Economic Review – September 2024 

UK economic growth forecast upgraded 

An updated forecast published last month by the Organisation for Economic Co-operation and Development (OECD) suggests the UK will be the joint-second fastest growing economy among the G7 nations this year.  

According to the OECD’s latest projections, the UK economy is set to expand by 1.1% across the whole of 2024, a significant upgrade from the think tank’s previous estimate of 0.4% which was released in May. The new forecast places the UK alongside Canada and France in the G7 rankings, with only the US economy forecast to grow more strongly this year. 

Gross domestic product (GDP) statistics released last month by the Office for National Statistics (ONS), however, did show that the UK economy unexpectedly failed to grow during July, after also flatlining in June. Despite the lack of growth across both of these months, ONS did note that ‘longer term strength in the services sector’ had resulted in some growth across the economy during the three months to July as a whole. 

Data from the latest S&P Global/CIPS UK Purchasing Managers’ Index (PMI) also suggests growth across the UK private sector has softened more recently, with its preliminary headline indicator standing at 52.9 in September, down from August’s figure of 53.8. This does, however, mean that for the eleventh consecutive month, the Index remained above the 50 threshold that denotes expansion in private sector output. 

Commenting on the findings, S&P Global Market Intelligence’s Chief Business Economist Chris Williamson acknowledged that the latest data did suggest output growth in both manufacturing and services had moderated last month. He added, “A slight cooling of output growth across manufacturing and services in September should not be seen as too concerning, as the survey data are still consistent with the economy growing at a rate approaching 0.3% in the third quarter.”  

Interest rates set to gradually head lower 

While last month did see the Bank of England (BoE) maintain interest rates at their current level of 5%, the Bank’s Governor Andrew Bailey also stated his optimism that rates are now on a downward path. 

At its latest meeting, which concluded on 18 September, the BoE’s Monetary Policy Committee (MPC) voted by an 8–1 majority to leave Bank Rate on hold. The one dissenting voice voted for what would have been a second successive quarter-point cut following the committee’s decision to reduce rates in early August, the first reduction since 2020. 

The minutes to the meeting, however, did strike a fairly cautious note. They stated that the decision to hold rates was ‘guided by the need to squeeze persistent inflationary pressures’ out of the economy and that monetary policy would need to ‘remain restrictive’ until the risks to inflation have ‘dissipated further.’ 

On the same day the MPC meeting ended, ONS published the latest inflation data, which revealed that August’s headline annual rate was unchanged at 2.2%. Although this did mean the rate therefore remained marginally ahead of the BoE’s 2% target level, the figure was exactly in line with analysts’ expectations. 

Speaking a few days after the inflation figures were released, the BoE Governor said he was “very encouraged” by the downward path of inflation over the past two years and that the Bank should be able to reduce rates as it becomes more confident inflation will remain close to target. Mr Bailey concluded, “I do think the path for interest rates will be downwards, gradually.” 

A Reuters poll released last month also revealed that most economists expect one more rate cut this year, with a large majority predicting the BoE will sanction a reduction after the MPC’s next meeting, which is scheduled for 7 November. 

Markets (Data compiled by TOMD) 

An escalation of the conflict in the Middle East weighed on markets at the end of September, with investors and traders closely monitoring developments in the region.  

At month end, stocks retreated following implications from Federal Reserve Chairman Jerome Powell that further interest rate cuts are likely to occur at a more measured pace. 

Across the pond, the Dow Jones closed the month up 1.85% on 42,330.15. The tech-orientated NASDAQ closed the month up 2.68% on 18,189.17. 

On home shores, the FTSE 100 index closed the month on 8,236.95, a loss of 1.67%, while the FTSE 250 closed the month 0.16% lower on 21,053.19. The FTSE AIM closed on 740.43, a loss of 4.15% in the month. The Euro Stoxx 50 closed the month on 5,000.45, up 0.86%. In Japan, the Nikkei 225 closed September on 37,919.55, a monthly loss of 1.88%.  

On the foreign exchanges, the euro closed the month at €1.20 against sterling. The US dollar closed at $1.33 against sterling and at $1.11 against the euro.  

Brent crude closed September trading at $71.65 a barrel, a loss over the month of 6.74%. The conflict in the Middle East is causing some price volatility. OPEC+ plans to begin increasing production in December is pressurising prices, while weak demand in China also weighs. Gold closed the month trading at $2,629.95 a troy ounce, a monthly gain of 4.64%. Prices retreated at month end, reversing recent strong gains as increased safe-haven demand prompted a rally in the precious metal.  

Retail sales stronger than expected 

The latest official retail sales statistics revealed a healthy growth in sales volumes during August, while more recent survey data points to further modest improvement both last month and in October. 

Figures released by ONS showed that total retail sales volumes rose by 1.0% in August, following upwardly revised monthly growth of 0.7% in July. ONS reported that August’s rise, which was higher than economists had predicted, was boosted by warmer weather and end-of-season sales.  

Evidence from last month’s CBI Distributive Trades Survey also suggests retailers expect the summer sales improvement to have continued into the autumn period, with its annual retail sales gauge rising to +4 in September from -27 in August. In addition, retailers’ expectations for sales in the month ahead (October) rose to +5; this represents the strongest response to this question since April 2023. 

CBI Principal Economist Martin Sartorius said retailers would “welcome” the modest sales growth reported in the latest survey. He also added a note of caution saying, “While some firms within the retail sector are beginning to see tailwinds from rising household incomes, others report that consumer spending habits are still being affected by the increase in prices over the last few years.” 

National debt looks set to soar 

Analysis published last month by the Office for Budget Responsibility (OBR) suggests national debt could triple over the coming decades if future governments take no action.  

In its latest Fiscal Risks and Sustainability Report, the OBR said debt is currently on course to rise from almost 100% of annual GDP to 274% of GDP over the next 50 years due to pressures including an ageing population, climate change and geopolitical risks. It also warned that, without any change in policy or a return to post-war productivity levels, the public finances were unsustainable over the long term, and that ‘something’s got to give.’ 

The OBR is also tasked with producing a more detailed five-year outlook for the country’s finances that will be published alongside Chancellor Rachel Reeves’ first Budget, due to be delivered on 30 October. The Chancellor has previously warned the Budget will involve “difficult decisions” on tax, spending and welfare. 

Data released last month by ONS showed that government borrowing in August totalled £13.7bn, the highest figure for that month since 2021. This took borrowing in the first five months of the financial year to £64.1bn, £6bn higher than the OBR forecast at the last Budget. 

All details are correct at the time of writing (1 October 2024) 

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission. 

News in Review

‘The global economy is starting to turn the corner’ 

Last week the Organisation for Economic Co-operation and Development (OECD) released its latest forecast, which outlines global growth prospects of 3.2% both this year and next. In its interim economic outlook, the well renowned think tank concluded, ‘The global economy is turning the corner as growth remained resilient through the first half of 2024, with declining inflation.’  

There are expectations that inflation will align with central bank targets in the majority of G20 economies by the end of next year. Easing to 2.7% this year, core inflation in G20 advanced economies, is expected to temper to 2.1% in 2025. 

With robust trade growth evident, inflation easing and an uptick in accommodative monetary policy in many regions, prospects are improving. Mathias Cormann, Secretary-General of the OECD, commented on the latest findings, “At 3.2%, we expect global growth to remain resilient both in 2024 and 2025. Declining inflation provides room for an easing of interest rates, though monetary policy should remain prudent until inflation has returned to central bank targets.” 

He continued, “Decisive policy action is needed to rebuild fiscal space by improving spending efficiency, reallocating spending to areas that better support opportunities and growth, and optimising tax revenues. To raise medium-term growth prospects, we need to reinvigorate the pace of structural reforms, including through pro-competition policies, for example by reducing regulatory barriers in services and network sectors.” 

The OECD did caution that ‘significant risks remain,’ specifically geopolitical tensions in the Middle East and the Russia / Ukraine conflict, which could cause another uptick in inflation, impacting global activity.  In addition, the potential impact of tighter monetary policy. Meanwhile, growth in real wages could support consumer spending and confidence. 

From a regional perspective, for the world’s largest economy, GDP growth in the US is expected to temper from 2.6% this year, to 1.5% in 2025. In China, restrained consumer demand and the continuing correction in the real estate sector are expected to cause an easing in growth from 4.9% this year to 4.5% next year. GDP in the euro area is predicted to pick up to 1.3% in 2025, from 0.7% this year due to recovery in real incomes and credit availability.  

UK growth expectations 

On home shores, the OECD upgraded UK GDP growth expectations from 0.4% and 1.0%, to 1.1% in 2024 and 1.2% in 2025. The upward revision places Britain’s growth rate close to most other Group of Seven (G7) countries this year and next. UK consumer prices are predicted to increase by 2.7% this year and 2.4% next, a faster rate than other G7 nations. Chancellor Rachel Reeves, commented on the data, “Faster economic growth figures are welcomed, but I know there is more to do and that is why economic growth is the number one mission of this government.” 

The latest GDP data released from the Office for National Statistics (ONS) on Monday showed the UK economy grew less than previously estimated in Q2. The economy expanded by 0.5%, down from an initial estimate of 0.6%, as construction and manufacturing output fell more than expected.  

Average household income continues downward trend 

New data has shown a decline in UK disposable household income. For 2023, the median household figure is £34,500, a 2.5% reduction on the previous year, according to ONS. For the richest fifth of households, the disposable income decreased by 4.9% to £68,400, over 4% below pre-pandemic levels. Meanwhile, for the poorest fifth of the population, household disposable income increased by 2.3% in 2023 to £16,400. This can be partly attributed to government cost of living support measures. 

Car production – “the sector remains optimistic about a return to growth” 

According to the latest car statistics from the Society of Motor Manufacturers and Traders (SMMT), during the month of August, UK car production fell by 8.4%. Typically, a lower output month due to summer shutdowns, the reduction equated to 3,781 less units, with a total of 41,271 new cars being manufactured in the month. As factories reduce production of key models and retool for electric vehicle production, the decline in August is a continuing trend. 

With record levels of investment in UK auto manufacturing announced last year, Mike Hawes, SMMT Chief Executive, looks ahead, “The sector remains optimistic about a return to growth… Realising those investments and securing more depends on the UK industry maintaining its competitiveness so we look forward both to the Chancellor’s Autumn Budget and the government’s proposed Industrial Strategy as critical opportunities to demonstrate that it backs auto.” 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. All details are correct at time of writing (2 October 2024) 

Financial considerations delaying divorce 

New research1 has found that one in ten married people in the UK have considered splitting up but decided against it, with the financial burden of divorce most commonly given as the main reason. 

A challenging time 

While respondents to the survey did cite other reasons for not divorcing a partner, for instance the effect it would have on their children, money was mentioned most often as the decisive factor. In essence, the research suggests that a significant proportion of people who are considering divorce decide they simply cannot afford to do so, instead preferring to stick with their partner and work on their relationship rather than having to face the financial consequences of splitting up. 

Costs of living alone 

The decision to go it alone and commit to financial independence does certainly come with significant cost implications, with people living on their own having to shoulder the full burden of all household bills. This will inevitably have a big impact on retirement plans, with analysis2 suggesting that, in order to fund a moderate standard of living in retirement, a single person would need around £275k more in their pension pot than a pensioner couple. 

Financial advice is key 

It is therefore vital that any couples considering divorce take expert advice. While for many people this involves consulting a solicitor, potential divorcees also need to seek financial advice. 

If you need any advice in this area, then please do not hesitate to get in touch – we’re always here to offer our help and support. 

1Investec, 2024, 2Standard Life, 2024 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

News in Review

“Inflation held steady in August as various price fluctuations offset each other” 

Last week, the latest UK inflation data for August came in as anticipated at 2.2%, still marginally above the Bank of England’s (BoE’s) target level of 2%. The rate, published by the Office for National Statistics (ONS), was unchanged from July. 

Services inflation, which is an indicator of domestic price pressures, rose sharply to 5.6% from 5.2% in July. A Reuters poll had predicted a smaller rise to 5.5%. One factor behind this increase was a 22.2% jump in air fares between July and August; although a rise is normally expected at that time of year, ONS said the jump was the second largest since records began in 2001. 

Chief Economist at ONS, Grant Fitzner, commented, “Inflation held steady in August as various price fluctuations offset each other… The main movements came from air fares, in particular to European destinations, which showed a large monthly rise, following a fall this time last year. This was offset by lower prices at the pump as well as falling costs at restaurants and hotels.” 

Bank Rate held firm 

On Thursday, the BoE’s Monetary Policy Committee (MPC) voted to retain Bank Rate at 5%, as widely expected. The MPC voted by a majority of 8-1 to maintain Bank Rate, with one committee member favouring a reduction of 0.25 percentage points to 4.75%.  BoE Governor, Andrew Bailey, said that cooling inflation pressure will mean the Bank should be able to cut interest rates gradually over the upcoming months, adding, “it’s vital that inflation stays low, so we need to be careful not to cut too fast or by too much.” 

The MPC minutes alluded to a likely rate cut after the Budget in the autumn, stating, ‘Bank Rate expectations implied by market pricing… suggest that the next 25 basis point cut would occur in November. That was consistent with the Bank’s latest Market Participants Survey (MaPS).’  

Looking ahead, the BoE predicts GDP growth of 0.3% in Q3, with new analysis indicating that the combination of ‘improving real incomes, the August Bank Rate reduction and anticipated further cuts in interest rates have underpinned improved sentiment and expectations of increased activity across most sectors around the turn of the year.’ The next MPC meeting will conclude on 7 November. 

And in the US… 

The Federal Reserve announced a 50-basis point cut to its benchmark interest rate last week. The Central Bank’s federal funds rate is now in a range of 4.75% to 5%. This was the first cut in four years and now that inflation is back down to 2.5%, the lowest level for over three years, the Central Bank intends to focus on the ailing labour market. Exchange rates for GBP/USD hit a fresh two year high after the announcement.  

Following the rate cut, Fed Chair Jerome Powell said the labour market and the economy are in “solid shape” and after making the larger than expected interest rate cut, he said, “our intention is to keep it there.” The decision will have an impact all around the world for nations and companies whose debts are priced in dollars. 

Government borrowing highest since pandemic 

Government borrowing in August rose to the highest level for the month since the pandemic in 2021. ONS data, released on Friday, showed that borrowing – the difference between spending and tax revenue – reached £13.7bn in August, which is £3.3bn more than in August last year. 

“No return to austerity” 

At the Labour Party conference on Monday, Chancellor Rachel Reeves delivered a speech, lasting for around 45 minutes, in which she criticised the so-called “black hole” she inherited from the Tories. She called Labour the “party of economic responsibility” as she promised not to take risks with taxpayers’ money, adding “Because I know how much damage has been done in those years […] there will be no return to austerity.”  

Repeating the line “that’s the Britain we’re building“, Reeves promised an end to easy answers and said Labour will always stand with working people, saying “We do not have to choose between a fair society and a strong economy.” 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (25 September 2024) 

Using your pension to pass on wealth 

If you thought your pension was just your retirement savings then think again. 

As well as ensuring your financial certainty when you want to stop working, a pension is a great way to support future generations. This is because defined contribution pensions are one of the most tax-efficient ways of passing on your wealth. 

No tax troubles 

Unlike Individual Savings Accounts (ISAs), pensions usually sit outside your estate for Inheritance Tax (IHT) purposes. This means that the money inside your defined contribution pension can be passed onto your loved ones without any IHT going to the taxman. 

Pass it on 

It’s no secret that many of today’s young people are facing financial pressures. Alongside your wisdom, a tax-efficient gift of a pension might be one of the best things you can pass along to the next generation. 

Even better, your loved ones will usually inherit the pension itself rather than the money inside it. This means they can continue to benefit from all the tax advantages, including tax-free investment growth. There is the separate option of starting a pension plan, within limits, for a child, rather than (or in addition to) leaving them yours. 

Of course, passing a pension on might not be the best choice for everyone. We’re here to help you. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning. 

Residential Property Review – September 2024

Recovery in the residential market 

Recent data indicates that the residential property market is continuing to recover.  

According to TwentyCi, in the period from June to August 2024, sales agreed were only 1% lower than pre-pandemic levels. Promisingly, the number of new property listings was up 3%, indicating growing confidence among sellers. Meanwhile, Bank of England data shows that there were 62,000 mortgage approvals in July. While this is only a marginal increase, it is the highest number seen since September 2022.   

Although inflation rose by 2.2% in in the 12 months to August, core inflation continues to moderate and experts expect further cuts to Bank Rate in the coming months, which would make the future a little brighter for borrowers. Affordability is already starting to improve, according to Savills, who stated that the headline quoted cost of a five-year fixed mortgage with Nationwide had decreased to 3.94% at the end of August, having been 4.5% at the end of June. 

Rents starting to fall 

The UK has passed peak rental inflation, according to data from Zoopla.  

For the past three years, rents have been increasing at a faster pace than earnings. Renters will be relieved to learn that, in the last six months, rents increased by only 1.6% – the lowest rise since 2021. It is predicted that, by the end of 2024, rents for new lets will have gone up by 3 to 4%. So, while tenants may still be feeling the pinch, it is a significant improvement on previous years, as 2023 and 2022 saw rents go up by 8% and 11% respectively.  

Demand for rental properties has decreased by 39% over the last 12 months, while supply has risen by 17%. The boost in supply is likely due to corporate landlords buying more properties. Plus, lower mortgage rates are likely to have given first-time buyers more confidence to leave the rental market. Despite this improvement, it is still a challenging market – there are 17 hopeful tenants pursuing every rental property available. 

Landlords concerned about rumoured rise in CGT 

There is speculation that the Chancellor’s Autumn Budget will include an increase in Capital Gains Tax (CGT) which could affect private landlords selling properties and having to pay higher tax on any profits made.  

These rumours have caused a flurry of homes being put up for sale – Knight Frank data indicates that, in August, the number of market valuation appraisals was 25% higher than the five-year average. 

With landlords considering leaving the private rental sector, supply is at risk of reducing. Tim Bannister, Rightmove’s Property Expert, commented, “We’ve seen over the last few years how the supply and demand imbalance can contribute to rising rents, so there is a worry that without encouragement for landlords to stay in rather than leave the rental sector, it is tenants who will pay the price.” 

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission. 

All details are correct at the time of writing (18 September 2024) 

Commercial Property Market Review – September 2024

Growth expected in commercial property market  

Savills expects to see growth in the UK’s commercial property market in Q4.   

The sector had a good start to 2024, as cross-border investment hit $14bn in H1, with the UK attracting more capital than the USA or any European peers. Investors were given a further boost by the first cut to Bank Rate in over four years in August. As a result, many buyers are reaching an inflection point and more capital is set to be deployed in Q4.  

Joint Head of UK Commercial Investment at Savills, James Gulliford, commented, “We are seeing rising confidence in the UK’s economic fundamentals which should drive tenant demand and feed through into yield hardening from the end of the year.” 

Mat Oakley, Savills’ Head of UK and Europe Commercial Research, added, “The UK’s return to a focus on creating an environment to support economic growth is a solid strategy, although reversing the macro trend of the last eight years or so will be slow and there are risks that could threaten this growth.” 

UK hotels update 

It was a strong Q2 for the regional hotel market, according to recent data from Knight Frank.  

Occupancy across regional UK hotels remained stable in Q2 of this year at 77% – only 3% less than Q2 of 2019.  

Average daily rate (ADR) was up 4.3% year-on-year, driven by heightened demand for meetings and events space. Select Service and Upper-Upscale segments displayed particularly strong growth, with their ADR up 5.4% and 4.6% respectively.  

Golf and spa hotels outperformed the rest of the market, with revenue per available room going up by 20% annually. This boost is likely thanks to a 6% increase in occupancy and 10% rise in ADR.  

There was strong growth in departmental income due to a slowdown in rising costs and robust revenue growth, with food and beverage income going up by 9% per available room in Q2. 

Many commercial properties must improve energy efficiency 

In 2027, new regulations are expected to require all commercial properties to have an EPC rating of C or above.  

According to Essential Green Skills, leaders in sustainable building compliance, about 28% of commercial properties currently have an EPC rating of D or below. This means an estimated 130,000 properties could face fines of up to £150,000 if they don’t improve their rating soon.  

Failing to meet the new standards could make properties unlettable, thus reducing their market value. Upgrading EPC ratings should not just be a box-ticking exercise – a property with a higher energy efficiency will be much more appealing to environmentally-conscious tenants. 

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission. 

All details are correct at the time of writing (18 September 2024) 

News in Review 

“I’ve been really clear that the Budget… will require difficult decisions” 

Last week, Chancellor Rachel Reeves, who faced criticism over the Winter Fuel Payment vote, said the Budget on 30 October is set to involve “difficult decisions,” on key areas such as spending, tax and welfare.  

Her cautionary tone came hot on the heels of the latest monthly UK GDP data estimates from the Office for National Statistics (ONS), which showed no economic growth in July, following flat growth the previous month. A Reuters poll of economists had forecast a 0.2% expansion in July. 

In the three months to July, real GDP is estimated to have grown by 0.5%, supported by widespread growth in the services sector, which increased by 0.6%. The construction sector also recorded growth of 1.2%, while production output decreased by 0.1% over the period. Manufacturing output also fell overall due to ‘a particularly poor month for car and machinery firms,’ according to ONS. 

The Chancellor confirmed, “I’ve been really clear that the Budget on 30 October will require difficult decisions… But the prize – if we can bring stability back to our economy, if we can bring investment back to Britain – is economic growth, good jobs, paying decent wages in all parts of our country, to realise the huge potential that we have.”  

With an apparent £22bn “black hole” in the public finances, speculation is mounting over the taxes the Chancellor may choose to target on 30 October. 

Amazon £8bn UK investment 

In positive news for the economy last week, Amazon.com Inc. announced intentions to spend £8bn in the UK to develop its cloud business (Amazon Web Services, AWS), adding to a series of recent expansion moves on the continent and long-term projects across the globe including in Mexico, Singapore, the US and Saudia Arabia. Providing the government with a welcome investment boost, the five-year investment in data centres is expected to support 14,000 jobs and contribute £14bn to UK GDP. In a Treasury statement, the Chancellor said the investment “marks the start of the economic revival and shows Britain is a place to do business.” 

Housing market sees a positive shift 

On Thursday, the Royal Institution of Chartered Surveyors (RICS) outlined expectations for a continuation of sales growth in the coming months. Their latest Residential Survey, which measures the difference between surveyors seeing falls and rises in house prices, moved into positive territory for the first time in almost two years, since October 2022.  

Despite easing borrowing costs, the survey highlighted that affordability concerns continue, with Simon Rubinsohn, RICS Chief Economist, confirming “Affordability remains an issue in the sales market even with somewhat cheaper finance now available, but the picture appears even more acute in the lettings market where the amount of rental stock continues to diminish.”  

Meanwhile, mortgage data from the Bank of England showed an increase in gross mortgage advances in Q2, up by 16.7% from Q1 2024 to £60.2bn. This was 15.5% up year-on-year and the first increase in almost two years (Q3 2022). 

US inflation falls 

Latest figures from the US Labor Department show a tempering in inflation in August, with consumer prices rising 2.5% in the previous 12 months. Down from 2.9% in July, the August figure is the slowest pace in three and a half years (since February 2021). Although an unexpected rise in housing costs occurred in the month, this was countered by reductions in the price of petrol and used vehicles, amongst other items.  

All eyes now turn to the Federal Reserve’s next policy meeting which concludes on 18 September, as expectations heighten that the central bank will cut interest rates. Analysts are predicting the inflation data has increased the likelihood of a rate reduction, but by a smaller percentage. 

And in Europe… 

On Friday, the European Central Bank (ECB) Governing Council unanimously decided to reduce interest rates by 25 basis points to 3.5%. The ECB’s inflation forecasts have remained steady, with inflation expected to return to a 2% target during H2 2025. Headline inflation is expected to average 2.5% this year, 2.2% next year and 1.9% in 2026. Christine Lagarde, ECB President, reiterated that the bank will “continue to follow a data dependent and meeting-by-meeting approach… we are not pre-committing to a particular rate path.” 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (18 September 2024) 

The most affordable cities for FTBs

Jobs permitting, those looking to get on the property ladder may start flocking to Aberdeen, as a report has found it is the most affordable city to be a first-time buyer (FTB)1. 

Under the assumption that a FTB home has two bedrooms or fewer, the average asking price for a property in Aberdeen is £102,601. Bradford and Sunderland are the next cheapest cities to purchase a first home, with average asking prices of £107,929 and £111,263 respectively. The national average price of a FTB home currently stands at £227,110. 

Latest data2 shows that the average FTB in Scotland and Wales has a 20% deposit, while in England it is 25% and that more FTBs are taking on longer mortgage terms which they may well be paying off into retirement. It’s important to remember that while longer mortgage terms might make repayments more affordable in the here and now, you will end up paying off more overall in interest. 

Here to help 

Whether you’re a first-time buyer or moving home, we’re always here to help you with your mortgage – just get in touch for advice. 

1Rightmove, 2024, 2UK Finance, 2024 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments 

Advice to your younger self?

A survey1 has found that 51% of people would tell themselves to start saving as soon as they can. Meanwhile, 41% would say to take more care of their health, and a third would advise worrying less about what other people think. 

How old do you feel? 

The same report also asked UK adults when they are likely to start feeling old, with most respondents saying their 50s and 60s. However, with people living longer, you could only be halfway through your life at the age of fifty. That’s why it’s important to have a financial plan in place that will allow you to enjoy a long and happy retirement. 

No regrets 

Regardless of how old you are, it’s never too late to heed the advice and start saving, while having an emergency fund should be an objective, putting money into your pension should be a key priority too. Even a small increase in contributions can have a significant impact on the opportunities you create for yourself in later life. 

Talk it through 

Everyone’s goals for retirement are different. We can help you understand how much you need to save depending on your specific needs. 

1Aegon, 2024 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.