“The market appears to be showing signs of resilience”
The UK experienced a modest rebound in house price growth in May, according to the latest Nationwide House Price Index, released on Friday. Prices rose by 0.4% month-on-month to reach an average house price of £264,249. The annual growth rate picked up to 1.3%, from 0.6% in April.
The figures point to resilience in the housing market, with May's gain reversing a 0.4% drop in the previous month. Wage growth and lower inflation contributed to renewed buyer confidence, analysts suggested.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said, “UK house prices increased by 0.4% in May, after taking account of seasonal effects. This resulted in a slight pickup in the annual rate of house price growth to 1.3% in April, from 0.6% the previous month.” He added, “The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months. Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.”
There has also been positive news on homeownership rates for young adults, according to new research from the Institute for Fiscal Studies (IFS). After falling continuously from 2000 through to 2015, homeownership for those aged 25 to 34 has recovered to the level of 14 years ago, despite rising prices and interest rates. The figure for this age group rose by 6 percentage points to 39% in 2022/23, which is back to the level in 2010. However, the IFS warned the figure remains 20 percentage points lower than in 2000, adding, ‘The recovery has been concentrated among those on middle incomes.’
UK car production falls
Figures released last Thursday by the Society of Motor Manufacturers and Traders (SMMT) showed that car production in the UK has fallen for a second consecutive month.
Some 61,820 cars rolled off the production line in April, the SMMT revealed, down by 7% on the same month last year. Of these, around 14,000 were built for the UK, an increase of almost 20%. In contrast, cars built for export declined, with shipments to the European Union, China and Australia experiencing double-digit drops.
Analysts attributed falling production to the winding down of existing models, as well as some plants transitioning to electric vehicle (EV) production.
Mike Hawes, SMMT Chief Executive, commented, “With a General Election in a matter of weeks, the next government must ensure the conditions are right not just for the competitiveness of UK manufacturing, but for the investment required to transition the sector to a net-zero future.”
US economy growth slower than expected
The US economy grew slower than expected at the start of 2024, after an initial estimate of a 1.6% annualised growth rate was revised down to 1.3%. According to the US Bureau of Economic Analysis, the world’s largest economy, which has outperformed its peers over the past year, suffered from a widening trade deficit and a drop in consumption in the first three months of the year. The 1.3% growth rate compares to 3.4% annualised expansion recorded at the end of 2023 and was lower than the 2.4% that had been forecast by economists. Household consumption was reduced from an initial estimate of 2.5% to 2% in the revised figures and accounted for about half of the overall growth downgrade.
Calls for financial engagement
UK Finance has called on the next government to produce polices that will promote financial engagement, including financial education delivered via the school curriculum and a cross-government task force to tackle financial abuse. According to UK Finance, 80% of voters support better financial education at school. The lobby group is also calling for improved policies around frauds and scams.
King Charles banknotes enter circulation
The Bank of England will issue banknotes bearing the likeness of King Charles for the first time today. To minimise the environmental and financial impact of the change, new notes will only be printed to replace worn ones featuring her late Majesty, Queen Elizabeth. So, the public will begin to see the new King Charles notes very gradually.
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All details are correct at time of writing (5 June 2024)