HOUSE PRICES FALL FOR THE SECOND MONTH IN A ROW, ADPL JUNE REPORT

House prices fell by 0.4% in April to £261,962, following a 0.2% drop in March.UK house prices declined for the second consecutive month in April, influenced by uncertainties around interest rates and rising mortgage costs, which impact the traditional spring homebuying season. According to the Nationwide Building Society, April’s average house price fell by 0.4% to £261,962, following a 0.2% drop in March. This reduction marks a decrease of £11,700 since August 2022. Nationwide’s index showed that annual house price growth slowed to 0.6% in April from 1.6% in March. This trend placed additional pressure on the Bank of England ahead of its 9 May interest rate announcement. At the beginning of May, major banks such as Barclays, HSBC and NatWest raised their fixed mortgage rates, and Nationwide increased some rates by up to 0.25 percentage points. The average new two-year fixed mortgage rate has risen to 5.91%.The housing market has shown signs of cooling despite expecting a bank interest rate cut later this year, possibly as early as June but more likely around August or September. However, mortgage approvals peaked in March, reaching a high not seen since September 2022.A Nationwide survey revealed that 49% of prospective first-time buyers have postponed their purchasing plans in the past year due to high house

prices and increased mortgage costs. Additionally, 53% cited high house prices as a deterrent, while rising mortgage expenses hindered 41%. Despite these challenges, 55% of respondents were open to buying in less-expensive regions to afford a bigger home.

UK PREDICTED SLOWEST GROWTH AMONG RICH NATIONS

GDP is expected to rise by only 1% in 2025, below other G7 nations such as Canada, France, Germany, Italy, Japan and the US.The Organisation for Economic Co- operation and Development (OECD) has forecasted that the UK’s gross domestic product (GDP) will increase by only 1% in 2025, placing it below other G7 nations such as Canada, France, Germany, Italy, Japan and the US.The UK economy is described as “sluggish” by the OECD, primarily due to the residual impacts of multiple interest rate hikes. It predicts a modest 0.4% growth this year, a reduction from a previous estimate of 0.7%. This year, only Germany will have slower economic growth than the UK, placing the UK’s expansion rate as the second slowest among the G7 nations.The OECD attributes ongoing high inflation and the uncertainty surrounding future interest rate adjustments by the Bank of England (BoE) as factors dissuading investment. Despite recent national insurance cuts totalling a 4% reduction, the OECD notes that frozen personal income tax thresholds continue to impose a fiscal drag, where individuals may end up in higher tax brackets as their earnings increase. Furthermore, a governmental policy enabling full tax deductions for business investments in machinery and equipment is seen as insufficient to offset the rise in corporation tax from 19% to 25%. The OECD suggests that long-term measures, including the free childcare scheme, could alleviate fiscal pressures. With inflation easing from last year’s 40-year peak to 3.2% in April and interest rates steady at 5.25% sincelast September, the OECD anticipates a reduction in borrowing costs beginning this autumn, potentially reaching 3.75% by the end of next year.

SME ENERGY STANDING CHARGES ARE TOO HIGH
Some SMEs’ costs have risen by more than 1000%. Nearly two-thirds of these businesses cite utility costs as a key factor driving higher expenses.

MPS WARN UNFAIR BANKING IS HARMING SMALL FIRMS
The Treasury Committee says confidence among SMEs has fallen.

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