Weekly Round-Up: 22nd October 2018
Up across the country
The Office for National Statistics has released the latest data on its UK House Price Index (HPI) tracing house price inflation, the rate at which the prices of residential properties purchased in the UK rise and fall. The UK HPI, introduced in June 2016, includes all residential properties purchased for market value in the UK. According to the data, average house prices in the UK have increased by 3.2% in the year to August 2018 (down from 3.4% in July 2018), remaining broadly stable at a national level since April 2018.
Over the past two years, records indicate that there has been a slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England. The lowest annual growth was in London, where prices decreased by 0.2% over the year, down from being unchanged (0.0%) in the year to July 2018. The average UK house price was £233,000 in August 2018. This is £7,000 higher than in August 2017 and £1,000 higher than last month. On a non-seasonally adjusted basis, average house prices in the UK increased by 0.2% between July 2018 and August 2018, compared with an increase of 0.5% in average prices during the same period a year earlier (July 2017 and August 2017). On a seasonally adjusted basis, average house prices in the UK increased by 0.3% between July 2018 and August 2018
House prices in England increased by 2.9% in the year to August 2018, down from 3.3% in the year to July 2018, with the average price in England now £250,000. House prices in Wales increased by 6.2% over the last 12 months to reach £162,000. In Scotland, the average price increased by 4.1% over the year to stand at £153,000. The average price in Northern Ireland currently stands at £133,000, an increase of 4.4% over the year to Quarter 2 (Apr to June) 2018.
Happy to be Scottish
Happiness levels in Scotland have risen for a third consecutive year, according to the latest Bank of Scotland Happiness Index. The annual nationwide survey asks Scots how happy or unhappy they are in their local communities, to create an official cheeriness barometer ranging between -100 (very unhappy) to +100 (very happy). Overall, Scots are slightly chirpier than last year as the Index recorded a score of 44.9 (an increase of 1.2 points compared to 2017) and 5.9 points happier than they were three years ago.
Anyone looking for their next home might want to consider Central Scotland, with its leafy suburbs and The Helix – home of The Kelpies – as it’s been crowned the happiest place to live. The Highlands & Islands is the second happiest – perhaps partly because of its stark beauty and outdoors community – followed by the Lothians. Clouds may be gathering over West of Scotland though, as it fell to the bottom of the table this year. Getting older doesn’t necessarily mean becoming grumpier as the Index reveals that over 65s remain the happiest age group. They’ve consistently been table-toppers for the past three years. But at the other end of the age scale, 18 to 24 year olds’ happiness levels have grown by the highest number of points in the last year, and over the last three years. Those aged 35 to 44 are at the bottom of the table for the second consecutive year, and 24 points below the over 65s.
Two’s company when it comes to a happy home as for the third year in a row those households with two residents say they’re the happiest. Families of four have slumped four places to the bottom of the table, replacing those living alone, who move up just one position to fifth place. They say money can’t buy happiness but according to the latest Index, the more Scots earn, the happier they are. This year, Scots with a personal income of more than £60,000 are happiest, but last year, the magic number was between £40,000 and £59,999 – it’s moved to second place.
Lost in pension
The scale of the UK’s lost Pensions Mountain is exposed last week by research carried out on behalf of the ABI. In the largest study yet on the subject, the Pensions Policy Institute (PPI) surveyed firms representing about 50% of the private defined contribution pensions market. From this PPI found 800,000 lost pensions worth an estimated £9.7 billion. It estimates that, if scaled up to the whole market, there are collectively around 1.6 million pots worth £19.4 billion unclaimed – the equivalent of nearly £13,000 per pot. This figure is likely to be even higher as the research did not look into lost pensions held in the public sector, or with trust-based schemes typically run by employers.
Insurance providers make considerable efforts and spend millions every year trying to reunite people with lost or forgotten pensions. In 2017 more than 375,000 attempts were made to contact customers, leading to £1 billion in assets being reunited with them. However, firms are unable to keep pace with a mobile workforce that moves jobs and homes more often than ever before, so a digital solution through the Pensions Dashboard is now more important than ever. This would enable anyone to see all their pension savings, including the State Pension, together in a single online place.
Nearly two-thirds of UK savers have more than one pension, and changing work patterns means that the number of people with multiple pensions will increase. People typically lose track of their pensions when changing jobs or moving home. The average person will have around 11 different jobs over their lifetime, and move home 8 times. The Government predict that there could be as many as 50 million dormant and lost pensions by 2050.
Following HM Treasury’s announcement last week, the Bank of England confirmed that it plans to issue a new £50 note. This will be the final note in the latest series, all of which will be printed on polymer. The Bank will announce a character selection process for the new £50 note in due course, which will seek nominations from the public for potential characters to appear on the new note. Having successfully moved to polymer with the £5 and £10 note, the Turner £20 note will be issued on polymer in 2020 and the new £50 note will follow this.
The Bank of England is very excited to be starting the process of introducing a new £50 note highlighting the need to provide the public with high quality notes that they can use with confidence. Moving the £50 note onto polymer is an important next step to ensure that the Bank can continue to improve the notes in circulation, they are cleaner, safer and stronger and harder to counterfeit. And, because they last around 2.5 times longer than paper notes, they are also more environmentally friendly.
Weekly Round-Up: 12th October 2018
Top of forecast
According to the Halifax, with the annual rate of house price growth easing to 2.5% in September from 3.7% in August and the quarterly rate of growth remaining at 1.8% for the second month, their analysis is seeing a steadying in house price inflation across these more stable measures. This is set amongst mortgage approvals and completed house sales remaining broadly unchanged, although a gradual pickup in wage growth has helped to support household finances.
The annual rate of growth is near the top of their forecast range for the Lender of 0% to 3% for 2018, as a low supply of new homes and existing properties for sale, combined with historically low mortgage rates and a high employment rate, continue to support house prices.
Quoting HMRC seasonally adjusted figures Halifax supported their assumptions by highlighting that the number of completed UK home sales remained near the monthly average for the past 12 months. On a monthly basis, sales rose between July and August to 99,120. In the three months to August sales increased by 1.2% from the previous three months. The volume of residential transactions has been broadly flat over the past year and is likely to remain so in the coming months.
On the range
Households borrowed an extra £2.9 billion secured against their homes in August the latest analysis from the Bank of England reveals. Net lending has been relatively stable over the past year or so, but this was the lowest monthly secured net lending since July 2016, and the annual growth rate ticked down to 3.1% in August. It has now been around 3% since late 2016, and remains modest compared to the pre-crisis period.
The number of mortgages approved for house purchase – which gives an indication of how much new mortgage lending might be expect to see in coming months – increased to 66,440 in August. This was the highest level since January 2018, although approvals for house purchase have remained within a narrow range in recent years. The number of approvals for remortgaging – which could lead to an increase in gross lending and repayments, with little impact on net lending – increased to 53,125 in August. This data has been volatile recently, and this was the highest since November 2017.
The net amount of new consumer borrowing, excluding mortgages, increased slightly to £1.1 billion in August, up from £0.8 billion in July. Despite this increase, lending remains a bit lower compared to much of the past two years. This weakness reflects subdued net lending for other loans and advances (which includes personal loans, overdrafts and car finance), which increased slightly to £0.7 billion from £0.6 billion in July. Net credit card lending increased to £0.5 billion on the month, in line with the average of the previous 6 months.
A worrying knowledge gap has been highlighted as research reveals a large percentage of people would willingly withdraw their own money at the request of a fraudster posing as the Police. The poll, by Nationwide Building Society, of more than 2,000 people shows that people in the UK are at risk of putting themselves in compromising situations due to a lack of awareness of scams and the ways in which criminals try to trick people into handing over their hard-earned money.
Although the poll shows that fraud education work is getting through to many, with just over a third (34%) indicating they would not fall for the scams posed in the research, three in ten (30%) would still transfer their own money into another account ‘to keep it safe’, if requested to do so by someone they believed to be representing the Police. This is despite the fact that neither the Police nor National Crime Agency (NCA) would ever ask anyone to do this.
It appears goodwill or a sense of civic duty could prove to be the main downfall for unsuspecting victims, with 29 per cent willing to withdraw their own cash from their bank branch or building society in order to hand it over to the ‘authorities’ to check for suspect fingerprints. While the Police or NCA would never request such action, scammers posing as law enforcement sometimes claim that branch staff are engaged in illegal activity in order to dupe their victims into playing an active role in handing over their money. In addition, more than a fifth (22%) of those surveyed would be prepared to withdraw their own money to purchase counterfeit goods from a retailer, hand the items over to the Police and then wait for a refund. Again neither the Police nor NCA would ever request a member of the public do this.
On a regional basis the research shows that Londoners are the most at risk, with more than half (54%) willing to follow any of the requests, followed by those living in the West Midlands (52%), and those in Wales and the North East (both 49%). The survey shows men are far more cautious than women, with more than a third (37%) not prepared to help the Police in any of the ways suggested. This compares to just 30 per cent of women who said the same.
An experience worth sharing
Aviva has published research, commentary and advice to support this World Mental Health day which took place on October 10th. They found that almost two in three (65%) UK adults say they have experienced a mental health condition at some point in their life.
Despite the prevalence of mental health conditions, the taboo persists. Just 52% of UK adults would feel comfortable telling people about their mental health condition and 10% of UK adults believe the stigma surrounding mental health conditions has worsened in recent years. According to the research, three in four (71%) women have experienced a mental health condition at some point in their life, compared to 58% of men.
The most prevalent mental health conditions were anxiety, stress, depression, panic attacks and insomnia. In the same way they would if people were physically ill, Aviva in encouraging people to feel able to speak up when their mental health is impacted, as the stresses and strains of everyday life can take their toll on everyone from time to time.
World Mental Health Day was an opportunity to encourage everyone to get rid of the stigma surrounding this topic and be more aware of the impact of mental health. Aviva say that no one should feel uncomfortable talking about how they feel nor of asking for help to find the best ways to manage their condition which can be as simple as talking to a family member, friend or doctor to tell them how you feel or a couple of minutes meditating and deep breathing can work wonders alleviating stress and anxiety.
Just 30 minutes of physical activity can tackle issues such as stress and insomnia and rather than browsing the internet or watching TV, a more calming activity such as reading or taking a bath can help to combat sleepless nights.
Weekly Round-Up: 5th October 2018
Slowly does it
Annual house price growth was stable in September at 2% according to the latest analysis by the Nationwide Building Society. Figures suggest that annual house price growth has been confined to a fairly narrow range of between 2-3% over the past 12 months, indicating little change in the balance between demand and supply in the market.
The Building Society has stated that future House Price growth will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates. All indicators point to subdued economic activity and ongoing pressure on household budgets which is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low. Overall, Nationwide continue to expect house prices to rise by around 1% over the course of 2018.
Regional house price developments were more varied than the national picture. For the fifth quarter in a row London prices fell in annual terms, though the decline remained modest at just -0.7%. Indeed, prices in the capital are around 3% below the all-time high recorded in Q1 2017 and are still more than 50% above their 2007 levels. The Outer Metropolitan region also saw a slight year-on-year fall, with prices down 0.3% in Q3. The weakest performing region was the North, where prices were down 1.7% year on year. Yorkshire and Humberside was the strongest performing region in England, and also the UK, with prices up 5.8% year on year. The East Midlands continued to see relatively strong growth, with prices up 4.8% year-on-year.
Northern Ireland saw a pickup in annual price growth to 4.3% and was the best performing amongst the home nations. Wales saw a slight softening in growth, with prices up 3.3% year on year. Price growth also slowed in Scotland, from 3.1% in Q2 to 2.1%. England was again the weakest performing nation, with prices up just 1.4% year on year.
The high cost of renting
People in their 20s who want to rent a place for themselves face having to pay out an “unaffordable” amount in two-thirds of Britain, BBC research shows. They face financial strain as average rents for a one-bedroom home eat up more than 30% of their typical salary in 65% of British postcode areas.
Many housing organisations regard spending more than a third of income on rent as unaffordable and the research reveals that a salary of £51,200 is needed to “afford” to rent a one-bed London home. Even flat-sharing – the choice of many young employees – does not entirely resolve the issue as 12% of postcode areas in Britain remain “unaffordable” for two people in their 20s sharing a two-bedroom home.
Analysis by the BBC’s data team shows that a gross annual income of £24,800 would be needed for the average one-bedroom rental flat in England to become affordable under the 30% measure. In Scotland £20,700 is needed and in Wales £17,600. Many people can pay more than 30% of income on rent, but housing organisations say this puts considerable strain on the rest of their finances. Compare this to 1980 when UK private renters spent an average of 10% of their income on rent, or 14% in London. There was, however, at that time many more people renting from councils or in social housing at that time.
Landlords have also faced increased costs, including their mortgages, insurance, maintenance and licensing, that need to be covered from rents. These costs have increased as the government introduces new measures such as the removal of mortgage interest relief and changes to stamp duty. This has landlords have been divesting their properties as their businesses become less financially viable, resulting in fewer properties available to rent, while demand for properties across the UK remains high.
No ordinary complaint
Citizens Advice has revealed customers who stay loyal to their providers are losing out on over £4 billion a year. The national charity has this week lodged a super-complaint with the Competition and Markets Authority (CMA), calling for the regulator to outline how the problem can be fixed. The consumer champion has indicated that the practice of overcharging loyal customers is widespread and they have found that across 5 essential markets (mobile, broadband, home insurance, mortgages and savings): British consumers lose £4.1 billion a year to the loyalty penalty.
It has been alleged that 8 in 10 people are paying a significantly higher price, in at least one of the markets, for remaining with their existing supplier with loyalty penalty being, on average, £877 per year – equal to 3% of the average household’s total annual expenditure.
The Government’s recent price cap in the energy market should bring down loyal customers’ bills by £75 per year on average. The charity also found the loyalty penalty is disproportionately paid by vulnerable consumers, such as older people and people with mental health issues. These groups are particularly likely to struggle with switching.
This is the fourth super-complaint Citizens Advice has made since being given the power in 2002. Their complaint on payment protection insurance (PPI) in 2005 helped to generate a huge win for consumers, with at least £32.2 billion returned to customers in refunds and compensation so far. Citizens Advice have identified the scale of the problem in 5 essential. By submitting this complaint the organisation is asking the CMA to investigate all markets where the loyalty penalty exists however as the sectors are so diverse there is no one-size-fits-all solution. The charity is calling for the CMA to work closely with other regulators and the Government to ensure the right action is taken in each market.
Time to learn?
Six million women in the UK declare they don’t know how to check their breasts for cancer and a staggering 80% of women are unclear on what could increase their risk of breast cancer. Amongst the proportion of women who know how to check for signs of breast cancer (77%), only 14% say they feel very confident in what they are doing.
The figures by Bupa Health Clinics are released to mark the start of Breast Cancer Awareness Month, to demystify fact from fiction when it comes to breast health and help improve the confusion women have. Amongst the findings, a quarter (24%) think stress increases the possibility of being diagnosed with breast cancer – however, there is no evidence to suggest this is true. In addition, over two million women believe wearing deodorant and over half a million believe wearing fake tan can play a part in the probability of being diagnosed with breast cancer. However, all of these beliefs are unfounded.
A third of women (32%) also falsely believe that turning 40 will increase the chances of developing breast cancer, but in reality, it’s those over the age of 50 that are more at risk. Despite not being informed on all aspects of breast cancer, women are checking themselves, and doing so on average three times a month. The report by Bupa Health Clinics also found information overload is leading millions of women to believe health myths, which could potentially damage their health and wellbeing. As many as 60% of women admitted they found their health difficult to understand and of those, over a quarter (28%) said frequently changing advice and conflicting information from friends is the cause.
So big is the problem, the report suggests four million women are avoiding the doctor simply through their lack of knowledge about female health.