Finance Matters

Posts Tagged ‘rise’

The latest house price index from the Nationwide Building Society has revealed prices rose by just 0.1% in September on a monthly basis.

On an annual basis, house prices are now 0.3% lower than this time last year with the average UK home costing £166,256.

Meanwhile, when comparing prices in the three months to the end of September with the previous quarter (which is a more reliable indicator), prices were unchanged.

The latest figures suggest the housing market will remain subdued as a lack of buyers, together with the ongoing lack of mortgage availability, means demand for housing is weak.

The Nationwide’s chief economist, Robert Gardner, comments: “Sentiment towards major purchases is depressed, as a result of weak labour market conditions and ongoing pressure on household budgets from above-target inflation.”

Mr Gardner expects prices to remain relatively stable throughout the remainder of the year but cautioned that the outlook had “darkened” due to the euro zone sovereign debt crisis which is denting confidence and driving up banks’ funding costs.

In other news today, the Bank of England said the number of new mortgages approved, but not yet lent, for home buyers in August grew to its highest level since December 2009 with 52,410 mortgages approved last month.

However, approvals remain well below levels seen prior to the financial crisis.

Since the early 1990s, mortgage approvals have averaged around 90,000 a month but the credit crunch saw a tightening of lending criteria and many have been unable to secure a mortgage unless they have a significant deposit.

Also this week, HM Revenue & Customs (HMRC) revealed a fall in the number of homes sold in August in the UK.

According to HMRC, 78,000 homes worth at least £40,000 or more were sold in the month – 6,000 less than the previous month and 3,000 lower than in August 2010.

However, August is traditionally regarded as a quieter month due to the holiday season.

At the height of the housing boom in July 2007, 151,000 homes were sold.

The Standard & Poor’s/Case-Shiller composite index of 20 metropolitan areas rose 0.9% in July compared with June when values rose 1.2%.

July represented the fourth consecutive monthly rise.

On an annual basis, however, prices are 4.1% lower.

The US housing market has remained in the doldrums for some time now and many have suggested it is holding back the recovery of the world’s largest economy but the latest figures suggest the housing market may be stabilising.

According to one economist, the oversupply of existing homes, particularly taking into account all those in foreclosure or soon to be, looks set to keep pressure on prices for some time.

Commenting on the index, David Blitzer, S&P’s index committee head, said: “This is still a seasonal period of stronger demand for houses, so monthly price increases are expected.

However, he cautions that a sustained recovery is a long way off and several factors suggest that the “housing market is still bottoming and has not turned around.”

Meanwhile, 18 of the 20 metropolitan areas in the index posted an annual decline in July – led by a 9% fall in Minneapolis.

The only two areas to see a rise were Detroit and Washington which increased 1.2% and 0.3% respectively.

Meanwhile, house sales continue to be depressed. Yesterday, the Commerce Department revealed sales of new homes in the US fell to a six-month low in August.

According to the Commerce Department, new single-family home sales fell 2.3% in August to a seasonally adjusted annual rate of 295,000 units – the lowest level since February.

The figure is now less than half the 700,000 units which experts believe demonstrates a healthy market.

Demand for housing in the US remains weak, despite mortgage rates hovering at record lows and falling house prices – the latter due to millions of home repossessions.

Figures published by the Society of Motor Manufacturers and Traders (SMMT) revealed a strong rise in UK car production for the month of August.

UK car production rose 10.7% in August versus the same month a year ago, the SMMT said, with the total number of cars produced at 86,250.

Furthermore, for the year-to-date, car production is 4.4% higher than in the same period last year, the Society added.

Car production has declined over recent months due to disruptions in the supply chain, resulting from the Japanese earthquake and tsunami which struck in March.

Meanwhile, commercial vehicle production rose 9.3% in August at 6,433 units; however, it is 4% lower compared with the corresponding period last year.

In addition, the SMMT said there was a 14.4% increase in UK engine production in August, while the year to date figure was 4.8% higher compared with the same period in 2010.

According to Paul Everitt, SMMT chief executive, new investment is boosting production.

He said: “A manufacturing-led recovery is taking shape, with August’s automotive output up more than 10% and a recent wave of private investment securing long-term growth for the UK sector.”

Mr Everitt added that the industry is on track to exceed last year’s production volumes.

The figures come shortly after the SMMT revealed UK car sales saw their first rise in 14 months in August.

According to the trade body, car sales rose by 7.3% in August compared with the same month in 2010, with sales of smaller cars rising by more than 30%.

The SMMT said the number of new cars sold in the month was 59,346 – representing the first rise since summer 2010.

The figures were a welcome boost since August is traditionally one of the slowest months for car sales – ahead of September’s launch of new plates.

Car sales have declined significantly over recent months after the Government’s scrappage scheme expired but the figures suggest that the industry is picking up.

The Office for National Statistics (ONS) has today revealed UK public sector net borrowing rose last month.

According to the ONS, public sector net borrowing came in at a higher than expected £15.9 billion in August – a rise of £1.9 billion from a year ago and represented the highest for the month of August since records began in 1993.

Since the start of the financial year in April, public sector net borrowing totals £52 billion – just 7% less than a year earlier.

Overall, public sector net debt stands at 61.4% of UK GDP (total economic output) – up from 55.3% this time last year.

The Government’s independent Office for Budget Responsibility (OBR) is expecting public sector net borrowing to come in at £122 billion for the current tax year – lower than the £143 billion borrowed in the previous tax year.

However, today’s figures will put further pressure on Chancellor George Osborne’s tough austerity measures but the Treasury maintains that spending plans are on track.

A spokesperson for the Treasury said: “These are challenging times, but despite economic growth being lower than the OBR’s forecast earlier this year, tax receipts have continued to grow and spending so far this year has grown at the rate the OBR forecast in the Budget.

“These figures also include a welcome and substantial downward revision to borrowing so far this year and to overall borrowing last year.”

The OBR estimates that the UK economy will grow by an optimistic 1.7% this year – however, this estimate was made in March and is widely considered out of date.

Yesterday, the International Monetary Fund (IMF) said the global economy has entered a “dangerous new phase” and slashed its growth forecast for the UK.

In its World Economic Outlook bi-annual report, the IMF said the UK economy will grow by 1.1% in 2011 compared with its last forecast of 1.7% in April.

Official figures today revealed Japan’s exports rose in August for the first time in six months – suggesting the world’s third largest economy is continuing its recovery from the devastating earthquake and tsunami which struck in March.

According to the Ministry of Finance, exports were 2.8% higher last month on an annual basis but this was much less than the 8% rise expected by analysts.

The figures suggest the strong yen continues to hurt Japan’s manufacturers – it is currently hovering around 76.30 to the US dollar – dangerously close to its post-war high of 75.95 yen seen last month.

The yen has been appreciating for some time as global investors see it as a safe haven at a time of economic uncertainty.

However, it has implications and it is forcing manufacturers to consider relocating and some have even suggested moving their operations overseas.

Exports helped the economy recover from recession earlier than its counterparts more than two years ago but the twin disasters disrupted supply chains and forced some of Japan’s largest exporters to halt production.

In the meantime, imports surged 19.2% on an annual basis, due to hikes in oil prices.

As a result, the economy posted a huge trade deficit of 775.3 billion yen – the biggest since records began in 1979.

Last week, the Cabinet Office revealed the Japanese economy performed worse than originally thought in the April to June period.

Gross Domestic Product (GDP) contracted by 2.1% on an annual basis in the three-month period, compared with an initial estimate of 1.3%.

The economy is currently in recession and has now contracted for three consecutive quarters.

Japan lost its place as the world’s second largest economy to China last year and it faces several headwinds including years of deflation and a mountain of debt.

Debt currently stands at almost twice the country’s annual economic output and is the highest of any industrialised nation.