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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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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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Housing Forecast 2020 highlights need for Government to prioritise housing policy

The Royal Institution of Chartered Surveyors (RICS) Housing Forecast 2020 highlights the need for Government to prioritise housing policy, in order to inject activity into the market and create a favourable environment for developers to help address the housing crisis. The 2020 forecast predicts that there will be little change in sales volumes for the year ahead, despite the new certainty around Brexit.

In 2019, the RICS survey data consistently showed that the market was plagued by a shortage of stock, with average stock levels on estate agents’ books hitting a new all-time low in June. This coupled with a continued decline in new properties being listed for sale – as respondents cited sellers caution over selling during the Brexit period – and stretched affordability in parts of the country – means the likelihood of a material pick-up in activity during 2020 seems unlikely.

This lack of impetus in sales activity, suggests house price growth will rise modestly throughout the year with the forecast predicting a 2% rise.

Tarrant Parsons, RICS Economist, said: “Momentum across the UK housing market has remained relatively subdued, with new buyer demand showing little impetus going into the New Year. That said, with the Conservative party winning a clear majority, the Withdrawal Agreement will very likely be ratified in the coming weeks. This could see some confidence returning, at least for a brief spell, meaning activity may see some uplift.”

“Challenges around affordability and low stock levels will continue to drag on the market, and Brexit uncertainty could resurface as the next deadline draws closer. As such, we expect house prices to rise by just 2% next year, with the outlook for overall sales volumes broadly flat.”

Rents are also expected to rise in 2020, and at a faster pace. As the sector continues to struggle with a lack of supply, the RICS survey data suggests rents will rise by 2.5%. In fact, the number of new landlord instructions has been stuck in negative territory for fourteen successive quarters, which is the longest run since 1999. In London, rents are expected to rise at an even faster pace of 3%.

Hew Edgar, RICS UK Head of Engagement and Cities Strategy, said: “In the past, many Government administrations have implemented a piecemeal approach to housing and tinkered around the edge of the main issues. This needs to stop in order to make real and substantive enhancements to the UK’s housing sector – whether that is the pace and quantity of housing delivery, quality standards, or energy efficiency. Mr Johnson’s parliamentary majority provides an ideal opportunity to do this; but he, and his team, must grasp the nettle.

“It is imperative that the new administration hits the ground running and makes headway into the plethora of housing pledges within the Conservative manifesto – ensuring they actually deliver holistic policy, as well as moving the housing sector forward with a consistent and long-term approach.”

Source: Property118

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Brexit and house prices: ‘Boris bounce’ will not lift the stagnant housing market

Brexit and house prices: many home owners are continuing to worry about the state of the property market following the Brexit vote and the continuing uncertainty about what kind of a deal we’ll have when we do leave the European Union.

Although Boris Johnson’s landslide victory in the recent General Election has spiked hopes of a ‘Boris bounce’ for the UK’s housing market, property experts continue to predict a flat housing market constrained by a lack of supply of new properties. The latest housing forecast by Halifax predicts a two per cent growth countrywide – a better situation for sellers than in 2019, but hardly a surge.

Finding a good mortgage deal might be easier than ever historically, with interest rates remaining low, but sellers remain wary of what 2020 will hold in terms of Brexit negotiations and are holding off putting their properties up for sale.

Simultaneously, first-time buyers continue to be stymied by their inability to put together a deposit. Moreover, the number of rental properties coming onto the market has reduced too, which will mean higher prices for renters, with a three per cent rise predicted in London.

It is clear at this point that the government will need to come up with both short-term and long-term solutions to the housing crisis come the new year – not after Brexit, but as soon as possible.

Managing Director of Halifax Russell Galley points out that something must be done to increase housing affordability, regardless of the outcome of the Brexit negotiations, ‘Prospects for 2020 look a bit brighter, with uncertainty in the economy falling back somewhat, transactions volumes anticipated to pick up and further price increases made possible by growth in households’ real incomes. However, the challenges faced by prospective buyers in raising the necessary deposits may continue to constrain demand.’

RICS also emphasise the need for the government to take housing reform seriously. Head of UK Government Relations & City Strategy Hew Edgar suggests that elevating the Housing Minister to Cabinet level would signal an appropriate level of commitment to fixing the housing crisis – a burning issue that continues to unfold alongside Brexit, ‘For too long, domestic issues – particularly housing – have been side-lined by the Brexit debate, and this has negatively impacted investment and growth in land, property and construction.’

BY ANNA COTTRELL

Source: Real Homes

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Pound to Dollar Forecast: UK Interest Rate Uncertainty Impacts GBP to USD Rate

Pound Continues to Slip Lower Against the Dollar

The pound to US dollar rate ended last week on the backfoot, after briefly dipping below the 1.30 level on Friday. Already concerned about the Bank of England’s (BoE) interest rate outlook – which kept the possibility of cutting the cost of borrowing on the table in 2020 – the pair was left to digest the central bank’s second big announcement of the week. Mark Carney’s replacement as the governor of the BoE was revealed on Friday: Andrew Bailey, a BoE stalwart, will step into the role next month, creating further uncertainty about UK interest rates in the months ahead.

Interest rates weren’t the only factor weighing on the GBP vs USD pair. A sudden revival of no-deal Brexit fears, combined with dollar strength, also contributed to its downward spiral from a high of 1.34 on Monday. Boris Johnson’s suggestion earlier in the week that he would prevent the extension of the Brexit transition period, led to concerns that the upcoming negotiations could fail to deliver a comprehensive deal; a scenario that could leave the pound sterling to USD rate balancing on another cliff edge.

US-China Trade Doubts Boost Safe Haven Dollar

The US dollar took comfort in encouraging domestic data, before being boosted by lingering US-China trade uncertainty. Any hint of optimism that the trade war between the two superpowers can be resolved has the potential to make the safe haven dollar unappealing. Therefore, further stagnation in talks about a ‘phase one’ deal can have the opposite effect.

Looking Ahead

Britain took a huge stride towards leaving the EU when Parliament finally passed the Brexit withdrawal agreement on Friday. Mr Johnson’s reward for achieving such a thumping election majority also included an amendment outlawing an extension to the Brexit transition period. While this could still be revisited in the coming months, the pound will be hoping the UK government favours a soft Brexit agreement over splitting from the EU as soon as possible. The only UK data of note over the Christmas week is Friday’s UK finance mortgage approvals.

Will a raft of ecostats provide the US dollar with some festive cheer? Today sees the release of Durable Goods Orders, Nondefense Capital Goods Orders (excluding aircraft), New Home Sales and the Chicago Fed National Activity Index. On Thursday Initial Jobless Claims figures hit the headlines. Dollar investors will also continue to monitor developments in the US-China trade war, although the Christmas break means they probably shouldn’t hold their breath.

By Jonathan Watson

Source: Pound Sterling Forecast