Market Update - May 2026

0:01Hey everyone, it's Rob B here with Rob Dix and you are listening to the Market Update. My word, there's a lot going on in the world right now, but there's so much happening that you probably haven't even realised. We bring you the stories that really will make a difference to the property market, where it's going, the industry and your own investment journey, all in this week's episode.

0:27welcome to the property podcast thank you for joining us in case you don't know we run a business that arranges over 100 million pounds worth of property deals every year you can find out about that at propertyhub.net slash invest um i don't think i could remember a time when it's ever been harder to really get beneath the skin of what you're reading in the headlines and understand what's going on in the market and understand what that means for you well thankfully that's what our market update episode is here to do. So let's get into it. As always, there's so much happening in the world, but it's our job to bring you the stories that really matter to you as a property investor and investor in general, and help understand what is really happening beneath the surface outside the big headlines that you're reading day to day.

1:11The first one, and I pretty much miss this one, but it happens every month. The Bank of England voted on interest rates and it's pretty solid, Rob. The reason why probably didn't make big headlines is because rates were held at 3.75 but there was eight people who said let's hold but one one said let's increase let's increase to four and it's been a while since we've had a vote for an increase that's right but they're in a tricky position because the reason that there was that vote for the increase is that inflation is above target and actually came in higher than expected so inflation was three percent went up to 3.3 percent and a lot of that is due to energy prices, of course, but services inflation, which has little to do with that, is also particularly high, which is a worry for the banks.

1:55You can see why one of their members voted for an increase because they want to get inflation under control. At the same time, increasing interest rates slows down the economy and the economy is not doing particularly well. So stagflation is the word that's being thrown around. You're in this worst of all worlds situation where you've got inflation above target and the economy not doing very well. So what do you do? The answer and where they seem to be at the moment, Rob, is just hold rates where they are and hope for the best. That's why, again, as an investor, using inflation to your benefit is such a power because, as we know, inflation is meant to be 2%, but here it is between 3%, 3.5%, and they're not increasing rates because the last thing they want to do is crush the economy.

2:33And this is why inflation always in practice ends up being above target, and that's why using mortgages is so powerful. Yes, for the majority, inflation punishes, but listeners to this podcast will know that it rewards property investors who use mortgages or leverage or debt. Choose your word. Interestingly, the Bank of England have said that they expect inflation to stay around this rate for the next six months. So any cuts that were expected this year are probably going to disappear. I don't think we're going to see an increase. Like you said, Rob, I think it's probably going to hold around this level now.

3:07And actually, historically, where we are at an interest rate level is pretty good. I'm sure people would like to see it lower. but where it is right now isn't too bad at all and hopefully the bank of england stay firm don't push rates up any further and we eventually come out to this and maybe some rate cuts towards the end of this year probably not maybe more the beginning of next but we will see it's a moving feast at the moment every week it feels like there's a different perspective a different opinion of where rates are going so of course we will keep you updated while we're on the bank of England, the surprising news, at least the headline is, is mortgage approvals hit a nine-month high in March.

3:46What's all that about? That sounds like the market is super active, right? If the mortgage approvals, which are up to very high levels, the highest since June 2025. Well, actually, when you dig in again beyond the headline, the story's more interesting because it's not really driven by new mortgages. It's been driven by remortgaging. Because of the volatility, because the uncertainty, A lot of people have locked in new mortgages, so they've remortgaged in March because of the concern about where rates are going. And that's driven approvals to the highest since last summer. So if you just read the headline, you could get the wrong end of the stick, but the data helps us explain what's actually happening.

4:25Rob, let's explain the next headline, though, because what the market feels like and what it's actually doing are two different things. and I'll be honest, this number surprised me as well, the next number, which is house prices are on the up again. Yep, surprised me. I can't really explain it. If you read the release, Nationwide's chief economist also doesn't seem to really understand why. I would have expected to see a small dip maybe, but no, house prices up 0.4 % in April, which means annual house price growth is at 3%. And it's crazy how bad the last decade has been that we're saying 3 % is pretty good but three percent does feel pretty good but as ever beneath that countrywide average there are regional differences and zoopla data shows that that north-south divide is just getting wider than ever it is not subtle every city where prices are falling is in the south of england every city where prices are growing three percent per year or faster is in the north and that doesn't surprise me and i don't forget to surprise anybody listens to this podcast because we regularly report on where you should be focusing as an investor right now and I'll keep saying it because people don't believe it even though I'm a northerner we don't just back the north for that reason we just tell you where the best places are to invest right now and we even put London on our wants to watch list earlier this year so we're not anti-south or anti-London the data might be but we're not but here's a few takeaways to consider when we look at this house price data so ZUPLO which should be noted, says that UK growth is at 1.3%, so a bit lower than nationwide, well quite a bit lower actually.

5:58And the northeast is the highest at 3.2 % and London is the lowest at negative 0.2%. But what we have to remember is the inflation numbers we just talked about. These numbers, even the strongest numbers that we're reporting here, are currently below inflation levels. That means that in real terms, house prices are falling. Again, this hasn't happened for a little while, but because inflation has crept up and house prices are only growing at a very modest rate, it means in real terms, house prices are falling. And this plays into the overall picture of where is UK property right now? Where it is, is incredibly affordable by historic levels.

6:43now some people get really angry when you talk about things like this like property is not affordable and for many it isn't but by historic standards when we look at the data and that's all I'm looking at I'm not being emotional about this I'm just looking at the data when you look at the data UK property is the most affordable it's been in decades now because we've had such limited growth and we've had quite a fair bit of inflation over the last 10 years so in real terms when you look at where house prices are going, house prices become more affordable. And that's one of the reasons why yields are constantly improving at the moment, because inflation pushes up rents as well.

7:24You have inflation and rents tend to follow. It's a bit of a lagging effect, but they tend to follow. So I wouldn't be surprised if we saw rents increasing towards the latter part of this year as well, further increasing the yields that we're seeing. So the value play in property is super compelling, the sentiment is awful. But when you look at the value proposition, and then you think, okay, well, what does value bring? Well, if you've got an asset that's undervalued, and the market is negative on it, that for me at least, and this is how I've always looked at investments, not just property, all investment, that creates opportunity.

8:00Because you've got sentiment saying it's awful, but the data saying there's value, and the two create the opportunity. We'll talk about this more on the podcast in the coming months. I think we need to do an update to the silent property crash that we've talked about previously. If you've not listened to that episode, we'll link to it in the show notes because it's really important for you to understand what is actually happening with the UK property market. And we report on the data there that just isn't talked about anywhere else. So we'll bring you an update on that in the next few months. You said the sentiment is bad and that is backed up by the latest RICS survey, which they put out every month.

8:34This is where they ask surveyors and valuers for what they're seeing. And I'd describe it as getting worse from a low base. So it says it's gone from slightly negative in February to firmly negative in March, the worst since the summer of 2023. And if you think back, that was when every month interest rates were just going up and up and up. They think that sales activity is going to fall. The amount of properties sitting unsold on agents books is going up. So this is why that nationwide data about house prices increasing, albeit by a small amount was so surprising because sentiment is so bad but like you said rob the numbers and the sentiment are very different and at some point people are going to notice i'm in lots of whatsapp groups anyone just this week someone very very smart who i know posted about property and said am i missing something here that like this this this is looking too good and that kicked off a mini discussion so most people mentally are at a completely different place from that but the fact that some very switched on people are noticing implies to me that more people will start catching on and at some point they're going to have to it's going to be too obvious it will become too obvious i've just made my first investment of the year and we'll talk about that on the podcast in the coming weeks i think it'd be interesting for you to hear and understand what i've invested in and why but i'm in that weird group and i know if you're listening to this you are in that camp as well where you try to filter out the noise it is difficult even for me who lives and breathes this who's in it day in day out you you hear this noise but the data the opportunity is so much bigger than a noise and actually it flip reverses and I become excited I get excited by the opportunity because when it's at its worst sentiment that normally creates the biggest opportunities and that's why I'm not just talking about it I'm doing something about it because the opportunities that are being created right now or you can create yourself are amazing and even if you don't get yourself a great deal, which you absolutely should in this market.

10:27Just buying an average property will probably see you do well over the next 10 years because you're buying at a point where yields are great and prices are flat and have been flat for a long time. And actually, as we've discussed in real terms, falling. Now let's move on to rents. Now earlier on, I hope you were listening, I said that I wouldn't be surprised to see rents go up towards to the end of this year, lagging behind inflation. At the moment, it's at 3.4%, which is actually around where inflation is right now, but that is the slowest it's been since 2022. Let's take that in for a moment.

11:01The slowest it's been since 2022, and it's at inflation levels now. So 3.4 % shows what's been happening with rents. Now, unless you're renting, you probably haven't really noticed but it's just been up and up and up and up and this is why yields are improving month in month out yields are really really good right now again sound like a broken record but no one's noticing and we're trying to open people's eyes to the fact of what is happening but that's because we're now at 3.4 percent which is where inflation's at and that is the slow as it's been since 2022 and I wouldn't be surprised if it crept up again towards the latter part of this year.

11:45Again the regional split very interesting so we talked about the northeast in London earlier and it's the same for the rents. Northeast rents are up by 6.5 percent that's huge and London is up by 1.7. Even London's still up but the difference between the two the top and the bottom is huge. So the yields in the northeast right now are very, very attractive. That's an area that Property Hub Invest has moved into the last few years as well. We haven't done a lot in the northeast, but we have moved into that region. I've been doing deals there because we've started this opportunity as well. We're very selective on the areas.

12:23I wouldn't invest in everywhere in the northeast. So you've got to be very careful. It's a warning we give out on the podcast all the time. You hear us drop areas or towns or cities that we like, but it doesn't mean that everything within those towns, cities, or areas, regions are good. There are plenty of rubbish places to invest in the Northeast, let me assure you, but there are some good opportunities as well. So if you are open-minded as an investor to the areas you want to invest in, the Northeast should absolutely be on your radar, but just be careful. Don't bulldoze in. Make sure you're buying the best because the best is quite affordable in the northeast and the yields are still very attractive and the best areas chances are will still be the best areas in 10 years so you benefit from that capital growth play as well i feel like we're getting quite tactical today rob we're not just giving the news but we're building on it and trying to give tactics i'm enjoying today's episode me too me too there's lots to get into lots of take away from it and but there's more as well because while we're talking about rents there's two really interesting things going on i think play into what you're saying about rents potentially picking up again which on the one hand you've got supply falling not a surprise we've heard that lots of landlords are leaving the sector but there's two stories that have come out in the last couple of weeks that are putting numbers on this so Savills data says that over a quarter of a million former rental properties have been listed for sale over the last year 700 per day if you want to be precise and of those only 14 are being bought by other landlords the rest are moving to owner occupiers and in London 30 of homes that are being listed for sale are former rentals.

13:53So the exodus is real. And there's another survey from Pepper Money that reckons that the private rented sector will shrink by 5 % this year. So that is stock that is going. There's another story that's come out recently from Brightmove showing how renting is now cheaper than buying. Now that of course is because the typical mortgage rate has gone up over the last couple of months. And of course lots of people will still want to buy even if at the moment renting is cheaper because there's lots of good reasons to own and it's not always going to be that way. But even so, as well as all the other sources of demand for the rental sector, you might have more people staying in the rental sector rather than going on to buy than you previously would have done.

14:32Because they're like, well, I'm a bit uncertain about the future. Everything's a bit iffy. And also, I'm not even going to be saving any money. It's going to be costing me more to buy. So they are going to be staying in the rental sector rather than moving out of it, which adds yet more demand. So put the two together, Rob, and it's hard to see how rents aren't going to go up over the next year well when you put it that way rob when i'm right later this year doesn't sound as impressive so we could try and backtrack a bit and though it could do and if you're right rob you're a real sage um but you touched on mortgages there going up which is why renting has become more affordable and you're right of course and the data is out and for landlords it's not the news you want to hear because the average mortgage rate over the last few months has jumped from 4.2 to 4.84%.

15:19Remember, interest rates haven't gone up. Interest rates haven't gone up. But the lending has, and that's because of all the volatility that we've seen in the market right now. And something I've been saying to investors on an individual level is that's okay because you should be taking advantage of the volatility and getting yourself a better deal. An interesting play is locking a deal with the volatility. If you can, that's off plan because then you can wait for the temporary volatility to move away. Because remember, volatility isn't a constant. When the situation becomes the norm, it's no longer volatile.

15:54So even wars can become normal. Not a nice thing to say, but that's how the markets look at it. But there are signs that this is already starting to happen. Because in the last two weeks, two-year fixes have fallen. And they were from a pretty high level, from 5.9 down to 5.81. on but the point i'm making is that it's starting to trend down in the last few weeks so we are starting to see movement because while the war hasn't been resolved it's just becoming more normal to the markets and that is why we're starting to see those rates cut now when they come back to the levels that they were at the sentiment will improve and the deals that we're seeing right now will of course not be as strong you can get a good deal in any market but it's easy to get a good deal in this market.

16:43So just be aware that this trend has begun and a few weeks might be just a blip so we'll keep reporting on this but if you've been sitting on the fence for a while maybe you need to start thinking about taking action because the opportunity in the market right now is really strong. Of course caveated by the fact that my expectation is that you get yourself a great deal if you are entering into the market and it is as I keep saying, quite easy to do. Whether you're working as an individual or working with a company like Cars, Property Up Invest, you don't have to work with us. You could absolutely do this yourself, but just make sure you do it.

17:19Let's move on and talk about the ever-exciting topic of policy and regulation. There's yet more bad news for landlords in Scotland coming up. But first, let's talk about leasehold flats. So the government, if you remember, are setting out to remove leasehold as a concept. They want to replace it with something called commonhold. but the housing minister gave a speech over the last week where it's quietly acknowledging that sort of having a great idea to do something and being able to do it are quite different things so he essentially said yeah this is a bit tricky and it's pretty much not going to happen during this parliament but within their proposals there are lots of different things bundled up into one what it seems like they're going to do is separate it all out into different bits of legislation so you can get some bits before others so probably the aspect that some investors will care about the most is capping ground rent.

18:06Ground rent, of course, on new apartments is not a thing. Since the middle of 2022, no ground rent. But for any leases issued before that, there is ground rent, and often it can increase to problematic levels. They said that they're going to cap ground rent at£250, and that part of the bill is not a done deal. But it seems like there is a fighting chance of that happening in this parliament, even if full reform takes longer. So lots of investors worry about ground rent. Like I say, if you're buying a newer property, then it's not something you have to worry about it's not a thing but if you have got older apartments with clauses where the ground rent can double every 10 years or 15 years or whatever it is then hopefully you're not too far away from that cap coming in and putting an end to it so some potential good news on the horizon there some potential bad news on the horizon for landlords in scotland who've already had a spectacularly tough time of it over recent years but at least if it's not going well you can just sell up and you can sell to whoever you want to no no you can't not if the snp get their way they pledge that if they're re-elected then tenants will get a first refusal period to buy the landlord's home at market rate again they haven't been elected yet and it is only a proposal but it's yet another sign of just how unfriendly the atmosphere is for investors north of the border and if you subscribe to our youtube channel to search property hub on youtube we've got a video coming out about that and what it might mean for investors in england very soon and finally i think it's fair to say that everyone is a bit fed up with politics and everything that's going on around that but this is one of the reasons why and it's not exclusive to this particular party i think it's just an ongoing problem that has been in place for decades and the headline of this story reads labour's mansion tax set to cost nearly 400 million up front before generating income and this is a story in property industry i and this is a staggering that to set this up it's going to cost the government 380 million pounds before revenue is generated of that it's going to cost 150 million pounds to identify and value the affected properties i mean the wastage in that is absolutely unbelievable you can imagine the difference the business world would take with this 150 million to identify the properties we'll do it for you it's not hard it's not 150 million pound problem it really is not and this wastage that goes on is absolutely ludicrous so it's taken to the end of the pod for us to have a political moan but and this like i say is cross party the wastage it's absolutely infuriating but how on earth can we get to 400 million pounds to spend just to set something like this up i mean Imagine what could be done if invested correctly, and that's another issue.

20:57I'm going to hold back, I'm not going to go. But imagine what£400 million worth of well-spent infrastructure could do. Why not build a great railway system between Manchester and Leeds? That would go a long way, the£400 million. Wouldn't pay for it all, but it'd go a long way. There's lots it could do, and that's just to set up a tax. That's all it's for. Absolutely bonkers. I could very happily join you in this moan rob and extend it for another five minutes but I will not because we've already covered a lot there's loads going on at the moment we've rounded up the most important stories of the month and most importantly I think put that in context and shared what that means what should you be doing as a result of this we do this every month but we also do it every week in our free property pulse newsletter it comes out every Friday it tells you everything you need to know as an investor so if you haven't already subscribed to that come on sort it out all you have to do is go to propertyhub.net slash pulse okay it's time to give you more we just love giving and we're going to do it in the form of hub extra now rob you haven't shared with me what we're going to talk about this week so please enlighten me and everyone else now what's hub extra this week yes this is a tv show that i've been really enjoying it's a really really easy watch so if you want a bit of escapism from all the things we've been talking about i strongly recommend a show on amazon prime video called Jury Duty Presents Company Retreat.

22:17So this is a documentary about a company retreat and all the characters are a bit strange and on this retreat lots of weird things happen. It's like this can't possibly be true and that's because it's not. It's because everyone is an actor except one guy. One guy has been brought into this and has no idea what's going on and it is just so funny to watch. It sounds a bit mean when I put it like that but actually it's just really really funny. So if you're looking for an entertaining watch where it's just funny and you can switch off your brain but not feel a bit dirty about it afterwards then i would strongly recommend company retreat and i'd strongly recommend that you subscribe to the podcast and sign up for property pulse and also join us on tuesday for ask rob and rob and if that wasn't enough for you then you can also read our weekly article in the sunday times as well you'll see our lovely faces smiling back at you there until all those lovely things happen take care have fun bye-bye

23:13Thank you.