UK home sellers slash prices at fastest rate since 2018; China cuts key interest rate – business live | Economics

Share prices of UK house builders have tumbled following a profit warning from Crest Nicholson.

Crest Nicholson itself is down 14.4%, and is on track for its biggest daily drop since the Covid pandemic in June 2020.

Investors are spooked after the company – which reported a 60%+ slump in half-year profit in June – said worsening trading conditions meant it was expecting annual pre-tax profit to be around £50m, down from previous expectations for £73.7m.

Against a backdrop of persistently high inflation and rising interest rates, trading conditions for the housing market have worsened during the summer of this year.

While pricing has remained resilient in a market with limited supply and few distressed sellers, the economic uncertainty is deterring prospective home movers.

Crest Nicholson said mortgage costs were deterring buyers, particularly first time buyers, who have no equity to support their purchases.

That is on top of the lack of government support, following the end of the Help to Buy scheme, contributing to weaker transaction levels in recent weeks.

The group does not therefore expect to see a material improvement in trading conditions before its year end.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

We kick off with news of further woe for UK home sellers this morning.

Data released by property website Rightmove has revealed that the average UK home has been listed for around £364,895 throughout August.

That is 1.9% lower than a month ago, meaning that sellers have slashed prices by around £7,012 as they try to attract buyers put-off by high interest rates that have affected mortgage costs.

While there is traditionally a summer slump in asking prices, it is steeper than the average 0.9% drop in August, and marks the fastest monthly decline since summer 2018.

Zooming out, though, the data is a bit more forgiving, showing that on average, asking prices have only dropped 0.1% compared to a year ago.

Elsewhere, China surprised markets but slashing one of its key lending rates early this morning.

However, policymakers left a. separate five-year rate unchanged in a move that surprised markets

There are concerns in Beijing that the country’s economic recovery is losing steam due to an ongoing property slump, weak consumer spending and a drop in credit growth, prompting authorities to introduce more stimulus.

But concerns over the country’s rapidly weakening currency has prompted additional worries, and meant Beijing has had to tread lightly when introducing more monetary easing to avoid putting more downward pressure on the yuan.

It meant that while the one-year loan prime rate was lowered to 3.45% from 3.55% previously, the five-year loan prime rate was left at 4.20%.