First house price fall in England since 2012

House prices are lower in England compared with a year ago – the first annual fall in property values since 2012, according to the Nationwide.

In the first three months of the year, prices in England were down 0.7% from the same period in 2018.

But the building society said that annual house price rises in Northern Ireland, Scotland and Wales meant the UK average was still growing.

The typical home was valued at £213,102, the Nationwide said.

Based on its own lending data, the building society said UK house prices in March were up 0.7% from the same month a year earlier.

Robert Gardner, the building society’s chief economist, said that the number of sales and the number of mortgages approved for house purchases had remained “broadly stable”.

However, he said that consumer surveys had suggested buyers and sellers were taking a more cautious approach. This has come as a result of a lack of Brexit clarity.

Sam Mitchell, chief executive of online estate agents Housesimple, said: “The market would have preferred a decision one way or the other. Instead, we are now in this state of short-term limbo leaving many buyers and sellers unsure what to do.

“Normally, we would expect to see a spike in transaction levels around this time as we enter the traditional spring bounce period, but with the extension to the EU leaving date, the bounce is likely to be a little subdued this year.”

Andrew Montlake, director of mortgage broker Coreco, said: “London is particularly sensitive to ongoing political uncertainty but it is also paying for the astronomic house price growth of five or six years ago.”

This was seen in figures comparing house prices in the first three months of this year with the same quarter in 2017.

On this measure, house prices in London had fallen by 3.8% – the biggest fall for a decade, the Nationwide said. However, properties in the capital remained the most expensive in the UK at an average of £455,594.

Prices in the commuter belt around London and the South East of England also fell compared with a year ago, driving the drop in England as a whole.

Over the same period, property values in Wales increased by 0.9%, rose by 2.4% in Scotland, and went up by 3.3% in Northern Ireland.

However, prices in Northern Ireland are still more than 35% below their high in 2007, the Nationwide said.


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Landlords are being taxed out of business, it is suggested

The majority of landlords in Britain are only paying the interest on their mortgages rather than paying off their loans, research suggest.

According to the National Landlords Association (NLA) some 79% of landlords are only servicing the interest on their mortgages and it is due to rising costs with many being taxed out of business.

The NLA points out that there are many costs to running a successful lettings business that tenants are even the wider industry are either unaware of or don’t consider.

‘There are myriad costs to running a letting business, including maintenance, repairs and upgrades, licensing, and insurance. Rents have to cover all these costs, as well as the interest on a mortgage, where there is one,’ said Richard Lambert, NLA chief executive officer.

‘Housing is expensive for everyone at present. The Government needs to encourage the supply of housing in all tenures, including the private rented sector,’ he added.

The NLA is calling for the Government to allow more time, five years, for existing policies in the private rented sector to bed in, and evaluate their effectiveness, before new policies and regulations are introduced.

It also suggests that the Government should be encouraging the building of more housing of all tenures by simplifying planning and borrowing rules.

Crucially, it says the Government should stop taxing professional landlords out of the market and argues that the loss of ‘good landlords’ will not make renting more affordable and will simply drive up the cost for those who want to access decent rented homes.

FTSE 100 suffers biggest one-year fall since 2008

The FTSE 100 has suffered its biggest one-year fall since the financial crisis in 2008.

London’s leading stock index was 12.5% lower at the end of 2018 compared with the start of the year, wiping more than £240bn off the combined value of its constituent companies.

Wall Street also limped across the finish line of what has been its worst year in a decade, with markets battered by anxieties about a US-China trade war and global economic slowdown, as well as Brexit worries.

The FTSE 100 ended a shortened day of trading on New Year’s Eve at 6728. Little changed on the day, meaning it closed 960 points lower than its level at the start of the year.

It is nearly 1200 points lower than the FTSE’s record high achieved in May this year.

Trading across global markets has been particularly volatile in the run-up to Christmas – a time when investors are traditionally more accustomed to a “Santa rally” lifting values.

Instead, a cocktail of worries – many of them focused on Donald Trump’s confrontations with China over trade and with the US Federal Reserve over interest rates – have pulled shares down.

Signs of more festive sentiment flickered into life shortly after Christmas when New York’s Dow Jones enjoyed a record-breaking rally of more than 1000 points in one day and the FTSE 100 had its best session since April.

But it was not enough to gloss over a grim year for shares.

The annual fall for the FTSE 100 was the first decline over the course of the year since 2015 and the largest annual percentage decline since the financial crisis – when it lost a third of its value in 2008.

Sliding share values hit investments such as pension funds as well as trackers that follow the value of the FTSE 100.

Among individual stocks, British American Tobacco has been badly hit, losing 50% off its share price over 2018, after the US proposed a crackdown on menthol cigarette sales.

House builder Taylor Wimpey, down by about a third, is among companies in the sector hit by worries about the housing market – which have largely been blamed on Brexit uncertainty.

U.K. Current Account Deficit Widens; Business Investment Falls

The U.K. current-account deficit stood at its highest in two years in the third quarter, raising fresh questions about its sustainability as Britain faces the prospect of a chaotic exit from the European Union in less than 100 days.

The gap grew for a third straight quarter to 26.5 billion pounds ($33.6 billion), the equivalent of 4.9 percent of gross domestic product. The Office for National Statistics left its estimate of GDP growth at 0.6 percent as consumers made up for another fall in business investment and a negligible contribution from trade.

Key Insights

  • Brexit has put the current account back in the spotlight, with economists questioning the willingness of foreign investors to keep financing the deficit by buying British assets after Britain leaves the EU.
  • The gap widened from 20 billion pounds in the second quarter as the trade deficit hit a two-year high and the shortfall in investment income reached the highest since the second quarter of 2016.
  • Sharp negative revision to trade deficit means net trade contributed just 0.1 percentage point to economic growth in the third quarter, rather than 0.8. The economy grew 1.5 percent from a year earlier.
  • But signs are pointing to a significant economic slowdown, with the Bank of England predicting growth of around 0.2 percent this quarter. Firms cut investment by 1.1 percent (revised from 1.2 percent) between July and September amid mounting Brexit fears. Investment has fallen for three quarters in a row, the longest period since the financial crisis.
  • The budget deficit narrowed to 7.2 billion pounds in November, below forecasts and the lowest for the month since 2004, with revenue and spending including investment both growing just under 4 percent on the year. The shortfall in the first eight months of the fiscal year was down over 29 percent versus the same period in 2017.

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  • Britons splurged during the summer heatwave — consumer spending rose 0.5 percent on the quarter — but pressures remain. Households were net borrowers for an eighth straight quarter, the longest stretch since the 1980s, as they continued to spend and invest more than they received.
  • Real disposable income was unchanged and the saving ratio remained at historically low levels, with households saving 3.8 percent of their income compared with 4.1 percent in the second quarter.
  • Widening in deficit on income was driven by an increase in the profits generated by foreign investors on their direct investment in Britain. Imports of goods and services rose 2.2 percent in value terms, while exports climbed 1.2 percent.
  • Simple extrapolation of fiscal data suggests deficit for 2018-19 as a whole will come in around 29 billion pounds, higher than the 25.5 billion pounds (1.2% of GDP) forecast by the Office for Budget Responsibility in October. The gap in the first eight months of the fiscal year was 32.8 billion pounds.
  • Budget deficit in November was almost 1 billion pounds lower than a year earlier, with the improvement due entirely to local authorities. Central-government revenue was boosted by value-added tax and income tax, both growing over 6 percent on the year. Current spending rose just 1.5 percent but overall outlays were lifted by an increase in net investment.