School
Every September the property market has its frantic ‘back-to-school’ moment, and this year the headline writers had their story ready. Asking prices up, plus housebuilding starts up, chuck in Interest rates on hold. Must mean a recovery, surely? Look a little closer and a different picture emerges, one that matters far more to anyone building homes, funding them, or investing in the loans behind them. The question this autumn isn't whether schemes can get out of the ground. It's whether the homes can be sold once they're built.
The good news, taken at face value, the headline numbers are genuinely better than they were in the summer. Rightmove's September index showed new-seller asking prices rising 0.7% to £367,440, the first monthly increase since May, and ahead of the ten-year September average of 0.5%. Nationwide's August figures had annual price growth edging up to 1.6%, from 1.4% in July. Over on the supply side, the latest MHCLG housing supply release looks even more encouraging. New-build starts in England reached 35,910 in the April–June quarter (seasonally adjusted), up 6% on the previous quarter and 20% on a year earlier. Annual starts to June came in at 136,330, up 15%. If you stopped reading there, you'd conclude the development sector had turned the corner. Please don't stop reading there (even though we know statistically, a lot of you will).
The starts figure is partly a change in who's counting. MHCLG itself flags that the higher starts recorded since late 2025 are partly down to a step-change in reporting by the Building Safety Regulator. The BSR reported 5,758 starts in Q2 2026; before its reporting changed, its highest quarterly figure had been 1,206. A meaningful slice of the "surge" is statistical rather than spades in the ground. A cleaner real-world proxy points the other way. New-build EPC lodgements, a less political data point, occur when homes are actually finished, so it’s less of a fair-weather metric. These total 46,240 in the 13 weeks to mid-September, down 7% from a year earlier. England delivered 35,800 new-build completions in Q2, down 3% on the quarter. Over the year to June, completions were 143,770, effectively unchanged, and well short of the 181,940 recorded in the year to June 2021. Against any version of the government's housing ambitions, that is not a recovery. It is a plateau, but a plateau is better than a cliff edge.
Even after September's value bounce, Rightmove's asking prices remain 0.8% below a year ago. Buyer enquiries are down 9% year-on-year, stock for sale is at a 12-year high for the time of year, and the average home is now taking around 64 days to find a buyer. Zoopla's numbers tell the same story: agreed sales are down 6%, stock is up 5%, and higher mortgage rates have cut the average buyer's purchasing power by roughly 9% since January. Official data show flats in England down 2.3% on the year, while every house type rose. Unit mix is no longer a detail; it's a valuation question.
On to rates, the Bank of England held Bank Rate at 3.75% on 17 September, but the vote was 6–3, with three members wanting a rise to 4%. CPI inflation climbed to 3.1% in August, and the Bank expects it to rise further, driven by energy prices linked to the conflict in the Middle East. Governor Andrew Bailey was explicit: the longer that volatility persists, the more likely a rate rise becomes. Markets have taken the hint, with Swap pricing now putting the odds of a November hike at around two in three, and the average two-year fixed mortgage had already risen to 5.67% by 10 September, from 5.59% at the start of the month. With the Autumn Budget landing on 28 October and the next MPC decision on 5 November, borrowing costs are up for now, not down. For the housing market, that matters less for this month's prices than for what it does to buyers' budgets next year.
So what does this mean for lenders and investors? The discipline shifts from getting deals over the line to making sure they can get out the other side. That means conservative loan-to-GDV ratios, independent valuations built on completed-sale comparables rather than asking prices, monitoring surveyors on site, and staged drawdowns that release funds only as work is verified. Headline indices can flatter; a well-structured facility shouldn't depend on them. When the headline numbers are this noisy, the structure behind a loan matters more than the market narrative around it. Investors looking at property-backed lending should be asking the unglamorous questions: Is the loan secured by a first legal charge? How much headroom is there between the loan and a realistic GDV? How does the lender assess exit risk, and what is its track record when exits take longer than planned?
The autumn bounce in the headlines is real, but it's largely seasonal, and arguably, without sounding too jaded in our arguments, the starts surge is partly a politically themed reporting artefact. Completions are flat, stock is high, and borrowing costs are moving in the wrong direction. However, none of that means development is a bad bet; if anything, it’s quite the opposite. The UK still needs far more homes than it builds & it means the schemes that come through 2027 in good shape will be the ones underwritten today for a more realistic sales window tomorrow.
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