What’s the deal for your personal finances if there’s a no-deal Brexit?

Amid warnings of dire consequences, here’s how to cope if it does become a reality
The pound’s fall since the EU vote has benefited tourists coming to the UK, but not Brits going abroad.
The pound’s fall since the EU vote has benefited tourists coming to the UK, but not Brits going abroad. Photograph: Dan Kitwood/Getty Images

The currency markets have been doing little to allow British holidaymakers to enjoy a relaxing summer. The pound recently slumped to its lowest level against the dollar and the euro so far this year, meaning a break away just got more expensive.

Behind that slump was the growing possibility that talks between London and Brussels will break down over the coming months and the UK risks leaving the EU with no deal in place. Bank of England governor Mark Carney has warned that the prospects of this happening are “uncomfortably high” and should be avoided at all costs. But if that no-deal does, indeed, become a reality, what will be the impact on the rest of our personal finances?

Pensions

An economic upheaval would affect pensions in some ways. Workers could be less able to invest in long-term savings, and there is the possibility that a squeeze on taxes would affect the ability of the government to pay for the pensions “triple lock”, which guarantees a minimum increase in the state pension each year, according to Steve Webb, director of policy at pensions investment company Royal London.

At present, hundreds of thousands of British expat pensioners live in EU countries and get their UK pensions paid and annually uprated as the UK has a reciprocal social security agreement.

“There is a risk that if there was a hostile ending of relationships between the UK and the EU, these reciprocal uprating arrangements could break down, and expat pensioners might miss out on annual upratings. Ministers assure us that a deal will be done. But it’s hard to know what a world of poor inter-governmental relationships would look like post-Brexit,” says Webb.

Rates on annuities – which guarantee an income for life – dropped to record lows when the referendum results came through, and some providers pulled out of the market, although rates are now rising slowly, says Rachel Springall of financial data provider Moneyfacts.

With the prospect of no deal, risk-averse retirees could be wise to invest sooner rather than later, says Moira O’Neill of Interactive Investor, an online trading and investment platform. “If you need income, but can delay buying an annuity for a few years – which might be a good idea, as the rates improve as you get older – look at a drawdown arrangement,” she says.

“Since the pension freedoms were introduced in April 2015, growing numbers of people have opted for drawdown schemes, whereby they can take sums directly out of their pension pot as income, while leaving the rest invested. A no-deal Brexit could give investors a bumpy ride, so those in drawdown should consider not eating into their capital, to allow it to recover.

“It’s best, if you can, to only take the ‘natural yield’ – that’s the actual income earned by the investments. For example, dividends on shares or interest or ‘coupon’ paid by bonds.”

Currency

The slump in the value of sterling earlier this month came as investors looked to protect themselves against the possibility of a collapse in talks, and there have been predictions that the pound will continue to fall in the coming months. Last week, foreign secretary Jeremy Hunt said that a no-deal Brexit could result in a sharp fall in the value of sterling.

“If a no-deal Brexit does become a reality, you’ll struggle to find many who don’t foresee the consequences as being pretty dire. There doesn’t seem to be very many positives, in the short term at least, and the many negatives would almost certainly far outweigh them,” says David Lamb, head of dealing at Fexco Corporate Payments.

Some analysts have a brighter outlook. US investment bank Morgan Stanley says Britain is likely to secure a deal with the EU and that the pound will strengthen by the end of the year.

Savings

The Bank of England gave some long-awaited relief to savers at the beginning of this month when it raised rates above the emergency level introduced after the financial crisis. Mark Carney, however, signalled his willingness to reverse the quarter-point increase in the event of a disorderly Brexit.

“Savers who have their money in cash may see their returns fall … which would be devastating to those who rely on their savings to supplement their income,” adds Springall.

Those with investments in the stock market – through shares or shares-based Isas – could face the prospect of turmoil on the exchanges if there is no deal and companies struggle to cope with the repercussions.

“Many Isa savers associate investments with uncertainty and caution, but too much caution can have a negative impact on your money. And although we’ve seen a small rise in interest rates, keeping your money in cash is just guaranteeing that it loses value,” says O’Neill. “On the other hand, if you put too much of your cash into high-risk options such as stocks and shares, you put yourself at the mercy of market fluctuations – and a no-deal Brexit could mean a big drop in the value of investments.”

Housing market

House-price growth slowed in June to the lowest annual rate in five years, driven by falling prices in London, according to the Office for National Statistics last week.

A few days earlier, estate agent Savills posted an 18% drop in half-year profits and warned that deadlocked negotiations made it difficult to make predictions for the rest of the year.

A no-deal Brexit would be “disastrous”, according to Neal Hudson, housing analyst at Residential Analysts, with the possibility of a crash as a result of rising inflation, job losses and a recession. Others argue that a paralysis of the market is not necessarily a given. “Although we saw some evidence of a reaction from homebuyers after the vote, with a few putting a move on hold or pulling out, it was very short-lived and only affected a small minority.

“In most cases, homeowners have tended to decide not to put everything on hold over a potentially protracted period,” says David Hollingworth of London & County.

He believes that while the uncertainty has led to a slowdown of price growth in some regions, other factors are at play, such as affordability and tighter buy-to-let rules.

He adds: “Currently, low mortgage rates and low unemployment means there is a solid foundation. Of course, there could be speculation around organisations shifting job locations, for example in financial services, which could have a knock on for house prices. But even then, it may be regionalised and limited in scope.”

A varied portfolio

Despite the signs of gloom, Brexit does not have to be a disaster for personal finances, according to O’Neill. Instead, money has to be invested to avoid any turbulence.

“This means spreading your money between UK and overseas investments, plus buying lots of different types of investments, such as company shares, commercial property, government and corporate bonds, plus gold. You can buy funds that specialise in these areas. Funds will pool your money with that of other investors to give exposure to more investments than you could buy by yourself,” she says.

“The alternative is keeping your money in the bank, where it may be safer, but doesn’t have the potential to grow. If you use Brexit as a reason to delay or stop investing, you’ll probably find another reason afterwards. You can always find something that makes you feel nervous about investing.”

Brexit is Least Concerning Issue for Majority of UK Landlords

Almost two-thirds of landlords have no plans to sell their buy-to-let properties over the coming year…

Landlords remain optimistic about the buy-to-let market despite recent regulatory and tax changes, according to the latest Landlord Sentiment Survey by lettings agency Your Move.

In a survey of over 1,000 landlords, more than half (52%) felt positive about current market conditions, with almost two-thirds (64%) stating they were unlikely to sell a buy-to-let property in the next 12 months.

Just 16% expressed negative feelings towards the market, whilst 30% responded to the survey as being “indifferent”.

The poll also revealed that for 83% and 80% respectively, the most important considerations for landlords are the costs of upkeep and property maintenance, and the ability to make a long-term profit.

Brexit was the least pressing issue for landlords, with just 32% expressing concerns towards it, whilst under half (43%) regarded the upcoming tenant fees ban in England & Wales as a potential problem.

“Given the number of regulatory and tax changes in the buy to let market over the last few years, it wouldn’t be surprising if landlords felt some trepidation about the future,” said Martyn Alderton, national lettings director for Your Move and Reeds Rains.

“However, it’s great to see that the landlords we surveyed do, for the most part, remain positive about the future.”

He concluded: “Our research shows the majority of landlords are in it for the long term and that’s important for the well-being of the private rental sector, providing much needed homes for those who cannot yet afford, or do not wish to purchase due to lifestyle choices.”

House prices in England and Wales fall for fifth month in a row, new data shows

House prices in England and Wales fell for the fifth month in succession, but some cities bucked the trend with Leicester recording the fastest growth, according to new data.

Overall, average house prices slipped 0.2 per cent in July to £302,251, figures compiled by Your Move show. Despite the fall, the average price is still up 1.6 per cent on a year ago and all regions of England and Wales have recorded “modest” growth on an annual basis.

Slow activity has held prices down with an estimated 75,000 fewer activities in July compared to June; 2 per cent down on June and 6 per cent lower than the seasonal trend. Transactions in the first seven months of 2018 are estimated to be 4 per cent below the same period in 2017.

The West Midlands recorded the fastest annual growth at 3.3 per cent while the South East and East of England were the slowest at 0.5 per cent.

What effect the Bank of England base rate rise at the start of August will have on the market remains to be seen, Your Move said.

The average price of a property In London now stands at £625,529 at the end of June with prices falling in almost two thirds (21 out of 33) of the city’s boroughs on an annual basis.

The biggest drops on an annual basis have been seen in the City of London, down 19.4 per cent (albeit on a small number of transactions), Hammersmith and Fulham, and Southwark, both down 11.7 per cent. In both Westminster and Hammersmith and Fulham, sales of new builds in previous months or years can explain much of the swing in prices.

Overall, the most expensive borough remains Kensington and Chelsea, where prices are down 1.9 per cent on an annual basis to £1,765,033, while the cheapest borough is still Barking and Dagenham, with an average price of 308,547, up 1.8 per cent annually.

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No Brexit Impact for 75% of UK Buyers & Sellers

One year on from the Brexit vote, a new survey has revealed that the intentions of those in the housing market have been minimally affected by the referendum results.

Commissioned by UK estate agent haart, the independent survey of more than 2,000 homeowners revealed that it has not been Brexit that has had the largest impact for buyers and sellers in the last 12 months, but the lack of supply.

According to 75.2% of those surveyed, the Brexit vote has had no bearing on their decision to sell their homes or to buy new ones, with just 16.1% indicating that Brexit was a concern for them.

Providing much larger barriers to the purchase and sale of properties were the issues of affordability and the magnitude of a house move, with 43% and 33% of respondents respectively stating them as the reasons behind their hesitance.

Commenting on the results of the survey, Paul Smith, CEO of haart estate agents, said:

‘Nearly a year on from the UK’s vote to leave the EU, the UK property market remains sound … Our findings underline the faith that the average British homeowner has in the UK property market remain resilient, even amidst time of political uncertainty.’

Smith continued: ‘A severe lack of stock continues to hold back fluidity in the market … we need to look deeper into creating housing solutions that will help buyers get the homes they desperately want.’

Brexit Bulletin

Brexit Bulletin

304 Days to Go

Today in Brexit: While the Irish border and customs arrangements are the most pressing concerns, work on everything else needs to accelerate. And there’s a lot left.

The U.K. Parliament is in recess, but London has its homework to do. Brussels expects British negotiators to return next week with a clear plan about how the government proposes to solve the Irish border problem. The European Commission insists a backstop – the solution that will have to do until something better comes along – can’t be the government’s U.K.-wide customs arrangement with the European Union.

But amid all the talk about the Irish border and the endless customs union debate, it’s easy to forget there’s still a lot else that needs to be hashed out by October. The EU’s chief Brexit negotiator, Michel Barnier, used a speech in Portugal over the weekend to spell out the differences. The system for settling disputes – which the EU maintains must include a strong European Court of Justice role but which the U.K. wants to be run by joint political committee – also needs to be included in the final text of the Brexit treaty.

The details about the foundations of the future relationship – which includes trade, ddefenceagreements, financial-services arrangements and regulations for industries such as fishing – are supposed to be completed by October, too.

A senior EU official raised British hackles last week, accusing the U.K. of chasing “fantasy” ideas and failing to accept responsibility for the consequences of walking away. In a background briefing for reporters, given on the condition of anonymity, the official laid out areas of dispute. From the EU’s perspective, here’s where these stand:

  • Mutual recognition of standards and regulations in areas such as food safety and financial services
  • Security: The U.K. can’t stay in Europol or take part in the European Arrest Warrant system, the EU believes
  • Foreign policy: The EU is unlikely to comply with a U.K. request for a significant say in decision making
  • Galileo satellite navigation system: The U.K. can’t turn the program into a U.K.-EU joint project and have privileged access which could give it the right to turn the system off unilaterally, the EU says
  • Data protection: The EU is unlikely to allow the U.K. to have a bespoke agreement that would lead to the EU losing its autonomy over privacy rules

There’s much work to do over the summer to lay the plans for the full-scale negotiation on the two sides’ post-Brexit ties. “Time is running out,” Barnier warned on Saturday. “If we want to lay the foundation for our future relationship before the withdrawal of the U.K., we must accelerate.”

Ian Wishart

Today’s Must-Reads

  • The Financial Times’s Tony Barber argues there’s a fierce battle emerging over the future of the EU that’s been ignited by the crisis in Italy
  • Bloomberg Opinion’s Mohamed A. El-Erian says markets fear a populist backlash in the country

Brexit in Brief

Air Agreement | The U.K. is ready to agree to an “open skies” agreement with the U.S. this summer that will keep planes between both countries flying after Brexit, the Daily Telegraph reports, citing four unidentified sources. The newspaper also says the EU has moved to shut the door on British and other non-EU companies participating in the European Defense Industrial Development Program.

Carry On Spending | Britain will help to determine the EU’s 1 trillion-pound budget up to 2027 after European countries defied Brussels and invited British officials to take part in negotiations, the Times reports. The European Commission was opposed to the plan devised by individual member states, the newspaper says.

Scotland in Brussels | Scottish First Minister Nicola Sturgeon reiterated her goal for the U.K. to remain in the customs union and single market in a meeting with Michel Barnier in Brussels.

Dynamic Deals | Foreign Secretary Boris Johnson repeated his call for the U.K. to make a clean break from the EU when it leaves the bloc, warning Prime Minister Theresa May that Britain won’t be able to take full advantage of the split unless it does.

No Plan B
| The government’s preparations for a “no deal” Brexit have largely ground to a halt, the Financial Times reported. This will make it almost impossible for Theresa May to walk out of negotiations with the EU in the next 10 months, the paper said.

Hunky Dory | A Bank of England spokesman ,refuted suggestions of a rift between the central bank and the U.K. Treasury after a report in the Financial Times said the institutions are at “loggerheads” over the future of City of London regulations after Brexit.

 

Source https://www.bloomberg.com/brexit

Banks push back BoE rate forecasts after growth data shock

LONDON (Reuters) – Banks scrambled to push back their forecasts for the next Bank of England interest rate raise after data on Friday showed a sharp and unexpected slowdown in Britain’s economic growth.

The new forecasts anticipate the next BoE hike to take place in August this year or as late as 2019.

Before Friday’s GDP data most economists had expected the central bank to tighten monetary policy in May.

The change in banks’ forecasts signals a much weaker outlook for the pound, which has been among the best performing major currencies in 2018.

Last week expectations of higher rates lifted sterling to its highest since the Brexit referendum in June 2016.

The likelihood that the BoE will not hike next month also means bond prices could rally further and presents a more volatile backdrop for the UK stock market.

UBS scrapped its estimate of a single rate hike in 2018 after the weaker-than-expected growth figures while Nomura, which has long been hawkish on UK interest rates, now sees a first hike in August.

Bank of America Merrill Lynch and Natwest Markets strategists pushed back their May rate hike calls to November.

“We view the (economic) slowdown as more serious, and see no prospect of hikes in 2018,” said UBS, the world’s largest wealth manager, in a note.

John Wraith, a UBS economist, said inflation could fall back to the central bank’s target of two percent later this year and that concerns about talks between Britain and the European Union over the terms of their divorce could resurface.

Market expectations of a rate hike in May tumbled to less than 20 percent from around 50 percent, after GDP data showed Britain’s economy slowed to 0.1 percent growth between January and March, the weakest quarter since 2012.

Earlier this month the market was pricing in a 90 percent chance of a rate rise.

The market is now also forecasting no more than one 25 basis point rate hike over the remainder of 2018, from a near-certain two rate rises expected a fortnight ago.

Sterling GBP=D3 tanked more than one percent to $1.3748 and government bond prices surged in the aftermath of the data.

Reporting by Tom Finn and Saikat Chatterjee, Editing by Tommy Wilkes and William Maclean

12 Months To Go: Brexit and the UK’s Defiant Housing Market

On the 29th of March 2019, the UK will leave the EU. There are several key areas of concern across every sector of the country, but what does Brexit mean for UK property, and how is the market confronting the challenges?

In less than 12 months, Britain is scheduled to leave the European Union, following a hard-fought referendum back in June 2016. The negotiations are well underway, with progress being made on key issues, such as the duration and specifics of the transition period, citizens’ rights and future trade deals.

Despite the pervading uncertainty and cooling activity, investor confidence and growth projections for the UK’s property market remain strong, supported by dwindling supply and climbing demand.

2018 is the year when decisions on Brexit must be made, and property investors prepare to adjust to a new status-quo. But is the UK’s post-Brexit future still unclear, and what does it hold for those investing in UK property?

 

Brexit and UK Property

The country has been on something akin to a rollercoaster since Prime Minister Theresa May invoked Article 50 last March, serving the official notification letter to the European Council that formally began the withdrawal process.

Following this, there have been various summits, a gamble of a general election, and the agreement of a vital transition period – which will begin after the UK’s official departure in March 2019 – all aimed at solidifying the UK’s new status in Europe.

While uncertainty is set to dissipate in the final year of negotiations before the UK exits the EU, the property market, like many other industries, has held strong since the referendum in June 2016 – defying expectations.

Despite house prices and rental growth slowing in recent months, the significant falls in property values projected in the wake of the referendum have failed to materialise.

According to data from Your Move and LSL/Acadata, annual house price growth in February 2018 remains positive at a modest 0.6%, while data from the Office for National Statistics (ONS) found that rents increased by 1.1% annually over the same period.

But if Brexit is not behind the deceleration in growth, what is?

 

Construction Industry Brexit

Fundamentally, house price and rent growth in the UK is governed by the imbalance between the supply and demand for properties, with this current slowdown forming a natural part of the property cycle.

As housebuilding construction activity remains subdued, owing to high materials costs and a chronic labour shortage, the supply of homes in the UK continues to fall far short of demand, pushing prices up in a competitive, high demand market.

Yet, this growth has started to cool as property becomes increasingly unaffordable for many prospective buyers. With the cost of purchasing a home too high, many households are turning from the housing market and towards the more reasonable rates available in the private rented sector.

As a result, home sellers are having to be more competitive with their prices in order to attract buyers, despite estate agents registering fewer homes for sale in February, which has caused a modest drag on asking prices.

Midlands Cities Among Top 10 Buy-To-Let Property Postcodes

London commuter belt towns fall down the rankings as Northampton, Leicester and Birmingham surge

Three of the top five locations for buy-to-let property investments are in the Midlands, according to new research.

Northampton, Birmingham and Leicester were all cited as top postcodes for buy-to-let, with strong rental growth of 2.38%, 3.91% and 4.35% respectively, according to independent mortgage lender LendInvest.

Whilst the Midlands regions have been steadily rising up the rankings, the report highlights the South West region as an up-and-coming market, as strong rental growth and healthy market activity has boosted the profile of cities like Bristol, Swindow, Truro and Gloucester.

Conversely, London and the South East continue to underperform, as declining rents deters further investment in these regional markets.

Historically strong performing commuter towns like Dartford, Romford and St Albans have recent begun to slide down the LendInvest buy-to-let rankings, in some cases by as many as 58 places.

However, the report notes that demand for housing will continue to support future growth: “Political changes are increasingly underpinning this uncertainty in the market, however the need for housing around the UK prevails.

“As such, we can expect the rental market to grow, with investors prioritising yields and rental price growth as valuable metrics to consider when purchasing a property.”

Over the last 10 years, rents have grown by 16% nationally, according to figures from Rightmove.

 

Economy wobbles as factories and building sites stall – putting May interest rate hike in doubt

Economic growth slowed again in February as the construction and manufacturing industries both stalled, a pair of oil refineries closed for maintenance, and the export boost from the weak pound began to fade.

The Bank of England had already cut its first-quarter growth forecasts from 0.4pc to 0.3pc because the icy Beast from the East made families stay at home instead of hitting the shops. But now economists fear even this estimate is too high.

The new figures “look consistent with GDP growth slowing to 0.2pc in the first quarter – below the Monetary Policy Committee’s 0.3pc forecast – from 0.4pc in the fourth quarter, casting doubt over whether a May rate hike is as likely as markets currently expect”, said Samuel Tombs at Pantheon Macroeconomics.

 

“We estimate that economic growth nudged lower to 0.2pc in the first quarter of 2018,” he said.

“The main reason for the weakness was severe weather in March, which is likely to have disrupted activity in all major sectors of the economy.”

Manufacturing output fell by 0.2pc in February, the Office for National Statistics said, and January’s 0.1pc expansion was also revised down to zero.

Falling output of electrical goods, machinery, textiles and plastics hit the figures.

Growth in industrial production overall – which includes manufacturing as well as industries such as mining and quarrying, and utilities – slowed to 0.1pc for the month.

A major cause was that two of the UK’s six refineries were closed for refurbishment. However, growth was supported by February’s unusually cold weather, which boosted domestic energy consumption.

Mark Carney at the Bank of England is expected to raise interest rates to 0.75pc next month – but this weaker data could make him think again Credit: Simon Dawson/Bloomberg

At the same time construction output tumbled by 1.6pc in the month, defying expectations of a 0.9pc increase. This drop may not be entirely weather related. The ONS said maintenance work led the decline, even as residential building and infrastructure construction increased.

The trade deficit increased in the three months to February, rising by £0.4bn to £6.4bn, as a dip in imports was more than offset by a larger fall in exports – which the ONS said coincided with a strengthening of the pound.

However, the overall slowdown may only be a temporary wobble, rather than a longer-term slowdown in the economy.

“While a continuation of such news may generate some nervousness in markets about whether the Bank of England will deliver another rate hike next month, it is worth pointing out that there is another full round of economic news before the Bank announces its decision,” said George Buckley at Nomura.

“We continue to expect a 25-basis point move on May 10 on the assumption of better economic news to come.”

Chief economist Lee Hopley at manufacturing industry group EEF said: “The data looks more like a temporary wobble than a turn for the worse. Whilst other indicators may have softened since the start of the year, ongoing growth in the global economy should continue to spur growth across manufacturing in the coming quarters.”

Source https://www.telegraph.co.uk/business/2018/04/11/economy-wobbles-factories-building-sites-stall-putting-may/

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The 10 UK areas where house prices rose the most in 2017

UK house prices:Cambridge and Orkney see the biggest average price growth across the UK

New figures reveal the districts where house price growth outperformed the rest of the UK last year.

Property prices in Cambridge have risen by £63,000 in a year, according to the first detailed report on how much homes sold for in 2017.

Annual house price growth of 15 per cent takes the average price of a home in the university town and surrounding areas to £462,000.

Meanwhile, with prices across the UK rising by five per cent to average £227,000, the pace of growth in Cambridge is three times higher than the national average, according to the Office for National Statistics (ONS) report.

Last year, the government committed to a £7 billion investment programme in the city which is set to bring new roads, rail links and homes between Cambridge and Oxford.

“There is lots of talk about the Oxford-Cambridge corridor becoming England’s own Silicon Valley. Faster rail links for London workers is music to many home owner’s ears as the exodus from London continues,” says Michael Houlden, head of national estate agency at Strutt & Parker in Cambridge.

He reports that the proportion of buyers from London in the area rose by 60 per cent last year.

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£475,000: this three-bedroom detached house is between Cambridge North and Cambridge stations with easy access to the A14

THE UK’S TOP 10 FASTEST RISING LOCAL AUTHORITIES IN TERMS OF HOUSE PRICE GROWTH:

Local authorities Av. house price Dec 2017 Av. house price Dec 2016 Av. growth
Orkney Islands £146,842 £124,256 18.20%
Cambridge £462,033 £399,330 15.70%
Eden £206,713 £179,676 15.00%
West Dunbartonshire £109,293 £95,081 14.90%
Kettering £203,237 £178,200 14.00%
Cotswold £394,405 £346,150 13.90%
North Norfolk £258,580 £227,473 13.70%
Oadby and Wigston £215,417 £189,806 13.50%
Forest Heath £223,407 £199,385 12.00%
Dover £246,887 £220,776 11.80%

ENGLAND

Other areas with double-digit growth were Eden, just outside of the Lake District National Park, where an average house now costs £206,000; Kettering in Northamptonshire with average prices of £203,000; and the Cotswolds in south-central England.

An average of £48,000 was added to Cotswolds residences over the course of 12 months, taking the average price to £394,000 in December last year.

For this price, buyers seeking their own slice of Cotswolds charm can stretch their budget to a three-bedroom house with exposed beams and an Inglenook fireplace.

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£400,000: this Grade II-listed, three-bedroom house is in the historic hamlet of Churchend.

“The Cotswolds remained a firm hotspot last year as it continued to attract strong levels of demand from buyers looking for a change of pace and lifestyle,” says William Leschallas, director of Jackson-Stops’ Burford branch.

Widely regarded for its beautiful countryside and picturesque villages, the area is proving popular with young professionals commuting to Cheltenham, Bristol and Bath, Birmingham and Oxford, as well as families and downsizers.

“We expect demand to continue over the coming years, but whether or not supply can keep pace is yet to be seen. There are a number of larger property schemes in the planning system on the edge of major Cotswold towns, which may appeal more to local buyers who wish to remain in the area as their needs change,” says Mark Johnson, residential development partner at Knight Frank.

SCOTLAND

Homeowners in The Orkney Islands, off the north-east coast of Scotland, saw the biggest growth in percentage terms, with average prices rising by £23,000 (18.2 per cent) to reach £147,000.

For this, home owners can buy a dreamy two-bedroom house with sea and farmland views.

orkneyhp.png
£155,000: a two-bedroom house in Orkney

“The romanticism of a secluded island life, coupled with an affordable price tag, has no doubt made the islands impervious to the negative market influences of the mainland. Although it is also likely that the Orkney Islands’ explosive growth is no doubt a tad skewed to a smaller sample size than most other areas of the UK,” says founder of Emoov Russell Quirk.

There are also generous grants available to businesses setting up in the area, which will be attractive to qualifying entrepreneurs.

Scotland’s West Dunbartonshire also made it in to the top five performing areas in terms of house price growth. With an average house price of just £109,000, it is nearly £20,000 cheaper than nearby Glasgow and nearly £70,000 cheaper than Stirling, boosting its appeal.

WALES

Newport was the standout area in Wales for price growth, with homes selling for an average of £168,000. However, growth of 9.6 per cent puts the region outside of the UK’s top 20 performing areas.

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£169,950: a semi-detached three-bedroom home for sale in Newport

“Over the last few years, Scotland and Wales have seen property prices fall due to influences other than the wider uncertainty surrounding our departure from the EU.

“Both countries are home to pockets that have seen a drastic decline in the local property market, as the result of diminishing industries which have previously been pivotal to the local populace and economy,” says Quirk.

“However, with a much lower cost of getting on the ladder than the majority of regions in England, both have benefited from a greater degree of buyer and seller confidence, which has returned at a much quicker rate than other more inflated markets.”

Rents Continue to Grow Across England and Wales in February

London experiences lowest annual rental growth in over 7 years….

Official figures suggest the rental market remains subdued at the start of the year, whilst regional differences in performance persist.

In the 12 months to February 2018 rents in England increased by 1.1%, which remains unchanged on January, data from the Office for National Statistics (ONS) revealed.

This rises to 1.6% if London is excluded, where rents increased slightly by 0.1%; the lowest annual growth in the capital since September 2010.

The strongest rental growth was recorded in the East Midlands (2.5%), followed by the East of England and South West (2.1%), and the West Midlands and South East (1.7%), with above-average increases also reported in Wales (1.4%).

Kate Davies, executive director at The Intermediary Mortgage Lenders Association, believes the ONS figures demonstrate the burdens buy-to-let landlords are having to face, saying:

“Whilst [the data] may be giving tenants some temporary respite from higher rents, the flip-side is that landlords will be facing downward pressure on their cash-flows and profitability. This comes at a time when successive policy changes in the buy-to-let sector have proved detrimental.

“We therefore ask the Government to recognise the benefits that a strong private rented sector brings for the UK, and the importance of maintaining a good supply of rental properties for the periods when home ownership is not suitable or achievable for households.”

5% City House Price Inflation Predicted for 2018

Latest index reveals previously struggling cities reporting highest house price inflation

 

Since 2009, the cities which reported the weakest house price growth are bouncing back, recording the fastest rate of price inflation.

According to the latest UK Cities house price index from Hometrack, city house price inflation increased to 6.3% in November 2017, compared to 4.9% in the previous year.

Cities in Scotland are showing the strongest price growth, with Glasgow (7.9%) and Edinburgh (7.6%) taking the top spot. Also above the 7% mark are Leicester (7.5%) and Birmingham (7.3%).

For 2018, Hometrack predicts city house prices will increase by 5%, spearheaded by regional cities as London continues to struggle.

“A year ago, we predicted that UK city house price growth would be 4%,” the report notes, “as a continued recovery in regional city house prices would offset very low nominal growth in London.

“We expect 2018 to follow a similar pattern.”

London continues to weigh down on property prices, with LSL Property Services/Acadata’s house price index reporting annual house price growth in the UK was 0.9%. Excluding the capital and the South East this figure rises to 3.3%.

Inflation rose to 3.1% in November, the highest in nearly six years,


Inflation rose to 3.1% in November, the highest in nearly six years, as the squeeze on households continued.

The Office for National Statistics (ONS) said that airfares and computer games contributed to the increase.

The most recent data shows that average weekly wages are growing at just 2.2%.

Mark Carney, the governor of the Bank of England, will now have to write a letter to Chancellor Philip Hammond explaining how the Bank intends to bring inflation back to its 2% target.

Mr Carney has to write a letter to the chancellor if the Consumer Prices Index (CPI) inflation rate is above 3% or below 1%.

In November, the Bank of England raised its key interest rate for the first time in more than a decade from 0.25% to 0.5%.

However, it is not expected to announce a further increase when it publishes the results of the Monetary Policy Committee’s two-day meeting on Thursday.

Mr Carney had said that he expected inflation to peak in October or November.

The last time he wrote to the chancellor was in December 2016, after inflation fell to 0.9% in October that year.

Mr Carney’s latest letter will be published in February, when the Bank of England will also release its quarterly Inflation Report.

Analysis, Andy Verity, economics correspondent

Image copyright PA

It may be the highest rate of inflation for nearly six years. But that tells you not so much how high it has got but how low it has been for so long.

In the past 10 years, inflation’s peak has been 5.2% (in 2011). Tell anyone over the age of 50 that inflation at 3.1% is out of control and you’re likely to get a scoff, followed by memories of the 70s and 80s.

What they may forget, though, is that for most of that time wages were also rising – and faster than prices. The tendency of wages to respond to higher prices and outpace them seemed to follow an iron logic back then.

Bigger price rises led to bigger pay rises, forcing many employers to charge higher prices to cover higher labour costs: the so-called “wage-price spiral”.

But those rules don’t seem to apply these days. The breakdown of that logic is why we have a squeeze on living standards. It is also why the Bank of England isn’t that worried about above-target inflation getting higher or even staying above target. In the City, a second rise in interest rates isn’t expected until August next year.

Pricier food

Lucy O’Carroll, chief economist at Aberdeen Standard Investments, said: “It’s quite possible that inflation is now close to its peak. But some of the latest surveys suggest that service sector costs and prices are rising. Given how dominant services are in the economy, this could feed through to inflation overall.

“That means that further interest rate rises are definitely not off the table.”

The ONS said that although airfares fell in November – down 10.4% – the decline was not as steep as last year when they tumbled 13.4%.

Data also shows that food inflation has picked up, especially prices for fish, oil and fats, such as butter and chocolate.

Figures from market researcher Kantar Worldpanel released on Tuesday indicated that food inflation hit 3.6% in the three months to 3 December, the highest rate since 2013.

It also noted that prices for butter and fish had grown as well an increase in the cost of fresh pork. Kantar said only a few items were cheaper during the period, such as fresh chicken and crisps.

Richard Lim, chief executive at Retail Economics, said that the rise in inflation had come “at precisely the wrong time for retailers”.

“In the run-up to Christmas, the cost of living, now rising at the fastest rate in five years, remains uncomfortably high for households.”

He said that food inflation “is one of the most transparent indicators of living costs and often the catalyst to cut back on spending elsewhere”.

However, he expects the inflation rate to now fall and could reach 2.5% by Easter.

The ONS will announce employment data for the August to October period on Wednesday, which will include figures for wage growth.

Ben Brettell, senior economist at Hargreaves Lansdown, forecasts that average weekly wages have risen by 2.5% during the period.

He said: “With wage growth picking up we should see an end to falling real pay in due course.

“That’ll be of small comfort, however, to households facing a significant increase in the cost of Christmas this year.”

Source http://www.bbc.com/news/business-42320052

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