700,000 homes incoming?

Hi there,

This is Chubby Wallet. The newsletter that helps you make the right property moves

Here's what’s in store..

• Mortgage rates ticking down

• UK home buying to go digital

• Labour’s plan to build new towns

• Property auctions start on a subdued note

Mortgage rates are finally showing signs of relief. The average two-year fixed rate mortgage has ticked down slightly to 4.93%, while five-year fixes are now averaging 4.73%, according to Rightmove.

The psychological milestone of sub-4% mortgages is back in play, with some lenders offering five-year deals at 3.99%—a crucial confidence booster for hesitant buyers.

With that said, the average mortgage rate is still hovering closer to 5%. Compared to the rock-bottom deals of 2021, buyers are still paying a lot more to borrow.

Rising repossessions in Q4 2024

Despite improving sentiment, UK Finance data shows home repossessions jumped 12% in Q4 2024 compared to the previous quarter, and 54% year-over-year.

This isn’t a financial crisis-level event - historically, repossession rates remain low, but it’s a flashing yellow light…

Why? Many homeowners who locked in ultra-low mortgage rates in 2020-21 are now facing the brutal reality of refinancing at 5% or higher. 😬 

Buy-to-let landlords are also feeling the squeeze, with repossessions up 30% year-on-year.. The good news is mortgage arrears are actually declining, suggesting most borrowers are still managing to adjust…

And with Chancellor Rachel Reeves meeting financial regulators to explore looser lending rules, we could see policy shifts that reshape mortgage accessibility.

The market may be more resilient than expected

Conventional wisdom suggests that high interest rates and affordability issues should have caused a sharper correction in house prices by now. But demand has remained surprisingly robust.

Our view is UK housing has an ability to defy expectations, because of the following:

• Supply is still constrained: Even with government intervention, building 1.5 million homes won’t happen overnight.

• Demographic shifts - including the ongoing rental crisis—continue to drive people toward homeownership despite higher borrowing costs.

• Finally, the return of mortgage deals below 4% could inject fresh momentum into the market.

Final thoughts

If inflation keeps trending down and the Bank of England keeps cutting rates, we could see affordability improve, confidence rise, and transaction volumes pick up by late 2025.

Keep an eye on interest rate movements, government policy shifts, and lending rule changes.

The biggest opportunities could come not from the headline trends but from understanding where the market is mispricing risk and reward.

Big changes are coming to the UK property market, that might actually bring home buying and selling into the 21st century.

The government is rolling out a plan to computerise this process designed to save time and a whole lot of money.

Right now, buying a home takes nearly five months on average… because the process is hindered by inefficient processes, that derail sales and collectively costs buyers and sellers £400 million a year.

The government’s solution to this is digitisation:

If these reforms work, buyers will have fewer last minute surprises, estate agents will waste less time, and conveyancers might experience reduced workloads..

Faster transactions might drive prices higher

While a streamlined process sounds great for buyers, there’s a twist—quicker transactions could fuel demand even more, pushing prices up, not down.

If homes sell faster, bidding wars could escalate. Some argue that the real issue to be tackled isn’t transaction delays - it’s supply.

So what does all this mean?

• For buyers: If the digital overhaul speeds up transactions and reduces fall-throughs, you’ll save time and avoid heartbreak. But don’t count on prices dropping just yet.

• For sellers: A more efficient process means less waiting around and fewer deals collapsing at the last minute.

• For investors: Digitalisation might make property investments smoother, with faster transactions and more transparency.

Our takeaway

The property market is famous for being slow, stressful, and full of unexpected costs and these reforms are a welcome development.

If they work as intended, we could finally see a faster, fairer, and more transparent housing system.

Of course, government plans don’t always roll out smoothly so it’s worth keeping a close eye on how these changes play out in practice.

Labour is rolling out its most ambitious housebuilding agenda since the post-war era, promising to unblock 700,000 stalled homes and create a new generation of towns.

It sounds impressive but many of these projects have been “in the pipeline” for years.

20,000 homes have already been ‘unblocked’, but that’s just 2.8% of the total goal - if this pace continues, it would take decades to hit their target

Plus, history tells us that housing promises often collide with the harsh realities of local resistance, planning delays, and economic downturns.

Back in the 1960s, Britain built 400,000 homes per year—yet today, with more advanced technology and urgent demand, we struggle to hit 250,000.

What’s different now?

Affordability - while building more homes is crucial, supply alone won’t solve affordability issues if borrowing remains expensive.

So even if the government delivers on its building targets, who will be able to buy these homes?

Without wage growth keeping pace or significant lending reforms, many of these new builds could end up in the hands of institutional investors rather than aspiring homeowners.

Will more homes really lower prices?

Common wisdom says, “Build more, and prices will drop.” But historical data suggests it’s not that simple.

Take London: over 30,000 new homes were completed last year, yet house prices remain stubbornly high because demand isn’t just about numbers—it’s about who can afford to buy. 

A decade ago, Japan faced a similar housing crunch. They built aggressively, yet prices only softened marginally.

Could we see the same in the UK? If large funds swoop in to buy newly built homes as rental stock, affordability for owner-occupiers may not improve as much as expected.

The rise of ‘Grey Belt’ development

One overlooked shift in government policy is the prioritization of ‘grey belt’ land—previously developed land near green belt areas.

This could be a goldmine for investors. Unlike true green belt, these locations are more likely to get planning approval while still offering desirable surroundings.

Buyers should watch for opportunities in these areas before prices rise.

What’s next?

While the government’s housebuilding push is a step in the right direction, several factors will determine whether it succeeds:

• Will interest rates fall fast enough to make new homes truly affordable?

• Will local councils embrace these new towns, or will nimbyism slow progress?

• Who will actually end up owning these homes—first-time buyers or deep-pocketed investors?

Ultimately, the government's town building initiative will only be a true success if it fosters inclusive communities and prioritises homes for people, not just profit.

The latest auction data is in, and it tells a tale of two markets - one where competitive bidding sends prices soaring and another where properties struggle to attract a single bid.

The gap between winners and losers is widening, and understanding why could give you an investing edge…

Superficially, auction success rates remain strong, with a seemingly impressive 72% clearance rate last month.

The market seems to be splitting into 2 - while prime properties in high-demand locations are achieving above average prices, a growing subset of secondary stock is failing to meet reserves. 

The overall sales rate disguises a widening disparity in performance. If you're only looking at the headline numbers, you could be walking into a trap.

Why are some properties selling well?

It’s not just location, location, location—it’s also about scarcity and perception.

Properties that tick all the boxes (good transport links, solid rental yields, and strong buyer demand) are seeing bidding wars, often 10-15% over guide prices.

In contrast, more "standard" stock, particularly older or riskier properties, are left on the market.

Higher interest rates haven’t killed demand

Many analysts predicted that higher mortgage rates would decimate auction sales, but the numbers tell a different story.

Despite mortgage costs doubling since 2021, buyer appetite remains surprisingly robust. Two key reasons:

• The “flight to quality” effect – Buyers are being more selective but are willing to pay top dollar for properties with strong fundamentals.

• Wealthy cash buyers – Many high-net-worth individuals see auctions as a way to park capital in tangible assets rather than watch inflation eat away at their savings.

Be selective, but be ready to strike

Auctions are becoming more competitive - in this environment, the key is knowing which properties have real upside potential and which ones are risky.

Nick Leslau’s journey from studying German to becoming a £200 million real estate tycoon is a masterclass in reinvention and resilience.

Starting as a quantity surveyor, he became CEO of Burford Estate & Property by 23.

His big break came in 1986 with a reverse takeover of Chartsearch, turning it into a £1 billion empire, despite setbacks like the failed SegaWorld deal.

In 1997, he co-founded Prestbury, growing it into a £4 billion portfolio featuring iconic assets like Alton Towers and Travelodge hotels.

Leslau’s knack for bold moves—like buying St Katharine Docks for £156 million and selling it to Blackstone for £450 million—showcases his strategic brilliance.

Nick Leslau’s story isn’t just about buying and selling properties—it’s about mastering the unseen strategies that most investors overlook.

From reverse takeovers to leveraging media hype, his approach is a reminder that success in real estate often lies in the nuances.

That's it for this week folks. Each week we'll cover strategies, updates and insights to help you succeed in real estate. We love this stuff!

If you Have questions or just want to chat, We want to hear it.

See you next time in your inbox!

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