Marketing No Comments

Sterling falls to over five-week low vs euro on hard line in EU talks

The pound fell on Thursday, hitting a more than five-week low versus the euro, as Britain confirmed a hardline stance on trade talks with the EU and disappointment grew that the new finance minister may not increase spending as much as expected.

Britain said on Thursday it wanted binding obligations on access to the European Union’s financial market. London, Europe’s biggest financial centre, risks being locked out of its biggest market for services such as banking, insurance and asset management if it loses access to the EU in January.

But senior minister Michael Gove told parliament on Thursday the UK would not “trade away its sovereignty” in pursuit of a trade deal with the EU.

The pound slipped 0.2% to a one-week low of $1.2860 and held near this level in late trade GBP=D3.

Against a broadly firm euro, sterling fell more than 1% to 85.43 pence, its lowest level in more than a month EURGBP=D3.

The pound also fell against the safe-haven Japanese yen to a two-month low of 141.50 GBPJPY=D3.

“The pound has reversed early gains as the government firmly places the prospect of no-deal back on the table in order to strong-arm the EU’s dynamic alignment to bend to their will,” said Simon Harvey, a forex analyst at broker Monex Europe.

“The resumption of trade uncertainty comes just as business optimism starts to improve, suggesting the Brexit headwind to the economy may not have abated quite just yet and hence the need for heightened fiscal stimulus,” Harvey said.

But the new fiance minister, Rishi Sunak, has been told by Treasury officials he cannot simultaneously raise public spending as fast as Prime Minister Boris Johnson wants, keep taxes down and adhere to new Treasury rules that allow borrowing only for capital investment, the Financial Times reported.

Consequently, Sunak could postpone loosening fiscal policy, which has put pressure on the pound. The possibility of more spending was the main reason the pound strengthened in recent weeks, despite concern that Britain may not agree a trade deal with the EU by the end of this year.

Market gauges for implied volatility in sterling in all tenures from one-month to one-year options contracts all rose close to their highest levels this year.

Money markets have started to price in a higher chance the Bank of England will cut interest rates to boost the economy if data worsen and Sunak does not stimulate growth through higher fiscal spending. A 25-basis-point cut to the current 0.75% rate is priced in by August this year.

“No big fiscal push means that if there’s a slump, the burden of reviving the economy will fall on monetary policy,” said Marshall Gittler, an analyst at broker BDSwiss Group.

Additional reporting by Dhara Ranasinghe; Editing by Alex Richardson

Source: UK Reuters

Marketing No Comments

UK house prices grow at fastest rate for 18 months in February

UK house prices grew at their fastest rate since July 2018 in February, according to Nationwide figures released today.

February’s annual rise of 2.3 per cent, up from 1.9 per cent in January, was UK house prices’ strongest rate of growth in 18 months.

That left the average UK house price at £216,092, up from January’s £215,897 despite the economy flatlining in the last quarter of 2019.

Prices rise but uncertainty clouds 2020

Nationwide’s chief economist, Robert Gardener, said it was a sign of gathering momentum in the UK housing market.

“While overall economic growth ground to a halt in the final three months of 2019, labour market conditions remained buoyant and borrowing costs low,” he said.

“The decisive election outcome may have provided a boost to buyer sentiment.”

But he warned that the economy faces “significant uncertainties” that could hurt UK house prices. The coronavirus outbreak and Brexit trade talks are chief among those challenges.

“The global economic backdrop remains challenging, with the coronavirus outbreak expected to weigh on global activity in the coming quarters,” he said.

“Investment is likely to remain subdued until the UK’s future global trading relationships become clearer, which is unlikely until early next year.

“Overall, we expect the UK economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat in 2020 as a whole.”

February’s monthly rise of 0.3 per cent marks the fifth monthly hike in UK house prices – the first time since May 2016 this has happened.

And house prices rose one per cent in the three months to the end of February compared to the previous three to deliver the highest such rate in two years.

Brexit clarity gives UK house prices a bump

More clarity on Brexit – despite fresh uncertainties over the likelihood of a trade deal – boosted UK house prices, economists said.

“The housing market has seemingly got a leg-up from increased optimism and reduced uncertainties following December’s election,” Howard Archer, chief economic adviser to the EY Item Club, said.

That led EY to increase its 2020 outlook for UK house price growth from 2.8 per cent to three per cent. EY’s forecast had sat at two per cent at the turn of the year.

Boris Johnson’s December General Election victory also played a major part.

“The housing market is continuing to strengthen in the wake of the General Election,” Samuel Tombs, UK economist at Pantheon Macroeconomics, said.

“Other surveys suggest that this momentum will be largely maintained. Asking prices rose at a 2.9 per cent year-over-year rate in February, according to Rightmove. In addition, the RICS survey showed the largest net balance of surveyors for four years in January expected house prices to rise over the next three months”

But Brexit trade talks still a fear factor

“However, the economy still looks set for a pretty challenging 2020,” Archer added. “There will still be appreciable uncertainties, including on the UK-EU relationship front – so that the upside for house prices in 2020 is likely to be limited.”

Coronavirus could hurt UK house prices

Marc von Grundherr, director of estate agent Benham and Reeves, warned the coronavirus outbreak could hurt UK house prices, however.

“As the world continues to tackle the Covid-19 pandemic, there are murmurings it could impact house prices as well as health across the domestic market,” he said.

“At this stage and while UK cases remain few and far between it remains unlikely. Foreign investors at the very highest level might be pausing to take stock. But it’s probably not one that will be felt by the average UK home buyer or seller.”

Mansion tax to hit London?

Von Grundherr said buyers and sellers will be more mindful of next month’s Budget, where a possible so-called mansion tax could hurt London house prices.

“A potential mansion tax via next month’s budget is far more likely to dent the sentiment of London’s high end foreign investors in particular, although they are arguably best placed to stomach such a hit. “

By Joe Curtis

Source: City AM

Marketing No Comments

Annual price growth at three year-high as supply lags demand – Zoopla

House prices across all English cities have risen above their 2007 pre-crisis peaks for the first time but Zoopla is warning sellers not to get over-excited when pricing their properties.

Figures from the portal – based on Land Registry price paid data and mortgage valuations – found annual price growth among the UK’s largest cities last month hit a three-year high of 3.9%.

All cities, except for Aberdeen, where prices fell 4.3% annually, recorded annual house price inflation of at least 2% last month for the first time since February 2017.

The highest growth was in Edinburgh, up 5.9%, while Nottingham and Leicester each recorded growth rates of 5.3%.

Zoopla highlighted that stock is also up 2.6% annually, but is lagging behind demand which is up 26%.

Stock levels in nine cities are lower than a year ago by as much as 6%, Zoopla said, with most of the shortages in areas where prices are rising fastest.

Richard Donnell, research and insight director at Zoopla, said: “It has taken 12 years for house prices in all English cities to return to their previous pre-crisis levels.

“Some cities returned to 2007 levels within four years, as the economy and job growth rebounded. In others, it has taken much longer as the mismatch between demand and supply has been less pronounced.

“An imbalance between supply and demand is supporting the current rate of house price growth – a trend we expect to remain in place over the first half of 2020.

“We do not expect a material acceleration in the rate of growth in the foreseeable future, as affordability pressures will limit the scale of price growth, especially across southern England.

“There is a risk that, in some markets, sellers may become unrealistic about the expected sales price for their home. This is more likely in London and southern England where the market has been weak, and supply remains constrained. Housing demand is up, but there remains a price sensitivity amongst buyers, especially in the highest value markets.”

By MARC SHOFFMAN

Source: Property Industry Eye

Marketing No Comments

1.2 million homes need to be built to close the housing gap

The UK housing market is facing grave challenges, according to a recent, in-depth report by the BBC. The Housing Brief points to a figure of a 1.2-million gap of new homes needed to accommodate everyone who currently needs a home. The inability to get on, or progress up the housing ladder is hardly just due to people’s inability to find the best mortgage rate or save up for a deposit.

A 2019 study by Heriot-Watt University estimates that closing this housing gap would take about 15 years at current building rates – and that’s provided that nothing changes, for example that the population doesn’t suddenly expand, or that private building firms don’t build less housing than they do now.

The number of new dwellings added to the UK housing market stood at 275,000 last year, but, as the report explains, this by itself might not be enough to resolve the UK housing crisis by 2030. The current household growth forecast suggests that, even if we are to close the current housing gap in 15 years’ time, by 2035, we will once again have a housing shortage of four million homes. Besides, there is no guarantee that building new homes per se will make them suitable for people’s needs, especially where it comes to affordability.

The lack of new social housing being built is hitting families at risk of homelessness particularly hard: councils are struggling to find suitable accommodation for the increasing number of people struggling to rent privately, with the number of homeless families in the UK standing at 140,000. Only 5,000 of them are rough sleepers, with the rest sleeping in shelters, on friends’ sofas, and in temporary accommodation.

The recommendation of the report is clear: the government can increase housing supply by funding local councils to build more social housing. It also suggests that subsidising private developers could incentivise them to build more affordable housing – although similar schemes in the past haven’t yielded the expected results.

A number of other recommendations from think tanks and research bodies are collected in the report, many of them pointing to the need for regulating private development, the need for further schemes to help young people onto the property ladder, and increasing housing benefit for those struggling to rent privately.

BY ANNA COTTRELL

Source: Real Homes

Marketing No Comments

Houses cost millennials 14 times more than baby boomers

Average property prices have risen twice as fast as wages in the UK over the past four decades, according to a new analysis of official figures.

Millennials looking to buy a home face prices that are now at least 14 times higher than when baby boomers tried to get on the property ladder in the late 1970s. But average wages have risen at less than half the pace of runaway house prices in recent decades, rising less than seven times over since 1979.

Analysis of official data by digital broker Mojo Mortgages and Yahoo Finance UK reveals the stark contrast between the generations in the property market.

A baby boomer born in the 1950s could buy the typical British home for about £16,800 in 1979, if they were able to get on the ladder as buyers often did in their 20s. The average home only cost just under four times the average pay packet, with the typical worker taking home around £4,200 a year.

But millennials looking to buy now, at an average age of 33, face a far greater gap between incomes and prices. The average home is now more than eight times higher than average wages.

The average property sold for around £235,300 last year, according to data from the Land Registry. Meanwhile typical pay packets came in at just over £29,000 last year, according to the Office for National Statistics (ONS).

British workers have seen a significant squeeze on pay particularly since the financial crisis, with younger workers among the hardest hit. But property prices continued to rise after the crash, and are now climbing once more after a recent slowdown.

The growing disparity helps explain why home ownership rates have been on a downward trend over the past decade, despite a recent uptick. Average buyers also now take on proportionally larger debts than previous generations, with only getting on the ladder because of competitive mortgage lending and historically low interest rates.

Mojo Mortgages combined the official data with estimates of spending habits, deposits and debts to show how getting a mortgage appears to have become harder over the decades.

The broker released the findings to mark the launch of its new online MortgageScore tool, aimed at showing would-be buyers how likely they are to get a mortgage.

Buyers are given a score out of 1,000. The tool suggests the average buyer in the 1970s would notch up 808 points, but chances have deteriorated with each decade. The typical worker in the 2000s scored 508, falling even further to an average of 410 last year.

Richard Hayes, CEO of Mojo Mortgages, said: “Home ownership is a top life goal, but for many first time buyers these days, it’s something they feel they won’t be able to achieve anytime soon.”

By Tom Belger

Source: Yahoo Finance UK

Marketing No Comments

Gap between property supply and demand widens

The number of house hunters registered per estate agent branch increased by 22% to 382 from December to January, NAEA Propertymark’s January Housing Report has found.

However, the number of properties available per member branch fell from 41 to 38, meaning the gap between supply and demand has increased.

Mark Hayward, chief executive, NAEA Propertymark, said: “It’s positive to see the New Year has brought some much-needed confidence to the market, with a significant increase in demand from house hunters following the General Election result.

“As the Spring Budget fast approaches, we hope to see housing as a priority for the new Chancellor.

“A clear strategy is needed to tackle key issues such as stamp duty costs, which needs to be addressed in its entirety to encourage more frequent moves, improve affordability and relax punitive financial tax on home movers.”

The number of house hunters is the highest figure seen since September 2019, when there were 387 prospective buyers registered.

The amount of properties available has fallen to its lowest level since June 2019, when there were 37.

BY RYAN BEMBRIDGE

Source: Property Wire

Marketing No Comments

BOE’s Haldane Says Brexit Uncertainty Lifting From U.K. Economy

Most of the Brexit uncertainty that has been overshadowing the U.K. economy has lifted, although it’s too early to say business investment is fully returning, according to Bank of England Chief Economist Andy Haldane.

A “big chunk, if not all” of the uncertainty has dissipated, Haldane said in answer to questions following a speech at Bloomberg’s European headquarters in London Monday. That’s contributing to investment starting to pick up, but it’s “too early to declare victory,” he said.

Political tensions and a lack of clarity on Britain’s future relationship with its biggest trading partner has been weighing on growth and held businesses back from spending on capital that could bolster the country’s lackluster productivity. Recent survey data, however, has started to show some signs that the economy is beginning to bounce back.

Globally, the economy has grown stronger since the financial crisis more than a decade ago, Haldane said. Banks’ balance sheets are in better shape and he doesn’t seen the buildup of new asset bubbles. While trade has been hurt by U.S.-China tensions, he doesn’t predict a “wholesale retrenchment” of globalization.

Source: Investing

Marketing No Comments

Mortgage product numbers rise by 9.3%

The number of mortgage products available on the market has risen by 9.3% over the past 12 months to a record high of 14,437, according to the latest data from Mortgage Brain.

Within this increase of 1,233 products, remortgage deals saw the strongest growth, with product numbers increasing by 7.4% to a total of 9,718.

Despite the upheaval seen in the buy-to-let sector in recent years, the number of products for landlords to choose from has still grown by 4.5% since February 2019 to 4,263.

Product numbers rose across all LTV bands, with deals available at an LTV of 70% or more seeing the sharpest uplift.

There are 9,350 deals to choose from at this level, an increase of 15.1% since February 2019.

At the other end of the scale, the number of products available to borrowers at 90% LTV has grown by 3.2% over this time period.

Looking over a three-year period the rise in products is even more significant, with the total number of mortgage deals on the market jumping by 72.7%.

This rise is most pronounced in buy-to-let, with product numbers rising by 2,007 (89%).

Mark Lofthouse, chief executive officer of Mortgage Brain, said: “Mortgage borrowers are the big beneficiaries of the heightened competition within the mortgage market now, with a greater level of choice than ever before.

“What’s more, this increase isn’t limited to a single area of the market, with products of all types and across all LTV bands seeing an uplift over the last year.

“The sheer number of deals to choose from demonstrates the value provided by mortgage brokers in helping their clients navigate these competitive waters.

“But they too need to think carefully about what technology they can use to help them sift through the many home loans lenders have on offer.”

By Jessica Nangle

Source: Mortgage Introducer

Marketing No Comments

Scottish commercial property market ‘shows resilience and growth’ in 2019

Scottish Property Federation (SPF) analysis of 2019 commercial property sales figures has revealed that the total value of sales grew in Scotland for the third consecutive year.

At £3.37 billion, the value of commercial property sales in 2019 hit its highest annual total since 2015. The total value of sales increased by £136m (4%) compared to the total for 2018.

The SPF’s analysis also shows that the number of commercial property transactions was the highest in the decade, standing at 4,667.

The number of commercial property transactions has increased every year since 2012, with 139 (3%) more sales taking place in 2019 than in the previous year.

Cities

Edinburgh continued to dominate the Scottish commercial property market. The capital recorded £1.01bn in commercial property sales during 2019, some £379m (60%) more than in 2018, and accounted for 30% of the Scottish commercial property market by value.

Glasgow also saw an increase in the total value of its commercial property sales. Scotland’s largest city saw total sales of £753m, some £229m (44%) higher than in 2018, and captured a 22% share of the Scottish commercial property market.

High Value Sales

Of the 4,667 commercial property transactions in Scotland during 2019, only 97 (2%) sold for over £5m. However, with a combined value of £1.75bn, these transactions accounted for more than half of the Scottish market by value. In total, 15 of Scotland’s 32 local authorities saw sales at this section of the market in 2019.

David Melhuish, director of the Scottish Property Federation, said: “We’re pleased to see the Scottish commercial property sales market continue to grow in what has been an uncertain time for the economy and businesses. We expect to see this resilience turn into stronger confidence in the commercial property markets during the course of 2020.

“Our analysis shows the strength of both Edinburgh and Glasgow, which between them accounted for more than half of the Scottish market in 2019 in value terms.

“Edinburgh has seen a particularly strong year with several high value transactions occurring in 2019, including the sale of Standard Life Aberdeen’s headquarters and M&G Real Estate’s acquisition of Exchange Plaza.

“Glasgow saw a number of high-value retail transactions by overseas investors, including assets at the Great Western Retail Park and the Sauchiehall Building in the city centre.”

Source: Scottish Construction Now

Marketing No Comments

House prices return to pre-financial crisis levels

House prices across English cities have risen above pre-Financial Crisis peaks for the first time since 2007, the latest research has found.

Property in Central London recovered to pre-crisis levels in just 2.3 years, the fastest of all UK cities, as overseas buyers entered the market attracted by a weaker pound.

Oxford and Cambridge followed the capital, returning to 2007 levels at 3.7 and 3.9 years respectively.

Newcastle was the last city to exceed pre-crisis house levels, only registering recovery in late December last year, according to the Zoopla UK Cities House Price Index.

Meanwhile, London’s house prices grew two per cent from January 2019 to last month, and all English cities have recorded annual house price inflation of at least two per cent per year for the first time in two years.

Richard Donnell, director of research and insight at Zoopla, said: “While it took 12 years for all English cities to return to pre-Global Financial Crisis levels, the central London market returned to this level in just 2.3 years.

“The subsequent decrease in the value of sterling created a window of opportunity for overseas buyers to secure competitive value in high value markets and, since then, house prices in London have rebounded by almost 60 per cent, outstripping all other UK cities.

“Today London’s growth is more moderate, slowly ticking upwards at two per cent per annum. We do not expect the annual growth rate to accelerate further as affordability pressures limit buying power.”

Data by the Office for National Statistics published last month showed that London house prices jumped 2.3 per cent to £484,000 in December after the Conservative election win.

Across the UK house prices increased 2.2 per cent on an annual basis, and reported an increase of 0.3 per cent on a month by month basis.

By Jessica Clark

Source: City AM