Introduction: UK house prices growing, but living standards languish
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Whether people feel wealthier can be a key factor in where they place their tick at the ballot box.
And those lucky enough to own a house became slightly wealthier this month, new data shows, while a separate report shows living standards have languished for more than a decade.
Lender Nationwide has just reported that UK house prices rose by 0.4% month on month in May, ending a two-month run of falling prices.
This has lifted the annual rate of house price inflation up to 1.3%, from 0.6% in April, with the average house price now £246,249.
Prices rose even though some lenders raised mortgages rates this spring – although costs are below the spike in the months after the 2022 mini-budget fiasco which did such damage to the Conservative Party’s popularity.
Nationwide reports that the market is showing some resilience. Their chief economist, Robert Gardner, says:
“The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months. Consumer confidence has improved noticeably over the last few months (see chart below), supported by solid wage gains and lower inflation.
The general election campaign is unlikely to disrupt the housing market much; Rightmove reported this week that 95% of people planning to move home say the election will not affect their plans.
The wider economic picture, though, is that the UK has been suffering weak income growth since the Great Recession.
The Institute for Fiscal Studies reports this morning that median incomes grew by just 6% between 2009–10 and 2022–23; before the 2008 crisis, economists would have expected growth of 30% over that 13-year period.
The IFS warns that there’s no “silver bullet”, but reforms to taxes, planning, education and more can make a material difference to the UK’s long-term prospects.
Mubin Haq, chief executive of abrdn Financial Fairness Trust, says:
‘Unfortunately, living standards have languished for more than a decade.
On a range of measures UK performance has been weak, especially in comparison to other wealthy countries. The danger is that stagnation becomes the new normal. This is in no one’s interests and stunts too many futures and too many lives.
Key to any future government will be a renewed drive to tackling hardship and improving living standards.’
Also coming up today
New Bank of England data will show how many mortgages were approved last month, another gauge of the housing market’s health.
Global investors are bracing for the latest US PCE inflation data, which measures price changes across a wide range of consumer expenses. A strong PCE report could throw more cold water on hopes of early US interest rate cuts, while a weak reading could put them back into play….
The agenda
-
7am BST: Nationwide house price index for May
-
7am BST: German retail sales
-
7.45am BST: French inflation report
-
9.30am BST: UK mortgage approvals and consumer credit stats
-
10am BST: Eurozone inflation report
-
1.30pm BST: Canadian Q1 GDP report
-
1.30pm BST: US PCE inflation index
Key events
Nationwide: General elections don’t disrupt house prices
Nationwide have also dug into their data, and found that past general elections do not appear to have generated volatility in house prices or resulted in a significant change in house price trends.
Their chief economist Robert Gardner says:
“On the whole, prevailing trends have been maintained just before, during and after UK general elections. Broader economic trends appear to dominate any immediate election-related impacts.
CMA starts investigation into Nationwide/Virgin takeover
It’s a busy morning for Nationwide Building Society.
As well as their latest house price data, we’ve also just learned that the UK’s competition authorities have launched a merger inquiry into its £2.9bn takeover of rival Virgin Money.
The Competition and Markets Authority (CMA) says it is considering whether the deal – the biggest since the financial crisis – would lead to a substantial lessening of competition within the UK banking sector.
The CMA is seeking views from interested parties, by 14 June (details here).
Last week, Virgin Money shareholders have voted in favour of Nationwide’s offer, despite one investor claiming the takeover was “likely to sell shareholders very short”.
As well as the shareholder vote, the deal still needs formal approval from City regulators the Financial Conduct Authority and Prudential Regulation Authority, as well as signoff from the CMA.
We’ve launched our investigation into Nationwide Building Society’s potential acquisition of Virgin Money.
More: https://t.co/RJNnSHw5vY
— Competition & Markets Authority (@CMAgovUK) May 31, 2024
Introduction: UK house prices growing, but living standards languish
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Whether people feel wealthier can be a key factor in where they place their tick at the ballot box.
And those lucky enough to own a house became slightly wealthier this month, new data shows, while a separate report shows living standards have languished for more than a decade.
Lender Nationwide has just reported that UK house prices rose by 0.4% month on month in May, ending a two-month run of falling prices.
This has lifted the annual rate of house price inflation up to 1.3%, from 0.6% in April, with the average house price now £246,249.
Prices rose even though some lenders raised mortgages rates this spring – although costs are below the spike in the months after the 2022 mini-budget fiasco which did such damage to the Conservative Party’s popularity.
Nationwide reports that the market is showing some resilience. Their chief economist, Robert Gardner, says:
“The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months. Consumer confidence has improved noticeably over the last few months (see chart below), supported by solid wage gains and lower inflation.
The general election campaign is unlikely to disrupt the housing market much; Rightmove reported this week that 95% of people planning to move home say the election will not affect their plans.
The wider economic picture, though, is that the UK has been suffering weak income growth since the Great Recession.
The Institute for Fiscal Studies reports this morning that median incomes grew by just 6% between 2009–10 and 2022–23; before the 2008 crisis, economists would have expected growth of 30% over that 13-year period.
The IFS warns that there’s no “silver bullet”, but reforms to taxes, planning, education and more can make a material difference to the UK’s long-term prospects.
Mubin Haq, chief executive of abrdn Financial Fairness Trust, says:
‘Unfortunately, living standards have languished for more than a decade.
On a range of measures UK performance has been weak, especially in comparison to other wealthy countries. The danger is that stagnation becomes the new normal. This is in no one’s interests and stunts too many futures and too many lives.
Key to any future government will be a renewed drive to tackling hardship and improving living standards.’
Also coming up today
New Bank of England data will show how many mortgages were approved last month, another gauge of the housing market’s health.
Global investors are bracing for the latest US PCE inflation data, which measures price changes across a wide range of consumer expenses. A strong PCE report could throw more cold water on hopes of early US interest rate cuts, while a weak reading could put them back into play….
The agenda
-
7am BST: Nationwide house price index for May
-
7am BST: German retail sales
-
7.45am BST: French inflation report
-
9.30am BST: UK mortgage approvals and consumer credit stats
-
10am BST: Eurozone inflation report
-
1.30pm BST: Canadian Q1 GDP report
-
1.30pm BST: US PCE inflation index
