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Thursday, 30 January 2014

Round-up │ 30 January 2014

In Briefing pages: (Economic) BoE mortgage approvals grow at fastest annual rate since 2009 (Industrial and political) Government review to explore "innovative financing methods", including using City and local authority pension funds to boost affordable housebuilding │ (Forthcoming events) (Friday) HMRC housing transactions

Quote of the day: "local government pension funds are risk averse. They are cautious beasts and don't like doing new things. Our task is to shine a light on this area and identify barriers to investment", Keith House, co-chair of affordable housing funding review. 
Chart of the day:

 

Wednesday, 29 January 2014

Round-up │ 29 January 2014

In Briefing pages: (Economic) Nationwide shows house price inflation heading towards pre-Crash peak│ (Corporate) Retirement homes specialist McCarthy & Stone strengthens board ahead of anticipated float│ (Industrial and political) Call for a London housing corporation to build homes directly│ (Forthcoming events) (Thursday) BoE mortgage statistics, (Friday) HMRC housing transactions

Quote of the day: "there is a trend towards borrowers lengthening the term of their mortgage, with 52% of mortgages currently over 25 years, up from 40% in 2007," Robert Gardner, Nationwide Chief Economist 
Chart of the day:
Source: Nationwide


 

Tuesday, 28 January 2014

Someone in a hurry?

Couldn't resist this (posted on Twitter by @owenmeowenyou ) ...

Round-up │ 28 January 2014

In Briefing pages: (EconomicEconomy gathers strength with GDP up 2.8% y/y in Q4, boding well for private sector construction │ (Corporate) Crest Nicholson demonstrates strength of South East market, but cautions on supply chain pressures • British land underlines health of commercial market │ (Corporate) First phase of Help to Buy secures 12,875 purchases in first nine months, but only 6% came from London │ (Forthcoming events) (Wednesday) Nationwide HPI, (Thursday) BoE mortgage statistics, (Friday) HMRC property transactions.

Friday, 24 January 2014

Round-up │ 24 January 2014

In Briefing pages: (Economic) Lots of fun and games from Davos, on- and off-camera. Will Carney curb Help to Buy? "Yes" says Peston. "No" says BoE. "Yes" repeats Peston. Carney tell Paxman 7% unemployment is not so important after all and "no immediate" plans for a rate rise. (How immediate is "immediate"? Read below.) • Mortgage approvals surge to a near-seven year high  
• Switzerland doubles capital buffer on mortgage lending. Will Carney have taken note? │ (Forthcoming events) Next week: Crest Nicholson results (Tuesday), HMRC housing transactions (Friday)

Thursday, 23 January 2014

Is this a rate rise I see before me? (Part II)

I don't know if Canadian Mark Carney brushed up his Shakespeare last year en-route to the top banking job in the land of the Bard but, if he did, a line from Macbeth might prove invaluable over the next few months. If it were done when ’tis done, then ’twere well it were done quickly. Such a conundrum must now be facing Carney and his fellow Monetary Policy Committee members as they weigh up when to raise rates for the first time since hitting their all time low of half a percent in 2009.

Of course, Carney is only one member of the MPC, but he was fully responsible for the policy of "forward guidance" which he imported from the same role at the Bank of Canada. This made an unemployment rate falling to 7% the highest profile (but not only) criterion for a hike in rates. When introduced in the August Inflation Report the committee envisaged this most likely occurring in 2016.

That now looks pessimistic in the extreme. The rate hit 7.1% in Wednesday's Labour statistics, covering September - November, down a pretty staggering 0.5% compared with the three previous months. It looks set to drop below the magic number in the next month or so.

That led to what looked like Olympic record back-tracking in the same day's MPC Minutes: "Members saw no immediate need to raise Bank Rate even if the 7% threshold were to be reached in the near future", with this changed stance supported by inflation falling to 2.1% in November (funnily enough the key measure the MPC used to base rates decisions on).

Carney yesterday completed the pirouette near the slopes of Davos, at the World Economic Forum, when he told the BBC's Jeremy Paxman that he was against "unnecessarily focusing on one indicator in the future" and that there was "no immediate need to increase interest rates". 

The MPC Minutes may have argued that it was in no hurry to tighten; the markets begged to differ. Sterling rose half a cent to a three year high of just under $1.66 on the day of the employment release, while Gilt yields edged up 5 "bips" to 2.89%. Despite Carney's Newsnight comments, regurgitated today on the front of the FT, the pound strengthened further to $1.6656.

The problem facing Carney and his colleagues is Britain is very much in a twin track economy, with, for instance, house prices and car sales soaring and unemployment is plunging,  but yesterday's release showing wage growth of 0.9% less than half the rate of inflation.

However Carney defines "immediate", rates rise will have to come sooner or later, but he and the MPC, like other regulators around the globe, appear to be loathe to make the first move. It will be a rude shock to an economy and population inured to virtually zero interest rates. (Especially those lured into buying potentially over-priced new homes under Help to Buy, but facing ratcheting-up equity loan fees on top of underlying borrowing costs.)

In the meantime, a particular bug bear for Carney judging from several of his pronouncements is the rapid recovery in house prices and (reading through the lines) his concerns about Help to Buy. Before a rates rise expect some hands on intervention, either through tighter lending criteria for banks (Switzerland's doubling yesterday of the capital banks are required to hold against mortgage lending cannot have missed the attention of Carney at Davos) or pressure on government to modify Help to Buy.

But a rates rise will still happen and nobody now appears to expect to wait until 2016. The question is this year or next? Independent as the MPC supposedly is, it can never be completely immune from politics. Would Carney want to be seen to preside over a rates rise either, let's say, three months before a General Election (in May 2015) or, possibly more contentiously, three months after?

If history is to be believed, unions will be girding their loins for a push on earnings - possibly the new but less explicit guide for the MPC - as an election looms.

Citi yesterday brought forward its expectation of a hike from Q2 2015 to the final quarter of this year.

I wouldn't be surprised if, despite their sanguine public pronouncements, members are privately agonising over an earlier move. As Hamlet might have mused, were he studying economics at Wittenberg, "Q3 or not Q3, that is the question ..."

Wednesday, 22 January 2014

Round-up │ 22 January 2014

In Briefing pages: (Economic) Bank of England voted unanimously to hold rates but back-peddles on 7% unemployment as a threshold for tightening and hints rises will be more gradualist than 0.5% norm • unemployment falls to 7.1% and wages rises less than half inflation, squeezing household budgets further │ (Industrial and political) interesting feature on P2P lending to smaller housebuilders in FT │ (Forthcoming events) This week: BBA mortgage lending stats on Friday

Friday, 17 January 2014

Round-up │ 17 January 2014

In Briefing pages: (Economic) Experian follows CPA in major upgrades to construction forecasts, boosted by infrastructure expectations │ (Corporate) Electrical specialist T Clarke reports big contract payment delay • £400m for flood repairs to roads │ (Industrial and political) Treasury looking a housebuilders' "hush fund" to silence development objections, report │ (Forthcoming events) Mortgage lending releases and clues on monetary policy in BoE Minutes .

Thursday, 16 January 2014

Round-up │ 16 January 2014

In Briefing pages: (Economic) Sales rate per estate agent hits six year high but prices could become "unsustainable" without more supply, warns RICS │(Corporate) Bovis reports another hike in sales and prices amid "assertive" land buying.   

Wednesday, 15 January 2014

Round-up │ 15 January 2014

In Briefing pages: (Corporate) Taylor Wimpey improving on all fronts but stresses "optimal" scale and potential shareholder windfalls rather than volume growth (the aim of Help to Buy) • proposed £2bn Lafarge-Tarmac UK IPO faces delay after Competition Commission ruling  

Tuesday, 14 January 2014

Round-up │ 14 December 2014

In Briefing pages: (Economic) House prices wobble in November, including in London and the South East; the start of a trend│(Corporate) Barratt volumes surge (they're playing down house price inflation) • Latest Balfour Beatty trading statement makes more comforting reading  │ (Industrial and political) more movement on HS2 as Sir David Higgins climbs onto footplate   

Monday, 13 January 2014

Round-up │ 13 January 2014

In Briefing pages: (Economic) Construction Products Association ramps up its forecasts for workloads in 2013 - 17│(Corporate) Northern Irish construction, fit-out and property group enters administration after bid talks fail

Friday, 10 January 2014

Round-up │ 10 January 2014

In Briefing pages: (Economic) Construction output wobbles in November, the start of a trend │ (Industrial and political) long-running flood prevention tussle thrusts housebuilders into political spotlight again   

Wednesday, 8 January 2014

Round-up │ 8 January 2014

In Briefing pages: (Economic) house prices wobbled in December, Halifax (Nationwide begs to differ) • Brick stocks continue to plunge to new lows, a proxy for supply chain pressures across industry │(Corporate) Strong showings in Persimmon and Galliford Try updates, but cost pressures continuing │ (Industrial and political) major housing association brings maintenance in-house. The start of a trend?   

Tuesday, 7 January 2014

Round-up │ 7 January 2014

In Briefing pages: (Corporate) Costain's strong order book underlines upturn ... • ... but northern engineering specialist DCT highlights industry-wide struggle with cashflow

Monday, 6 January 2014

Round-up │ 6 January 2014

In Briefing pages: │(Industrial and political) housing resumes centre stage in election campaign with further cuts to social housing promised ... and a bit of an own goal in Help to Buy charm offensive • Balfour Beatty to reshape new home for the "Hammers" at Olympic Stadium   

Friday, 3 January 2014

Round-up │ 3 January 2014

In Briefing pages: (Economic) Full year out-turn for Nationwide house prices beat estimates. More pressure on BoE for early rates rise or more intervention on lending? 

Thursday, 2 January 2014

Round-up │ 2 January 2014

In Briefing pages: (Industrial and political) Help to Buy #2 stats show focus on first time buyers and those outside London/SE. Politically palatable, but is it where the need is?