LONDON, Sept 30 (Reuters) – British house prices failed to rise in monthly terms for the first time since July 2021, mortgage lender Nationwide said on Friday, a latest sign of the slowdown in the market caused by the cost-of-living squeeze and rising interest rates.
House prices were unchanged from August and were 9.5% higher than in September last year, representing the first time the annual measure did not show a double-digit percentage gain since October of last year, Nationwide said.
Economists polled by Reuters had forecast monthly and annual price rises of 0.3% and 10.0% respectively.
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Britain’s housing market has cooled after a coronavirus pandemic boom as surging inflation hits consumers budgets and the Bank of England raised interest rates.
Robert Gardner, Nationwide’s chief economist, said the slowdown had been modest so far and a shortage of homes for sale meant price growth remained firm in annual terms.
“However, headwinds are growing stronger suggesting the market will slow further in the months ahead,” Gardner said. “High inflation is exerting significant pressure on household budgets with consumer confidence declining to all-time lows.”
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Writing by William Schomberg; editing by William James
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SINGAPORE, Sept 30 (Reuters) – Singapore’s Temasek Holdings (TEM.UL) said that market valuations had not yet priced in a global economic recession and that said the state investor was waiting for further declines before stepping up investments.
“Current valuations are not reflecting the risk of downturn we see in the next 12 to 18 months,” Temasek’s chief investment officer, Rohit Sipahimalani, said on Friday.
“I do expect as these valuations correct, we will again step up our pace of investment,” Sipahimalani told a session at the Milken Institute Asia Summit in Singapore.
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Temasek remains committed on its four major investment trends, including digitization, longer lifespans, sustainable living and the future of consumption, he said.
“I think those trends are still valid,” he said. “For the long term, we will continue investing alongside them with a few nuances.”
Stock markets globally have fallen sharply this year as big increases in interest rates by inflation-fighting central banks raise worries about a recession or economic slowdown.
Sipahimalani said the markets had not forecast any major decline in earnings and were instead factoring in growth in 2023.
“Even in a mild recession, you will probably, usually see a double-digit decline in earnings,” he said, adding that earnings could decline by as much as 15 percent.
Temasek, which owns some of the biggest Asian companies, such as DBS Group (DBSM.SI), China Construction Bank (601939.SS) and Standard Chartered (STAN.L), is mainly anchored in Asia.
The investment firm has a 63% exposure to the region as measured by underlying assets of its portfolio companies, most of which are in Singapore and China.
“The UK hasn’t been a significant investment destination for us,” Sipahimalani said. “Whether it’s sort of digitization or longer lifespans, and health tech, biotech or sustainable living, the main areas we’ve seen that happen are in markets like the U.S. and China.”
Temasek remains bullish on China in the longer term based on its investment themes, Sipahimalani said.
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Reporting by Yantoultra Ngui; Editing by Anshuman Daga and Gerry Doyle
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Property estate agent sales and letting signs are seen outside an apartment building in Lichfield, Britain, May 3, 2022. REUTERS/Andrew Boyers
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Sept 21 (Reuters) – Shares in British homebuilders rose sharply on Wednesday morning after a media report said the government would cut stamp duty – a tax on property purchases – in a mini-budget on Friday.
Such a move would be a major fillip for the housing sector, which has shown signs of cooling this year amid rising inflation and interest rates.
The UK housebuilders’ index (.FTNMX402020), which has lost more than 43% so far this year, rose 4.1%.
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FTSE 100 stocks Barratt (BDEV.L), Persimmon (PSN.L), Taylor Wimpey (TW.L) and Berkeley (BKGH.L) climbed between 3.2% and 6%, among the top percentage gains on the blue-chip index.
CMC Markets analyst Michael Hewson said housing stocks were getting a boost from the report in the Times newspaper, but added rising interest rates and the worsening cost of living were offsetting factors.
“It can’t hurt but the devil will be in the detail,” Hewson added.
Peel Hunt analyst Sam Cullen said any stamp duty cut could help housebuilders better offset inflation in building costs, which has been largely cushioned by higher house prices.
The Times said the plan to cut stamp duty would be part of new Prime Minister Liz Truss’s drive to boost economic growth. https://bit.ly/3xFQCbn
The report did not specify the size of the cut and Reuters could not immediately verify the news.
A temporary stamp duty cut was used to support the market by previous finance minister Rishi Sunak during the COVID-19 pandemic.
Currently, no stamp duty is paid on the first 125,000 pounds ($141,650) of any property purchase.
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Reporting by Aby Jose Koilparambil and Yadarisa Shabong in Bengaluru; Editing by Savio D’Souza and Mark Potter
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Soccer Football – Premier League – Chelsea v Leicester City – Stamford Bridge, London, Britain – May 19, 2022 a Chelsea flag is pictured inside the stadium before the match REUTERS/Toby Melville/Files
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Sept 21 (Reuters) – Chelsea said they have terminated commercial director Damian Willoughby’s employment with immediate effect after receiving evidence he had sent “inappropriate messages” before being appointed by the Premier League side.
Willoughby began working at Chelsea earlier this month following the club’s takeover by an investment group led by Todd Boehly and Clearlake Capital.
“Evidence of inappropriate messages sent by Mr Willoughby, prior to his appointment at Chelsea FC earlier this month, has recently been provided to and investigated by the club,” a club spokesperson told Reuters.
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“While they were sent prior to his employment at the club, such behaviour runs absolutely counter to the workplace environment and corporate culture being established by the club’s new ownership.”
Willoughby has yet to reply to a request for comment from Reuters.
The Telegraph reported that Willoughby had been sending the messages to a football finance agent from last year. The report added that Willoughby’s lawyers had declined to comment.
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Reporting by Silvia Recchimuzzi in Gdansk, writing by Manasi Pathak in Bengaluru; Editing by Peter Rutherford
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LONDON, Sept 20 (Reuters) – Britain’s low headline rate of corporation tax has failed to boost business investment, which lags behind that of all its major peers, according to a report on Tuesday which comes as the government prepares to reverse a planned rise.
Britain’s 19% corporation tax rate – the lowest in the Group of Seven (G7) large, rich nations – had been due to rise to 25% in 2023 under plans announced last year by former finance minister Rishi Sunak.
However, opposing the rise formed a major part of Liz Truss’s successful campaign to defeat Sunak in the contest to succeed Boris Johnson as Conservative Party leader and Britain’s prime minister.
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New finance minister Kwasi Kwarteng is expected to confirm this in an emergency fiscal statement on Friday, where he gives more details about Truss’s plan to support the economy in the face of surging energy bills.
Truss said during her campaign that keeping corporation tax low was vital to attract investment, but a report from the Institute for Public Policy Research (IPPR) showed past reductions in the tax rate had not led to more investment.
Britain cut its headline rate of corporation tax rate from 30% in 2007 to 19% in 2017, but in 2020 private-sector investment was the lowest in the G7 at 9.8% of gross domestic product. Across 31 mostly wealthy nations in the OECD, Britain had the fourth-lowest business investment in 2020.
“Slashing corporation tax is just a continuation of a failed race to the bottom that hasn’t delivered for the UK economy,” said George Dibb, head of the Centre for Economic Justice at the IPPR, which describes itself as a progressive think tank.
Headline corporation tax rates do not always give a clear sense of the overall business tax burden in a country, and some countries with high rates offer widespread exemptions.
Before he resigned as finance minister last month, Sunak had been working on measures to reshape business taxation to promote investment.
Low business investment is one of the main reasons economists give for poor productivity and very slow growth in living standards since the late 2000s.
Weak demand after the global financial crisis, followed by years of uncertainty over the consequences of Brexit, are among the reasons economists give for Britain’s poor investment performance, alongside difficulties measuring investment in some services industries Britain specialises in.
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Reporting by David Milliken, editing by Andy Bruce
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LONDON, Sept 7 (Reuters) – Britain’s oil and gas industry body called for new drilling licenses in the North Sea and rapid investment in the sector to mitigate the impact of high prices on consumers as the country grapples with the worst energy crisis in decades.
The incoming UK Prime Minister Liz Truss has vowed to act immediately to help people cope with surging energy bills that threaten to leave many unable to heat their homes this winter and said during her campaign she would seek to extract more oil and gas from the North Sea. read more
The benchmark European gas price has quadrupled in the last year due to a war in Ukraine, sanctions on Russia and the aftermath of the coronavirus pandemic.
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Offshore Energies UK (OEUK), an industry body for offshore oil, gas, hydrogen and wind producers, warned that Britain could face potential energy shortages this winter while global prices could remain high for at least three years.
“The best way for the UK to ensure secure gas and oil supplies is by increased investment in its own resources,” said Ross Dornan, OEUK’s market intelligence manager.
Gas production in the United Kingdom rose 26% in the first half of 2022 compared to the same period last year, buoyed by new projects off England’s east coast. read more
OEUK said in a report published on Wednesday that the increase could be “short-lived” without a surge in investment. The industrial body sees a potential for 26 billion pound ($30 billion)capital investment in oil and gas sector by 2030.
Britain is not directly reliant on Russian gas imports, but its connectivity to the European countries through pipelines and its imports of liquefied natural gas (LNG) from other regions mean that it is also affected by the European and global price increases.
Without new investment, it will have to import around 80% of its gas by 2030, and around 70% of its oil, up from around 60% and 20% now respectively, the OEUK said.
Green groups have argued ramping up Britain’s oil and gas extraction is at odds with its climate target of reaching net zero emissions by 2050.
“This will do nothing to tackle the cost of living crisis as new licenses take many years to develop,” said Mike Childs, head of science, policy and research at Friends of the Earth.
In an interview with Reuters on Tuesday, the CEO of British oil and gas firm Enquest (ENQ.L) also urged the incoming government to offer investment incentives to North Sea oil and gas companies. read more
Increasing oil and gas drilling in the UK North Sea is one of the solutions to tackling the current energy crisis, EnQuest’s Amjad Bseisu said.
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Editing by Tomasz Janowski
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A person walks with a dog in front of a row of residential housing in south London, Britain, August 6, 2021. REUTERS/Henry Nicholls
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LONDON, Sept 1 (Reuters) – British house prices rose at a faster monthly pace in August than in July but the market is set to cool as surging energy prices hit households and the Bank of England pushes up interest rates, mortgage lender Nationwide said on Thursday.
House prices last month were 0.8% higher than in July when they rose by 0.2% from June. That wasa bigger increase than the median forecast of a 0.1% rise in a Reuters poll of economists.
Prices were 10.0% higher than in August 2021, a slowdown from July’s 11.0% increase but also above the Reuters poll forecast for a rise of 8.9%.
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Robert Gardner, Nationwide’s chief economist, said there were signs that the housing market was losing momentum after the surge in demand for bigger homes during the COVID-19 pandemic.
“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters,” Gardner said.
Britain’s most widely followed inflation index rose by 10.1% in the 12 months to July, a 40-year high, and is set to climb further on the back of accelerating power prices.
A separate Reuters poll of economists published on Wednesday pointed to a 7.0% increase in home prices this year before a gain of just 1.0% next year and a further 3.0% rise in 2024. read more
The BoE has raised interest rates six times since December as it tries to deal with the surge in inflation.
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Writing by William Schomberg, Editing by Paul Sandle
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New residential homes are seen at a housing estate in Aylesbury, Britain, February 7, 2017. REUTERS/Eddie Keogh/File Photo
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LONDON, Aug 31 (Reuters) – The surge in British house prices will come to an end next year as the cost of living crisis and rising borrowing costs put the brakes on what has been a buoyant market for years, a Reuters poll found.
Inflation is running at a 40-year high of over 10% and with energy bills set to rise 80% from October it is expected to rise much further so households are really feeling the pinch. read more
Adding to woes for potential home buyers needing to borrow money, the Bank of England has already raised interest rates to 1.75% from a pandemic-era low of 0.10% and is not done yet, a separate Reuters poll found.
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“Spiralling inflation is leading to a cost of living crunch which in turn has led to a new era of rising interest rates,” said Aneisha Beveridge at estate agency Hamptons.
“As a result, we expect house price growth to steadily slow during the remainder of the year and into 2023 when the real impact on households is likely to be felt as interest rates peak.”
According to the Aug. 12-30 poll of 21 property market experts home prices will rise 7.0% this year but that pace will slow to 1.0% next year before picking up to 3.0% in 2024. In a May poll prices were expected to rise 2.9% next year.
In London, a magnet for foreign investors, prices were expected to rise 5.0% this year but outperform the national market and increase 2.0% next year. That follows relative underperformance in recent years.
“While affordability pressures are likely to weigh on the mainstream market next year, there could be room for surprise in Prime Central London – particularly if sterling continues its downward trend, making London property more appealing to international buyers,” said Hamptons’ Beveridge.
The average price of a home is 365,173 pounds ($427,216) and 224,091 pounds for a first-time buyer, according to property website Rightmove, making the dream of owning a home out of reach for many.
Average pay in Britain is only around 30,000 pounds and salary increases are generally not keeping up with inflation, putting getting on the property ladder further out of reach for many.
“We are getting to the stage when young people can’t even dream of home ownership,” said property market consultant Henry Pryor.
When asked to rate the value of national house prices on a scale of 1 to 10 from extremely cheap to extremely expensive, the median response was 7, matching May’s estimate. In the capital it was an unchanged 8.
Responding to another question, prices would need to fall 8.5% to be fairly valued, the median showed, with forecasts ranging from 5.0% to as high as 35.0%.
Yet no-one in the poll predicted such a drop across the forecast horizon and only a few had any decline in their base case scenarios.
(For other stories from the Reuters quarterly housing market polls:)
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Reporting by Jonathan Cable; polling by Prerana Bhat and Sarupya Ganguly; Editing by Ross Finley and Jonathan Oatis
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NUNEATON, England, Aug 9 (Reuters) – A handful of commercial electric vehicle (EV) startups are burning through cash fast, racing to bring vans or trucks to market before the funds run out or customers choose to buy from legacy automakers like Ford Motor Co or General Motors Co (GM.N).
Boosted by investor hunger to create the next Tesla Inc (TSLA.O), a clutch of commercial EV makers on both sides of the Atlantic have gone public via reverse mergers with special-purpose acquisition companies (SPACs), raising hundreds of millions of dollars as they sought to emulate Elon Musk’s success. These include Arrival Inc , Canoo Inc (GOEV.O), Lordstown Motors Corp (RIDE.O), Electric Last Mile Solutions Inc (ELMS) and REE Automotive Holding Inc (REE.O).
But investors have soured on EV startups and their ability to compete with legacy carmakers, sending their shares to a fraction of their peak prices. This has raised the pressure to produce working vehicles fast if they want to raise fresh funds in an industry where launching a single vehicle can cost $1 billion.
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“It’s vitally important at this stage to get vehicles into customers’ hands,” said Daniel Barel, chief executive of Israeli electric chassis maker REE Automotive, which has run vehicle tests with customers near Detroit and will unveil a UK prototype van this week. “Only then can they make a real decision to buy.”
REE’s chassis use “corners” or standalone in-wheel electric motors, with brakes and steering housed in all or some of the wheels of an EV that do not need axles or powertrains, freeing up more space inside a van.
To get to market faster, REE has tapped legacy suppliers like American Axle for electric motors and Italy’s Brembo (BRBI.MI) for brakes. Companies like EAVX and Morgan Olson, units of commercial vehicle body maker JB Poindexter & Co, will provide standardized bodies for REE’s U.S. trucks.
“We want to keep true to what we’re about and let others bring their expertise in for the rest,” said vice president for engineering Peter Dow at REE’s engineering centre in Nuneaton, England.
The clock is ticking.
REE’s shares are almost 90% below their July 2021 debut. The company had $239 million in cash at the end of March and expects to invest up to $120 million in 2022 to scale up for production in 2023.
“We’re on track, we’re on budget, we’ve got everything we need to take it to the market,” CEO Barel said while demonstrating a test vehicle near Detroit, adding that REE has enough cash to last beyond the end of 2023.
Others have already struggled, however.
ELMS filed for bankruptcy liquidation in June, citing insufficient funding, while Lordstown had to sell assets to Taiwanese contract manufacturer Foxconn (2317.TW). read more
In May, Canoo disclosed “substantial doubt” about its ability to continue as a going concern, but recently received a boost when Walmart Inc (WMT.N) ordered 4,500 vehicles. read more
Obtaining more cash could be tough.
“The market right now is not an ideal market to raise capital,” said Dakota Semler, CEO of Los Angeles-based Xos Inc (XOS.O), which already has 200 electric trucks operating on U.S. roads for customers including Amazon.com Inc (AMZN.O) delivery contractors.
Xos had $132.7 million in cash at the end of March and can raise $125 million more via a share purchase deal with a unit of U.S. investment firm Yorkville Advisors.
‘TOUGH AT THE MOMENT’
Legacy automakers are turning up the heat.
FedEx Corp (FDX.N) has 150 BrightDrop electric trucks running deliveries around Los Angeles.
“It feels like you’re in the future now,” FedEx driver Nelson Granados, 28, told a Reuters reporter as he made deliveries during a ride-along in a BrightDrop EV.
FedEx has ordered 2,500 BrightDrop trucks, spurred by a combination of the 18-month-old company’s technology and GM’s manufacturing muscle, FedEx’s chief sustainability officer, Mitch Jackson, told Reuters
Potential new entrants have taken note.
British EV startup Bedeo makes electric powertrains for vans for world No. 4 automaker Stellantis NV (STLA.MI) and said earlier this year it was talking to investors about building its own vans. read more
Despite its track record – vehicles with Bedeo powertrains have clocked over 50 million km (31 million miles) – executives say investors are now wary of competing with the likes of Ford’s electric Transit van.
“A large-scale capital raise is tough at the moment,” said Andrew Whitehead, CEO of Bedeo unit Protean Electric.
Bedeo CEO Osman Boyner said the company will instead start converting existing diesel vans later this year using Protean’s in-wheel electric motors so they can run in electric mode in cities with low-emission zones and diesel on longer journeys.
Bedeo is also talking to legacy automakers about producing small, specialized production runs of 5,000 or so vans for them.
“Big automakers don’t want to do that in-house,” Boyner said. “Those numbers are too small for them, but they’re big numbers for companies like us.”
‘LESS FAVOURABLE TERMS’
EV startups are cutting back.
Rivian said earlier this year that its $16 billion in cash as of the end of March was enough to fund its second U.S. plant for $5 billion, targeted to open in 2025, but it announced in late July that it would cut its workforce by 6% to reduce costs. read more
Amazon has ordered 100,000 vans from Rivian, whose stock has fallen more than 80% from a peak hit shortly after its November 2021 initial public offering.
UK electric van and bus maker Arrival also plans to cut costs. read more
Arrival had $500 million in cash in mid-July, almost 45% down from roughly $905 million at the end of 2021. Its stock is almost 93% below its March 2021 debut.
Chief Financial Officer John Wozniak said in a statement that restructuring will fund Arrival’s operations until late 2023.
The startup has begun phased trials with United Parcel Service Inc , which has ordered up to 10,000 Arrival vans.
“We believe that we will continue to access funding from a number of different sources,” Wozniak said. “However, the terms may be less favourable and the amount and timing remains uncertain, which is why the company announced the measures it is taking to preserve cash.”
Startups that avoided going public via SPAC mergers are now waiting for the market to improve.
In February Stockholm-based Volta Trucks raised 230 million euros ($235 million) in funding to ramp up electric truck production. read more
Spokesman Duncan Forrester said Volta has prototype trucks in customers’ hands and is on track for series production in early 2023. It has an order book of more than 6,500 trucks valued at around 1.4 billion euros.
Later in 2023, Volta will look to raise funds, either through fresh fundraising or an initial public offering.
“From an investor perspective, that will be a different conversation because we’ll be able to demonstrate a track record of bringing vehicles to market,” Forrester said.
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Reporting by Nick Carey in Nuneaton, England, Lisa Baertlein in Los Angeles and Ben Klayman in Detroit
Editing by Matthew Lewis
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A Bellway sign is seen at a housing construction site in London, Britain, February 5, 2017. REUTERS/Toby Melville/File Photo
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Aug 9 (Reuters) – Homebuilder Bellway on Tuesday lowered its outlook on average selling price for the next year, and reported a rise in housing revenue in 2022 as it benefited from strong house prices.
The Newcastle-based company now expects average selling price to be over 300,000 pounds ($362,550.00) in the year ending July 2023, compared with 314,400 pounds in 2022.
British house prices rose at a slower pace in July from June, figures from mortgage lender Nationwide showed last month, in fresh signs of a potential cooling in the market. read more
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The country’s housing sector is also struggling with a surge in build costs, labour shortages, and supply chain snags. Last month, bigger rivals Barratt and Persimmon flagged pressure on completions. read more
Bellway, founded in 1946, saw a 10.5% growth in housing completions to 11,198 homes, above its target of 11,100 homes.
Housing revenue for the year ended in July 2022 rose to more than 3.5 billion pounds ($4.23 billion), compared with 3.1 billion pounds a year ago.
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Reporting by Radhika Anilkumar in Bengaluru; editing by Uttaresh.V
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