Monthly Market Review – November 2016 – 1

Trump triumphs

Financial markets have fallen on the news that Donald J Trump has been elected the 45^th US President.

One recent poll suggested that 28% of Americans would consider emigrating in the event of a Trump win. At the time of the last census in 2011 about 63,000 people born in the US lived in London. They make up the largest group of immigrants in three boroughs, Camden, Kensington & Chelsea and Westminster.

The result could prompt a surge in interest in the London property market, however, this may depend on the continued strength of the US dollar, which has also fallen on the news.

Economic update

Recently published data from the Office for National Statistics (ONS) shows the UK jobless rate held steady at a near 11 year low of 4.9% in the three months to August, despite a small rise of 10,000 in unemployment to 1.66 million. The ONS interpretation is that “These figures show that employment continued to grow over the summer and vacancies remain at high levels, suggesting continuing confidence in the economy.” The economy expanded by 0.5% in the July to September period. That was slower than the 0.7% rate in the previous quarter, but stronger than many analysts’ estimates. This is further welcome news of a robust economic landscape, which in turn is underpinning consumer confidence in the housing market.

Latest data from national house price indices have continued to record positive annual house price growth, albeit at a more subdued pace. However, Halifax recorded a 1.4% month-on-month jump in prices last month; which is the strongest surge seen since the stamp duty spike earlier this year.

Rent or Buy?

New research from Zoopla records that it is now more cost-effective to buy a home than rent in nearly two-thirds of British cities. Not surprisingly London is in the other third.

The property website analysed the cost of renting a two-bedroom home compared to servicing a mortgage in Britain’s 50 biggest cities. The proportion of cities offering better value for money for homeowners has seen a 25% increase since April.

90% of the top locations where buying beats renting are in the north of the UK. This explains an emerging sellers’ market in the north, with sales agreed up on 2015 and lower stock availability.

City house price inflation is up

Despite London recording its lowest rate of price growth for 20 months, overall the UK Cities House Price Index is at 8.5% per annum, higher than the 5.7% growth recorded in 2015 according to Hometrack.

This highlights the emerging strength of markets outside the south east of England, with 11 of the large regional cities such as Liverpool, Manchester, Cardiff and Birmingham registering higher levels of growth than in January 2016. The other 9 cities listed on the index have all seen slower growth.

However, as illustrated by the graph below, slower growth does not necessarily translate to poor performance as London has still registered the second highest annual growth of 10%, with Cambridge fourth at 8%. So, no need for widespread doom and gloom, but please do spare a thought for property owners in Aberdeen.