Confidence Growing in the UK Housing Market?

17th July 2013 Investor Today suggests that more confidence has returned to the housing market with the Halifax Housing Market Confidence tracker revealing that the headline House Price Outlook balance (i.e. the difference between the proportion of people across Britain that expect the average house price to rise rather than fall) stood at +40 in June. This was an increase of 7 percentage points compared with last quarter (+33) and was the highest score on this measure since the tracker began in April 2011. Martin Ellis, housing economist at Halifax, said: “Sentiment regarding the outlook for house prices has improved markedly over the past quarter, continuing the trend seen since late 2012. This increase in optimism is partly due to house prices being stronger than expected in the first half of the year. We continue to see a clear north / south divide with significantly higher proportions of people expecting prices to rise in the south than elsewhere in the UK. Nonetheless, the market still faces substantial headwinds with, for example, house prices remaining above the historical average in relation to earnings. Such factors are likely to prevent a sharp acceleration in house prices.” Meanwhile Stephanie Butcher, European Equities Fund Manager at Invesco Perpetual tells investors not to write off Europe as an option to put their money into stating “At current levels valuations are so cheap on a cyclically adjusted basis that I believe the environment simply needs to be ‘less bad’ for Europe to be an attractive case. We could point out that Europe is chock-full of world class companies, which have international exposure, and are (thankfully) run by first-class managers not politicians, but that has been the case for a while and it hasn’t persuaded investors thus far. As investors we have one role – that is, to find under-valued assets, whatever those assets might be. Most appear to be persuaded that bonds are intrinsically over-valued. Equally, many seem persuaded that equities are, at this point, a cheap asset class. What fewer seem to accept is the fact that Europe today is the global value play, and within Europe itself, there are areas of the market which sit at generationally low valuation levels.” Finally Knight Frank’s Prime Global Rental Index states that Prime rents in key cities worldwide rose by just 0.2% in the first quarter of 2013 – The Index’s lowest rate of quarterly growth since 2009. Knight Frank’s Kate Everett-Allen said: “Prime rents are rising strongly in many emerging markets, but this growth is being overshadowed by weakening rents in some of the world’s more established financial centres such as Hong Kong, New York and London. Luxury property for rent in Dubai, Nairobi and Beijing rose by 18.3%, 13.9% and 12.3% respectively in the year to March. By comparison, Hong Kong, New York and London saw prime rents fall by 2.3%, 2.6% and 3.1% over the same period. In this second group of cities, the rental markets have suffered as relocation budgets for executives have been trimmed during a period of weaker financial sector performance.” Taylor Scott International