deposits, and what happens? In a market where supply is this constrained - 119 years of social housing backlog, new-build stalled in London, the whole supply paradox we've just walked through - you don't make homes more affordable. You bid up the price of the homes that exist and hand the subsidy straight to the seller. And this connects right back to the OBR number I made you stare at earlier - it's the asymmetry made flesh. One report tells us the supply lever shifts prices 0.8% for a heroic building effort; another proposes pouring £12,548-a-head of fresh demand into the very same fixed pool of houses.
You don't need a model to see which one moves prices faster. The Citizens Advance is, functionally, Help to Buy with a pension bolted on instead of a loan - and we ran Help to Buy, we have the receipts, and the settled finding is that a meaningful chunk of it ended up capitalised into higher prices, which is to say handed to the seller. Professor Cheshire's line, quoted by the Committee, says it perfectly: no policy that inflates demand can do much more than push up prices when supply is this inelastic. So as a piece of political positioning ahead of the next election, I understand it. As housing policy, it would very likely make the thing it's trying to fix slightly worse. And there's a deeper unease I can't shake, which the SMF's own respondents flagged: people worried the pension age would just keep rising and a future government would quietly claw it back. Look at the shape of the trade from a thirty-year-old's side of the table - you take a fixed, knowable £12,548 today, against an unknowable, government-revisable cost decades out, in a system that has already shown every willingness to push the pension age further away. That's a wretched thing to ask anyone to price. Asking the young to mortgage their old age to afford a deposit, in a country that can't build them somewhere to live, is a fairly bleak statement about where we've ended up. I'd rather we built the houses.
However - poke the bear and you are going to get more. This is where the pension piece needs to be preserved - we know that people aren't putting enough away for a secure retirement. Gen Xers have a specific problem in terms of how old they were when pension reforms have taken place around workplace private pensions. Still - here we go - I'm going to go with a creative layer on top. Borrow the deposit from the pension, don't cash it.
100% leverage, I hear you say? Remember the GFC, Mr Lawrence? Sure. I'm not saying "no skin in the game". But - if a favourable loan at - say - a gilt rate AGAINST the pension could be "charged" and trap the pension funds, to provide a bigger and better deposit - this is a GREAT way to awaken the sleeping giant of pensions in the UK. Guess what - this extends the Bank of Mum and Dad, as well, in a BIG way. I'd love to see it. This also rewards the workers and by extension punishes the shirkers - anyone with a pension that isn't yet being drawn down (and perhaps those who are) could have a repayment loan against that pension to pay off their deposit. Affordability - match the deposit loan for 25 years, if it all stacks up, if you need to - keep that monthly payment down! And notice what it fixes about the SMF's version: you're not spending the pension, you're securing against it, so the pot stays invested and compounding while it quietly does a second job as collateral - the asset works twice. Because it's lent and charged rather than gifted, it doesn't just vanish into a higher asking price and end up in the seller's pocket the way a straight deposit handout does - which is the one part of the SMF idea that genuinely worried me. Same instinct as theirs - mobilise the capital young people have already earned - but built as leverage against a preserved asset rather than the surrender of a future one. That's the version I could actually get behind.
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 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: https://www.tickettailor.com/events/boardroomclubconsultingltd/2177426
Above all - please remember to Keep Calm, ALWAYS listen to or read the Supplement, and Carry On. It's been a heavier week than most - a softening market, a flipped rates outlook, and a stack of reports all pointing at the same affordability wall - so let me end where I always do, on the fundamentals, because they haven't changed. There's a shortage of 2-3 bed terraces and semis; there was one fifteen years ago, and every report I've read this week only deepens it. It's one of the core pillars of my investing philosophy that's just become more and more relevant as time has gone on.
"Investing in property" is not a guaranteed win, and with the rates conversation turning to hikes rather than cuts, the discipline around leverage and loan-to-value matters more this month than it did last. But investing in undervalued areas, strong on the spreadsheet, strong on yield, in a market repricing slowly in real terms rather than crashing in nominal terms - that remains as close to a guarantee as this game offers, and it's how you stay ahead of an inflation rate the public has very much noticed. The houses still aren't being built. The people still need somewhere to live. Everything else is noise. KCCO!