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.

One Third of Millennials Will Continue to Rent in Their Retirement

The number of families with children living in rented property tripled between 2003-2016…

The Resolution Foundation has proposed a series of reforms aimed at protecting tenants and landlords in the private rented sector.

According to the think-tank’s research, half of all millennials – people born between 1980 and 1996 – will be living in rented property up to their 40s, whilst a third are likely to be renting beyond retirement.

Furthermore, four out of ten millennials aged 30 are already renting, double the rate of the previous generation and four times that of baby boomers, whilst the number of families with children lived in the private rented sector has grown substantially, from 0.6m in 2003 to 1.8m in 2016.

Although they acknowledge the policies the government has introduced to make housing more accessible for first time buyers, the Resolution Foundation argues that more needs to be done to provide greater security for those that rely on renting.

This includes short-term measures such as proposals for indeterminate tenancies, which are essentially open-ended leases. Such tenancies are already in use in parts of Europe, including Scotland.

A new tribunal system could also be created, in order to resolve disputes in a timely and cost-effective manner.

Lindsay Judge, a senior analyst at the Resolution Foundation, notes that support needs to be available across all areas of the housing market: “While there have been some steps recently to support housebuilding and first-time buyers, up to a third of millennial still face the prospect of renting from cradle to grave.

“If we want to tackle Britain’s ‘here and now’ housing crisis we have to improve conditions for the millions of families living in private rented accommodation.”

London’s property market is in a coma

London’s housing market has ground to a halt.

After years of blockbuster growth, home prices have reversed course and are expected to drop further over the next year. The number of sales has dropped, and more homeowners are pulling properties off the market.

The dour outlook comes courtesy of the Royal Institution of Chartered Surveyors (RICS), which warned in a report on Thursday that weakness in London had caused its UK house price indicator to hit a five-year low.

A number of factors have hobbled London’s market.

The government has in recent years hiked taxes on property purchases, making it more expensive to buy luxury housing, second homes and investment properties. Doing so has scared off some wealthy investors and caused prices to slump in central London.

Britain’s decision to leave the European Union has also hurt the market, with potential buyers putting their plans on hold because of the economic uncertainty.

One property professional surveyed by RICS said that Brexit and the tax changes had “killed the liquidity of the London market.”

Related: Renting vs. Buying: What can you afford?

The Bank of England is also expected to keep slowly raising interest rates as the economy grinds forward, making mortgages even less affordable for Londoners.

The average house price in London is £486,000, according to the UK Land Registry.

That’s too high for many first-time buyers, whose finances have been hit by high inflation and small salary rises. But sellers would rather pull properties off the market than accept lower bids.

“Buyers and sellers are currently locked in a stand-off,” said Hansen Lu of Capital Economics.

RICS’ chief economist Simon Rubinsohn said that the slowdown in London “has the potential to impact the wider economy, contributing to a softer trend in household spending.”

He said the dynamic could ultimately impact the Bank of England’s thinking about future interest rate rises.

Still, analysts don’t expect house prices to collapse in London. Inflation has moderated in recent months, employment remains strong and the British economy is growing.

Lu said this should be considered “good news” for the stagnant market.

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.


Substantial Rental Growth Found Outside of the Capital

UK renters are increasingly looking outside of London, as the capital’s rental market reaches an affordability ceiling.

Your Move’s latest buy-to-let index shows rents across England & Wales averaged in February.

In London, however, the exodus of renters looking outside of the capital for more affordable accommodation has resulted in slower rental growth, with rents declining 1% year-on-year and 0.5% from the previous month to an average of in February.

Similarly, the rental market in the South West also saw pressure ease in February, as rental properties reached a surplus in the region; rents in the area reduced by 1.5% year-on-year, with the average price now standing at pcm.

Tenants in Wales, on the other hand, saw rents surge the quickest over the month, with the average property letting for in February – a 7.7% annual increase.

A monthly reduction saw rental returns slide by 0.1% from January to an average of 4.1% across England and Wales.

The highest rental returns were found in the northern regions of the North East & North West, where average returns stood at 5.3% & 5% respectively, in February.

Conversely, landlords with properties in the South East and South West saw rental return fall below 4% in February, following a year-on-year decline.

The news follows Knight Frank and IHS Markit’s latest publication, which found that property owners continued to remain positive about the UK property market in March.