Abshire-Smith - Analytics


    250.50 5.50/10
    100% of positive reviews

    UK House Prices Beat Estimates

    The UK property market (especially London) is regularly cited in the press as having overheated, with the disparity between income growth and prices growing exponentially. Following the financial crisis prices have pushed higher with double digit year-on-year growth in certain regions. Inflows of hot money from Russia, China (HK), Ukraine and peripheral European countries have led the growth in prime locations. Buy to let investments provide a relatively stable yield alongside the expectation of asset appreciation as investors search for a return with interest rates a record low.

    Halifax House Price Index

    Today’s release, the Halifax House Price Index stated "House prices in the three months to January were 1.9% higher than in the preceding three months. This was the first increase in the quarterly rate of increase for six months. Annual price growth also picked up, to 8.5% from 7.8% in December, but remained significantly below last July’s peak of 10.2%”.

    BoE FPC Mortgage Overview

    George Osborne Chancellor the Exchequer confirmed that the Bank of England’s FPC will be given new tools to ensure the ongoing stability of the UK property market. The mortgage market review brought in last year increased the requirements that banks needed to manage the level of lending. ‘The Bank of England will have further powers to safeguard the stability of Britain’s financial system from any future risks posed by our housing market or banks,’ said Osborne.

    The rapid growth in property prices had been cited as the potential catalyst for a need to raise interest rates, however the focus from MPC members seems to have passed. There is a concern that when monetary policy is tightened, the rise in interest rates could stall the economic recovery with a reduction in borrowers disposable income.  

    BoE Rate decision

    The Bank of England rate decision is at 12 (GMT), but is expected to be a non-event; unchanged for both rates at 0.50% and asset purchases at £375bn. Trades focus will be on the Inflation Report (12th Feb) and the Minutes for todays meeting (18th Feb). Market expectations are for the first rate hike to be Q1/2 in 2015, which will most likely be a 25bps increase with subsequent gradual rises, however the record low readings of inflation (CPI) due to the fall in oil prices have pushed some expectations out further. 

    Looking at a longer term outlook for Sterling the currency should be driven by the general election. 

    GBPUSD: 1.5237 

    To leave a comment you must or Join us

    By visiting our website and services, you agree to the conditions of use of cookies. Learn more
    I agree