UK Property Market Strongest for 11 Years

This article by Mark Deans of FX-MM on October 8th, 2013 reveals the study that suggests that the property market in UK is in its strongest for eleven years.

Several of today’s papers carry a story about the University of Newcastle upon Tyne, a member of the prestigious Russell Group of academic institutions noted for their research.

They gleefully point out that, during a rebranding project, the university’s marketers applied for trademarks for alternative new and catchy names. One was “Research University of Newcastle upon Tyne”. Another, perhaps put suggested by alumnus Roger Mellie, was “Central University of Newcastle upon Tyne. Either the marketers at Newcastle have a poor grasp of the Grey Street vernacular or the media have been conned into regurgitating a rumour first attached to Newcastle Polytechnic more than two decades ago.

Whichever is the case, the individuals concerned have neglected their study of history. The same could be said of those who rejoice that the British government’s Help to Buy Scheme is boosting consumer confidence by pushing up house prices. Can it only be six years ago that Northern Rock collapsed because it had helped stoke an asset price bubble by lending money to people who could not afford to pay it back? Last night the Royal Institute of Chartered Surveyors reported that its house price balance had risen from 41% to 54%, its highest level for 11 years. And that was the situation in September; wait until Help to Buy kicks in.

The news has done no harm to sterling though. Coincidentally (for the RICS data were only released at midnight) the pound was the top performer among the dozen most actively-traded currencies yesterday. It was not a stellar performance; sterling’s biggest gain was the three quarters of a cent it won from the Canadian dollar. But every little drop helps fill the bucket and the pound edged higher on all fronts. It was not a busy day in the FX market. Ranges were mostly narrow and the pound’s average gain was a measly 0.2%, equivalent to quarter of a Japanese yen or a third of a NZ cent.

The day’s few ecostats provided little inspiration. Euroland investor confidence deteriorated slightly from 6.5 to 6.1. Euroland gross domestic product (GDP) for the second quarter was confirmed to have expanded by 0.3%. Canadian building permits reversed the previous month’s sharp increase with a -21.2% fall. NZ business confidence improved to 38% and Australian business confidence tripled from 4 to 12. One of the two Chinese services sector purchasing managers’ indices slipped half a point to 52.4.

Ahead of London’s opening Swiss unemployment was boringly steady at 3.2% while retail sales there were up by an annual 2.4%. Germany’s trade surplus was almost unchanged at €15.6bn and France’s deficit was on target at -€4.9bn. There is not much remaining on today’s list, only German factory orders and Canada’s housing starts and balance of trade. Whatever state-sponsored US data there might have been will not appear because of the government shut-down. There is very little on that agenda likely to affect the price of cod, and no reason to expect that today’s FX market will be any more exciting than Monday’s.

Article Source: http://www.fx-mm.com/29638/trading-commentaries/daily-brief-moneycorp/uk-property-market-strongest-for-11-years/