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UK house prices treble in the last 20 years – Halifax

The price of a home in the UK has more than trebled in the last 20 years, with London property jumping the highest, with increases of 239% from £157,453 to £533,437, according to new research.

An average home in the UK would have cost just £91,199 at the end of the last millennium, but today a home would cost £279,997, Halifax found.

Every region saw houses at least double in value, although residents in Northern Ireland experienced the least dramatic increase at 139%, or £97,056.

A renewed focus on housing policy and increased infrastructure investment aimed outside the South East, for example, may go some way to rebalance the differences.

Russell Galley, Halifax

Scotland and the North of England saw the smallest increases over the period, up 172% and 185% respectively.

Russell Galley, Managing Director, Halifax, said: “The rise in house prices in London since the turn of the century is well documented, and a sharp decrease in affordability just shows how quickly the market has moved.

“Conversely, there are bargains to be had elsewhere such as in the North, Scotland and Northern Ireland where prices have been slightly more subdued and properties compared to earnings are comparatively affordable.

“A renewed focus on housing policy and increased infrastructure investment aimed outside the South East, for example, may go some way to rebalance the differences.”

First-time buyers will face tough times getting onto the housing ladder, with the cost of a first home outstripping the increases seen in the average UK home.

Source: Shropshire Star

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Small business confidence at an eight-year low

Confidence among small businesses reached an eight-year low this month, according to a new survey.

The Federation of Small Businesses (FSB) Small Business Index (SBI) was negative for a sixth straight quarter, reaching its lowest point since the last recession.

The confidence index now stands at -21.6.

The survey, which was conducted at the beginning of the month, showed that 46 per cent of small firms expected their performance to worsen over the next three months.

Just 24 per cent said they expected performance to improve.

Confidence is particularly low among retailers, with two-thirds expecting their businesses performance to decrease over three months.

The survey also found that the amount of small businesses that reported declining profits, 42 per cent, had reached a five-year high.

The domestic economy was given as the biggest reason for the lack of business confidence by business owners.

FSB director of external affairs and Advocacy Craig Beaumont said he hoped there would be a turnaround in the new year after the election gave the business community Brexit certainty.

“The small business community has been stifled by uncertainty for more than three years,” he said.

“This quarter, the added uncertainty that accompanies a general election made it even harder for small firms to plan, hire and increase profits.

“They say that the night is darkest before the dawn, and small firms will be hoping that the old adage holds true.

“The incoming government has made some very positive commitments to the small business community – particularly where connectivity, employment costs, business rates and late payments are concerned – it now needs to deliver.”

By Stefan Boscia

Source: City AM

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The city Brits most want to move to outside London

Bristol is the most sought-after area in the UK among potential buyers and renters looking for homes outside the capital on Rightmove, new figures suggest.

Data from the property listing site shows the city in south-west England was searched for more than anywhere else outside the capital in 2019.

York, Glasgow, Edinburgh, and Sheffield made up the rest of the top five among prospective buyers. Manchester, Liverpool, Cambridge and Glasgow were the most popular for potential renters, according to the data published on Tuesday.

The most searched-for areas of London were leafy Wimbledon in the south-west of the capital for would-be buyers, and the business district of Canary Wharf to the east for renters.

Separate analysis by Zoopla earlier this month showed the most affordable cities, such as Glasgow, Liverpool, and Belfast, had seen growth twice as fast as the UK average over the past decade.

The past three years have seen a slowdown in the housing market, particularly in the capital and the south-east as Brexit uncertainty, stamp duty changes, and a weaker economy have curbed growth.

Why is Bristol getting more popular and pricey?

The average property in Bristol now sells for £316,410, according to Rightmove.

Asking prices have grown by 2.3% over the past year, far higher than nationwide growth of 0.8%. Properties sell more quickly than anywhere else in the south-west, typically spending 50 days on the market before being sold.

“There’s high demand for suitable housing in Bristol and the surrounding area, as it’s a vibrant regional centre with a strong local economy,” said Miles Shipside, director of Rightmove.

The city’s economy has grown faster than average in recent years, with employment levels generally higher than in other large cities.

It has seen some of the highest rates of business startups, with creative industries booming and strong banking, insurance, and professional services sectors.

But the local council says economic growth has put a strain on housing in a city of almost half a million people, as well as increasing congestion and pollution.

“Though this is good news for those already on the property ladder, it makes it harder for first-time buyers to get onto it,” said Shipside, who predicts price trends will continue.

“Historically, there has not been enough new house building to cope with the shortage of homes, resulting in prices rising at a faster pace than many other cities in the UK,” he added.

Bristol’s population has increased by 11.7% since 2008, faster than the national average.

Its population is expected to rise by a further 21% by 2041 from 2016 levels, also far higher than the national average.

The average home cost more than nine times average local earnings in 2018, according to Bristol council, the highest of any of England’s so-called ‘core cities.’

Average property prices increased by £118,000 in the decade to 2019, analysis by the council suggests. That marked a 74% increase, versus an average of 47% in England and Wales.

The most popular cities to buy outside London

  1. Bristol
  2. York
  3. Glasgow
  4. Edinburgh
  5. Sheffield
  6. Cambridge
  7. Manchester
  8. Norwich
  9. Birmingham
  10. Nottingham

The most popular cities to rent outside London

  1. Bristol
  2. Manchester
  3. Liverpool
  4. Cambridge
  5. Glasgow
  6. Leeds
  7. Nottingham
  8. Birmingham
  9. Edinburgh
  10. Sheffield

By Tom Belger

Source: Yahoo Finance UK

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Agents anticipate rent increases in 2020

The majority (84%) of letting agents think rent prices will rise next year, up from two thirds (65%) last year, ARLA Propertymark has predicted.

More than three fifths (61%) think demand will continue to increase, but almost seven in 10 (68%) reckon the number of landlords operating in the private rented sector will decline next year, as they are driven out by rising costs.

Indeed, two thirds (68%) expect landlords’ taxes to rise again.

David Cox, chief executive, ARLA Propertymark, said: “For far too long, successive governments of all political persuasions have passed significant amounts of complex legislation for landlords.

“As a result, much of this year has dampened landlords’ appetites to invest and expand their portfolios, with many consolidating their assets, or choosing to step away from the sector altogether.

“This has impacted tenants most, who have restricted supply and have been faced with less choice and paying higher rents.

“Looking ahead to 2020, we hope the government recognises the importance of increasing supply for tenants and uses it as an opportunity to make the market more attractive for landlords.

“This will encourage more landlords back into the market as well as ensure that tenants, including those who are most vulnerable, are not at a disadvantage in being able to find a suitable and affordable home to rent.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Interest rates unlikely to rise in 2020, says ECB policymaker Robert Holzmann

A European Central Bank policymaker has said it is unlikely interest rates will be lifted back into positive territory next year.

Robert Holzmann cited Brexit as being likely to cause renewed concern toward the end of 2020.

The governing council voted to maintain the deposit rate at the historic low of -0.5 per cent in line with market expectations in President Christine Lagarde’s first monetary policy meeting in Frankfurt earlier this month.

“I do not expect a turnaround to a positive interest rate environment next year,” Holzmann said in a statement on Friday.

The head of Austria’s central bank said concern would grow next December toward the end of the UK’s transition period for leaving the European Union.

The UK is currently on course to leave the EU on 31 January with Boris Johnson saying a transition period up until the end of 2020 was non-negotiable, regardless of whether trade and other deals are agreed.

“There is little time for negotiations on future relations, and the outcome of the negotiations is open,” Holzmann said.

The ECB has reiterated earlier this month that rates will stay at the current level or lower until the inflation outlook is close to but below 0.2 per cent, with underlying inflation consistently convergent with that level.

Its annual forecast for real GDP growth for the euro area was 1.2 per cent in 2019, an upward revision of 0.1 per cent, but down 0.1 per cent for 2020 compared with September’s projections at 1.1 per cent.

The forecast for 2021 and 2022 is currently 1.4 per cent.

By Michael Searles

Source: City AM

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UK employment set to fall in 2020 despite wages returning to pre-2008 levels, warns think tank

According to a Resolution Foundation report, wages were set to increase in the New Year despite slow economic growth.

This would take wages, when adjusted for inflation, past their April 2008 peak for the first time, reversing an 11-year pay downturn.

But it predicted this wage turnaround may not be sustainable as economic uncertainty surrounding Brexit sets to weaken the job market.

The report pointed to a fall in youth employment, a decline in the number of vacancies and a poor employment outlook by businesses as potential warning signs of a stagnating job market.

This gloomy forecast follows a mixed year for the British economy.

2019 saw the UKs weakest GDP growth outside of recessions since the Second World War, but employment levels and pay growth hit a record high.

The employment rate hit a new high of 76.2% at the end of the year, while pay growth peaked at 3.9% in June.

Commenting on the report, Torsten Bell, Chief Executive at the Resolution Foundation, said: “2019 was a bad year for the economy, which looks set to have recorded its weakest GDP growth outside of recessions since the war.

“However, the part of the economy that households really care about – the labour market – defied the economic gloom and delivered record employment and decent pay growth.”

He added: “As we look ahead to the new year, the crucial living standards question facing the country is whether the labour market can continue its bullish run into 2020.

“The future is an uncertain land, but our best guess is that 2020 will be very different from the last few years.

“We may well see a welcome return to record pay levels, but a less welcome retreat from record employment, with worrying signs including falling vacancies and rising youth unemployment.”

Mr Bell also called on the government to focus on falling business investment in the New Year, adding that this issue “received next to zero discussion during the election campaign”.

Written by: Eleanor Langford

Source: Politics Home

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Thurrock records highest UK house price rise this decade

Thurrock in Essex has seen the largest increase in house prices this decade outside London, analysis of Land Registry data by modular housing developer Project Etopia shows.

Prices have increased by 78.2% in the past decade from £156,741 to £276,164, compared to an average rise of 38.8% across the UK, excluding London.

Joseph Daniels, chief executive of Project Etopia, said: “The staggering extremes of some of these house price increases this decade, topping 76% in 10 years, means owning a home remains an unachievable dream for many.

“In Three Rivers, for instance, buyers would now need mortgages of close to half a million pounds to buy an average home, leaving many properties out of reach for average earners.

“Healthy appreciation will be welcomed by many homeowners but for the wider country this is a totally unsustainable situation.

“The UK must accelerate house building to increase supply over the next decade and temper Britain’s affordability problems.

“Only Modern Methods of Construction can deliver new homes fast enough to meet the demand and ensure ordinary hard-working people can afford to buy property right across the UK.”

House prices fell in just three parts of the country in the last 10 years — Blackpool (-7.8%), Redcar and Cleveland (-1.0%) and Hartlepool (-0.4%).

BY RYAN BEMBRIDGE

Source: Property Wire

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House prices 2020: How will the UK property market fare next year?

It’s been a rocky year for the property market, as protracted political uncertainty and affordability problems left house prices largely stagnant in London and across the UK.

But with a resounding victory for Boris Johnson in the General Election earlier this month, and the prospect of an end to the Brexit saga in sight, 2020 may offer some hope of a turnaround.

So as the sector turns its eyes to the future, City A.M. asked top property experts whether they think 2020 will be boom or bust for the housing market.

Lee Pickett, real estate partner at global legal business, DWF

“Given the scale of the Conservative party’s victory in the general election, and the immediate reaction of both sterling and the stock market it’s entirely possible, likely even, that we will see a short-term Boris bounce for the economy and, as a result, house prices.

“There remains the fundamental problem that at nearly eight times average wages, house prices are already beyond what would normally be considered breaking point. But these are not normal times and mortgage rates are at record lows, which could well add a dose of rocket fuel to the housing market and house prices as a result at the start of the year.

“However, further into 2020 the spectre of uncertainty could make an unwelcome return. Much will depend on the government’s ability to negotiate a new free trade agreement with Brussels before the end of the year. If it can’t then Britain will either leave without a deal or the government will have to ask for an extension to the transition period, probably by June at the latest. Neither option is appealing and the return of political and economic uncertainty will have an obvious impact house prices. Maybe 2021 might bring better news.”

Marc von Grundherr, director of Benham and Reeves

“Previous to the EU referendum we were seeing annual growth as high as nine per cent nationally, hitting double digits within the capital. While it will take time for this momentum to return, six per cent growth across the UK is very attainable for the coming year, should the election play out as expected.

“London will see a return to positive territory”

“London as a whole will also see a return to positive territory and although it has fallen behind of late, once it turns it will turn quickly and so we expect to see house price growth for the region exceed the national top line in 2020 to hit seven to eight per cent.

“Prime central London may have seen the most drastic decline but over the last few months, parts of the top end market have also seen the largest revival. Now that we’ve seen the bottom of the market, this revival will continue with the hottest pockets expected to climb by as much as ten per cent in the next 12 months.”

Michael Stone, founder and chief executive of Stone Real Estate

“We’ve seen the property pedigree of the new build sector continue to outperform the wider market not only over the last year but since the EU referendum itself, and this is a trend that will continue well into 2020.

“Across the UK, new build house prices have increased by 4.6 per cent in the last 12 months alone, compared to just 0.6 per cent across the wider market. While this increase is smaller in London at 1.9 per cent, the capital’s wider market has declined by -1.2 per cent during the same time.

“This has been due to a sustained level of demand from first-time buyers in particular and a four per cent price gap between the two sectors is likely to remain, although we should see the market pick up over the coming months, with London enjoying a notable return to health.

“All things considered, we could see new build price growth lift another six per cent over the coming year, and while London may take longer to thaw, a three per cent jump is the least new build homebuyers can expect to see for the year ahead. Although this could be much higher depending on buyer sentiment levels.”

Patrick Alvarado, director of prime central London estate agency Nicolas Van Patrick

“Presuming Brexit happens, we would expect house price growth of around three per cent in prime central London in 2020. The continued surge in transactions we’ve seen in the last quarter should continue. As more supply comes to market over the year, pent-up demand will be satisfied and prices will level off. This will be more pronounced if Boris Johnson implements the extra three per cent stamp duty surcharge on foreign buyers as indicated in his recent manifesto.

Jeremy Leaf, north London estate agent and a former RICS residential chairman

“As far as impact on the housing market is concerned, the election is likely to result in a short-term bounce at least. However, the strength of this bounce will largely be determined by early clarification of the Brexit timetable.

“Demand can’t be pent up indefinitely and the clearest message we have received on our doorstep over recent months is that many people are fed up with waiting to move. That sentiment is reflected in greater-than-usual interest in pre-Christmas market appraisals.

“Nevertheless, I would be very surprised if there is a significant increase in values despite many sellers telling us it will happen. Prices have been underpinned for some time by a shortage of supply so any rise is likely to be more than outweighed by a stock increase in most price ranges.”

Howard Archer, chief economic advisor to the EY Item Club

“The housing market may get a modest leg-up should the UK leave the EU with a deal by 31 January. We believe an easing of uncertainties could see house prices rise by around 2 per cent in 2020. Housing market activity – and possibly to a lesser extent prices – could be given a modest lift in 2020 if the government introduces specific measures aimed at boosting the sector in the Budget.

“However, the economy still looks set for a challenging 2020 even if there is a Brexit deal so that the upside for house prices is likely to be limited. Furthermore, Brexit concerns could very well pick up again as 2020 progresses due to concerns over what will happen at the end of the year if the UK and EU have failed to reach agreement on their longer-term relationship and the transition arrangement is due to end (both sides have to agree to an extension of the transition arrangement and Boris Johnson has stated that he will not seek an extension).

“Should the UK ultimately leave the EU without a deal, we believe house prices could quickly drop around five per cent amid heightened uncertainty and weakened economic activity.”

By James Warrington

Source: City AM

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Buy-to-let alert! The best (and worst) locations for rent changes in 2019

It’s been another tough year for buy-to-let investors in 2019.

On top of swallowing more punitive changes from HM Revenue and Customs, like an additional reduction in mortgage interest relief, landlords have also had to suffer the Tenant Fees Act of June, a new law which has seen letting agents pass some of the admin fees traditionally footed by the tenant onto the property owner instead.

On the up

One silver lining for investors, however, is that the impact of these measures, in thinning landlord numbers, has worsened the supply crunch and thus forced rents higher. Data from Howsy shows that the average rent in England has risen 0.9% in the last 12 months, with rents rising most significantly in Yorkshire and the Humber (up 5.1%).

In 2019 average rents increased in eight out of nine major English regions, the property lettings platform says, with rental costs dropping only in the North East (down 1.1%).

Annual Rent Increase by Region

LocationChange in rent (2018–2019)
Yorkshire and the Humber5.10%
West Midlands3.00%
North West2.60%
South West2.50%
East Midlands1.90%
South East1.40%
East of England1.20%
London1.10%
North East-1.10%
England0.90%

Too much cost!

And some of the rent rises on a more local level have been quite blistering. In Exeter these have exploded by 28.7% on an average basis from 2018 levels, putting the Devon town at the top of the tree. Another nine locations saw rents rise by double-digit percentages.

It’s critical to stress, however, that conditions haven’t been sunny for all of England’s landlords. In the Northamptonshire town of Corby, for example, buy-to-let investors have seen the average rent plummet 10.5% over the past year, while those in Elmbridge in Surrey have also seen rents drop by more than 10%.

Even if you let out a property in one of those locations where rents are soaring skywards, I still don’t consider buy-to-let to be an attractive destination for your hard-earned cash. On a national basis, it’s quite possible that the 0.9% average rent rise in 2019 wasn’t enough to cover the increased tax, administrative, and running costs that many landlords have faced. And things threaten to get even tougher in 2020 as a raft of new changes come into force.

A better way to play property

In my opinion, a much better way to get rich from the UK property market is through share investing. Of course investors need to be careful – those investing in firms with high exposure to the physical retail sector are dicing with danger right now – though there’s a multitude of other ways to get rich from bricks and mortar.

One great way to get rich over the next decade, I believe, is to get some exposure to e-commerce. Even though broader retail conditions remain difficult right now, the amount of business being conducted by online sellers continues to thrive. Royal Mail said in its latest trading statement that parcel volumes were up a chunky 5% in the six months to September.

And so I think a good idea is to buy into firms that own logistics and distribution hubs that are integral to the business of internet retailing, like Tritax Big Box REIT and Urban Logistics REIT. The latter looks particularly attractive, too, as not only do City analysts expect earnings to swell by double-digit percentages over the next couple of years at least but current dividend projections leave it with mighty yields above 5% over the medium term. So forget about buy to let and put your hard-earned cash to work here instead, I say.

By Royston Wild

Source: Yahoo Finance UK

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Business confidence since Johnson victory at highest since EU referendum

Confidence among UK business leaders soared after prime minister Boris Johnson’s re-election to its highest level since the EU referendum in 2016.

A poll by the Institute of Directors (IoD) recorded the sharpest upward swing in positive sentiment month-on-month since its records began three-and-half years ago.

Net confidence levels in the UK economy for the year ahead rocketed from a -18% reading in November to +21% in December.

Confidence levels in their own firms also leapt from 26% to 46% among the 952 directors surveyed in the IoD’s ‘Confidence Tracker’ index.

The number of directors who expected their organisations to increase investment in 2020 also ticked upwards.

Many firms have held back on investment as political instability and economic uncertainty have taken a heavy toll on the economy since the Brexit vote.

But Tej Parikh, the IoD’s chief economist, said the Conservatives’ decisive election victory after a period of political deadlock over Brexit had given many leaders “a little more festive cheer.”

“A firm majority government means that business leaders, whatever their personal views, now at least have a framework around which they can put in place plans to invest, hire, and expand,” he said.

Many business chiefs have also expressed their relief since polling day at avoiding a Labour government, amid fears over leader Jeremy Corbyn’s plans on tax, union rights, public spending, nationalisation, and business regulation.

Parikh welcomed “some exciting stocking-fillers” from the new Johnson administration, including promises on lower business rates, skills investment, and higher research and development support through tax credits.

“For the longer-term, ambitious proposals on broadband, infrastructure, and regional growth are music to the ears of many in the business community who want to finally see the dial shift on the UK’s lagging productivity growth,” he said.

But he said continued uncertainty over Britain’s longer-term future “remains a cause for concern.” Many in the business world fear Johnson’s pledge to abandon EU rules less than a year after Brexit leaves too little time to ensure a smooth transition and close trading relationship from 2021.

Parikh added: “Our members’ confidence has proven sensitive to Brexit developments over the past few years, and this is likely to continue during negotiations in the year ahead.”

Business chiefs surveyed raised Britain’s uncertain trading status with the EU as their second most pressing concern, behind current UK economic conditions.

Separate survey data in recent weeks has painted a bleak picture of the UK economy despite record high employment, with political uncertainty and a global economic slowdown hitting output in certain sectors.

By Tom Belger

Source: Yahoo Finance UK