The UK housing market is at its strongest since the aftermath of Liz Truss’s infamous mini-budget that sent borrowing costs soaring, according to the latest figures.
Nationwide said house prices grew at an annual rate of 2.4% in August, up from 2.1% in July and the fastest rate since December 2022.
Separate figures from the Bank of England showed there were nearly 62,000 mortgages approved for homebuyers in July, the highest total since September 2022 – the same month as the former prime minister’s disastrous mini-budget. The Bank also revised mortgage approval figures for June slightly upwards.
The UK housing market has been buoyed up by the Bank’s move this month to reduce rates from 5.25% to 5%, the first cut in four and a half years. Lenders have responded to the cut by introducing more competitive mortgage rates while Lloyds Bank, Britain’s biggest mortgage provider, announced on Thursday it would increase the maximum sum it was willing to lend to first-time buyers.
The call for government to intervene and potentially overrule Ofwat risks bringing into question the watchdog’s independence. The body was created in 1989, when Britain’s water and sewage services were privatised by Margaret Thatcher’s government, in order to set limits on the amounts regional monopolies could charge consumers.
In crisis talks with civil servants, advisers and members of Thames’s board of directors have predicted that if it runs out of money and is put into a so-called special administration regime – temporarily bringing it on to the government’s balance sheet – it could damage the entire water sector and the wider UK infrastructure market. They are understood to have argued that the contagion from temporary renationalisation would increase the cost of capital for all water companies hoping to raise funds.
However, some investors and people familiar with the discussions have talked down the risk of contagion, saying it would be unlikely as markets would view Thames as an extreme outlier, adding that stock market listed peers, including Severn Trent, have not struggled to raise fresh funds despite Thames’s very public struggles.
Thames Water declined to comment.
Such is the concern over the company unravelling and potential fallout that it was high on the list of priorities for the new government drawn up by Keir Starmer’s chief of staff, Sue Gray, in the run-up to July’s election. Cross-Whitehall discussions have included senior figures from No 10, the Cabinet Office, Treasury, the environment and business departments.
