London properties are taking longer to sell this month, despite a summer price cut by Londoners, as Brexit uncertainty compounds the dampening effect of the holiday season.
Homes in the U.K. capital are staying on the market for five days more than in May, the month before Britons voted to leave the European Union, property website Rightmove Plc said in a report published Monday.
To encourage buyers, owners of inner-London homes cut asking prices by 3.6 percent from July to an average of 784,494 pounds ($1 million); districts further out saw values drop 1.5 percent. It leaves London overall up 2.1 percent on the year, one the slowest growth rates of any U.K. region.
The average price in Westminster, home to many of Britain’s priciest properties, was nearly a quarter lower than in August last year at 1.63 million pounds, while in commuter-heavy Waltham Forest prices rose 14 percent to 475,662 pounds.
“Owners of more highly priced properties tend to prioritize their holidays over putting their property up for sale, which gives some anomalies in average prices in the most expensive boroughs at this time of year,” said Rightmove Director Miles Shipside.
Across the country, prices fell 1.2 percent over the month — in line with the average summer dip of the last six years — but were still up 4.1 percent from a year earlier.
Rightmove said the summer lull was adding to the fallout from the Brexit vote and a slowdown in demand since a tax hike on investment homes took effect in April. Transactions were down by a fifth on the year, according to the survey, which was carried out between July 10 and Aug. 6.
Homeowners and prospective buyers received a boost this month when the Bank of England cut its benchmark interest rate by a quarter-point to 0.25 percent, delivering immediate savings for millions of borrowers with adjustable-rate loans.
“There is pent-up demand,” said Shipside. “There are still hundreds of thousands of buyer enquiries every week. The latest interest-rate cut is making already cheap-to-borrow money even cheaper should act as an added boost to confidence.”
In a separate survey published Monday, broker Countrywide Plc said annual rental-growth slowed across the U.K. in July as the stock of homes jumped by almost a quarter. In London, rents fell by 0.5 percent to an average 1,280 pounds a month, the first decline in six years.
The increase in the number of rental properties is partly due to landlords rushing to complete purchases before the stamp-duty increase kicked in, Countrywide said.
Oil Prices Recover Slightly Amidst Demand Concerns in U.S. and China
Oil Prices Continue Slide as Market Skepticism Grows Over OPEC+ Cuts
Global oil markets witnessed a continued decline on Wednesday as investors assessed the impact of extended OPEC+ cuts against a backdrop of diminishing demand prospects in China.
Brent crude oil, the international benchmark for Nigerian crude oil, declined by 63 cents to $76.57 a barrel while U.S. WTI crude oil lost 58 cents to $71.74 a barrel.
Last week, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed to maintain voluntary output cuts of approximately 2.2 million barrels per day through the first quarter of 2024.
Despite this effort to tighten supply, market sentiment remains unresponsive.
“The decision to further reduce output from January failed to stimulate the market, and the recent, seemingly coordinated, assurances from Saudi Arabia and Russia to extend the constraints beyond 1Q 2024 or even deepen the cuts if needed have also fallen to deaf ears,” noted PVM analyst Tamas Varga.
Adding to the unease, Saudi Arabia’s decision to cut its official selling price (OSP) for flagship Arab Light to Asia in January for the first time in seven months raises concerns about the struggling demand for oil.
Amid the market turmoil, concerns over China’s economic health cast a shadow, potentially limiting fuel demand in the world’s second-largest oil consumer.
Moody’s recent decision to lower China’s A1 rating outlook from stable to negative further contributes to the apprehension.
Analysts will closely watch China’s preliminary trade data, including crude oil import figures, set to be released on Thursday.
The outcome will provide insights into the trajectory of China’s refinery runs, with expectations leaning towards a decline in November.
Russian President Vladimir Putin’s diplomatic visit to the United Arab Emirates and Saudi Arabia has added an extra layer of complexity to the oil market dynamics.
Discussions centered around the cooperation between Russia, the UAE, and OPEC+ in major oil and gas projects, highlighting the intricate geopolitical factors influencing oil prices.
U.S. Crude Production Hits Another Record, Posing Challenges for OPEC
U.S. crude oil production reached a new record in September, surging by 224,000 barrels per day to 13.24 million barrels per day.
The U.S. Energy Information Administration reported a consecutive monthly increase, adding 342,000 barrels per day over the previous three months, marking an annualized growth rate of 11%.
The surge in domestic production has led to a buildup of crude inventories and a softening of prices, challenging OPEC⁺ efforts to stabilize the market.
Despite a decrease in the number of active drilling rigs over the past year, U.S. production continues to rise.
This growth is attributed to enhanced drilling efficiency, with producers focusing on promising sites and drilling longer horizontal well sections to maximize contact with oil-bearing rock.
While OPEC⁺ production cuts have stabilized prices at relatively high levels, U.S. producers are benefiting from this stability.
The current strategy seems to embrace non-OPEC non-shale (NONS) producers, similar to how North Sea producers did in the 1980s.
Saudi Arabia, along with its OPEC⁺ partners, is resuming its role as a swing producer, balancing the market by adjusting its output.
Despite OPEC’s inability to formally collaborate with U.S. shale producers due to antitrust laws, efforts are made to include other NONS producers like Brazil in the coordination system.
This outreach aligns with the historical pattern of embracing rival producers to maintain control over a significant share of global production.
In contrast, U.S. gas production hit a seasonal record high in September, reaching 3,126 billion cubic feet.
However, unlike crude, there are signs that gas production growth is slowing due to very low prices and the absence of a swing producer.
Gas production increased by only 1.8% in September 2023 compared to the same month the previous year.
While the gas market is in the process of rebalancing, excess inventories may persist, keeping prices low.
The impact of a strengthening El Niño in the central and eastern Pacific Ocean could further influence temperatures and reduce nationwide heating demand, impacting gas prices in the coming months.
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