Rolling coverage of the latest economic and financial news, as UK house price slowdown spreads from London to the South East
- Breaking: House prices falling in London and South East
- UK-wide house price growth hits six-year low
Over in Germany, the government has conceded that its growth forecasts have been too optimistic.
Berlin now expects the German economy will only expand by 0.5% during 2019, only half as fast as previously expected.
In line with reports that had appeared last week, the #German government halves its forecast for #GDP growth in 2019 to just 0.5% from 1.0%, primarily due to the woes of the #manufacturing sector. Sees growth improving to 1.5% in 2020, driven by consumer https://t.co/MADEXIiwrV
Germany cuts growth projection to 0.5%…a year ago same survey called for growth of 2.1% just wow.
Here’s the regional breakdown of the latest UK house price data, showing that England is still the priciest place for housing.
Brexit isn’t the only factor behind Britain’s house price slowdown.
Sharp cuts in tax breaks for buy-to-let landlords are another factor, experts say, as they’ve wiped out many of the profits from buying a house and renting it out.
“The death of buy to let, increased stamp duty and the prospect of interest rate hikes combined with Brexit instability makes the downward trajectory of house prices predictable. This decline looks set to continue for the foreseeable future.
“One way to curtail non-resident buyers, who have stoked the residential property market in the south east, is to increase stamp duty further. While Government is consulting on this now, many would argue its impact will be minimal given the housing market is already in decline in London, particularly in the premium market. A one per cent surcharge is unlikely to reverse this trend in the short term.”
Despite recent falls, London still remain the most expensive region to buy a property.
The average London house price is now £460,000, more than double the national average of £226,000 in February.
UK house prices have actually been falling since last August, a clear sign that the market has cooled:
The big picture is that UK house price growth has been slowing steadily since summer 2016….and a certain referendum.
House price inflation was 8.2% in June 2016, when Britain voted to leave the EU. It’s now just 0.6%, as Brexit uncertainty has deterred some people from risking a house move.
The ONS’s head of inflation Mike Hardie says:
“Annual house price growth has slowed to the lowest rate in close to seven years.
Growth in Wales and the west of England was offset by a sustained fall in London and falling prices in the South East for the first time since 2011.
Newsflash: House prices across the South East of England have fallen, for the first time in over seven years, as the slowdown in Britain’s property sector deepens.
House prices across the South East declined by 1.8% in the year to February, the Office for National Statistics reports.
Why was UK inflation unchanged at 1.9% in March?
According to the Office for National Statistics, rising prices for motor fuels and clothing pushed the cost of living higher last month.
Newsflash: UK inflation held steady at 1.9% per year in March.
That matches February’s reading, and is weaker than the 2% which City economists expected.
Danny Blanchflower once explained that football isn’t just about winning, it’s also about glory — playing with style and a flourish.
JUVENTUS FALLS AS MUCH AS 24% AFTER LOSS TO AJAX
The problem with relying on government stimulus for growth is obvious — a nasty hangover when the punchbowl is taken away.
Writing in the New York Times, Alexandra Stevenson explains how China’s recovery may not be sustainable:
There is a caveat: The signs of improvement most likely do not stem from a sudden burst of confidence in the strength of the country’s economy among Chinese business leaders.
Instead, the positive glimmers are largely a product of the hundreds of billions of dollars that Beijing has pumped into the country’s economy in recent months and the loans that officials have pressed state-run banks to make. All of that comes at a cost, and it raises a question about how willing Beijing is to spend to keep growth going.
China’s economy seems to be stabilizing. There is a caveat: The signs of improvement likely don’t stem from a sudden burst of confidence among Chinese business leaders. A surge in lending gets the credit. https://t.co/sZdprYwbMr #china #GDP
Today’s GDP report also shows a jump in investment by China’s companies.
Private sector fixed-asset investment, a gauge of confidence of Chinese private manufacturers and entrepreneurs, rose 6.4% in Q1 2019 first quarter compared to a year earlier.
Chinese industrial production and investment spending may be more important signals.
China has become a significantly larger global manufacturer – but rarely makes a product from start to finish. China is a link in the chain, so stronger Chinese production signals stronger production for other countries along the supply chain.
China’s growth report has helped to push the oil price up to a new high for the year.
Brent crude has hit $72 per barrel for the first time since last November, on expectation of higher demand from Chinese factories.
Brent oil reaches the highest level of 2019 (> USD 72/bbl) after US inventories seems to have dropped unexpectedly. This comes on top of the already positive sentiment based on US/China trade deal hopes and OPEC+ supply cuts.
WTI struggles to move higher…#OOTT #oil #energy pic.twitter.com/OAncz6F6fA
This chart, from Durk Veenstra of RTL news, shows how Chinese industrial output has surged since Beijing ramped up its stimulus measures.
China’s National Bureau of Statistics has urged caution, warning that the economy still faces downward pressures.
Spokesman Mao Shengyong told reporters:
“The national economy enjoyed stable performance with growing positive factors, and stronger market expectation and confidence.
“Given slowing global economic growth and international trade, increasing international uncertainties and prominent domestic structural issues, the task of reform and development is arduous and downward pressure on the economy persists.”
Tai Hui of JP Morgan Asset Management says Beijing’s stimulus programme of higher government spending, lower taxes and wider credit availability are “starting to yield results”.
This confirms that China’s economic growth is bottoming out and this momentum is likely to continue.
Chinese growth momentum returns, thanks to policy measures implemented last year. GDP data came in above expectations, which suggests that China’s economy is back on track… 1/2
…However, we still remain a bit cautious, because more positive data is needed medium-term, but one can tell China is out of the woods for now – something investors were looking for. 2/2 #China
In some ways the data are as expected –we all knew there was a state led drive to goose growth by building more roads and reflating the property market by easing restrictions, so pick up in FAI and property investment makes sense.
However, faster retail sales growth and a fall in unemployment don’t sit with a lot of the other evidence of factory shutdowns, collapsing auto sales and sharply slowing import growth.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
#China GDP +6.4%
acceptable number given backdrop. pic.twitter.com/fpcxOt4OCu
“There is no denying that China’s economy ended the first quarter on a stronger note.
China’s economy will bottom out before long if it has not already.”
#China GDP figures higher than analysts had predicted (at 6.4%) meaning growth here could be faster than it seemed. (Keep in mind that plenty of analysts don’t trust the Chinese GDP figures but…) increased bank lending and infrastructure spending are two factors driving it.