Preparing for the longevity megatrend in an uncertain world

As a new year dawns and we ponder what the next 12 months may hold for us as individuals and investors, one thing is for certain – some familiar challenges lie ahead. 

The International Monetary Fund (IMF)1 unveiled its latest economic assessment the week prior to the US election, proclaiming a period of ‘stable but underwhelming’ global growth for the year ahead. The update also predicted a return to a more neutral monetary policy stance as inflation in most economies steadily falls towards target in 2025. 

The report acknowledged ‘exceptional’ levels of uncertainty, which Donald Trump’s subsequent return to the White House has done little to ease. Quantifying the impact of the Republican’s victory is difficult at this stage, but a return to US protectionism and the prospect of trade wars certainly pose a threat to the global economy. 

A global phenomenon 

The IMF forecast also highlighted some structural challenges that are expected to temper global growth, with an ageing population amongst the most prominent. As well as impacting the economy and presenting an investment theme to capitalise on, the unfolding longevity megatrend is a global phenomenon, which presents a financial challenge at a personal level too as we live longer. 

Life goals 

Research2 suggests most of us are vague when it comes to financing increased longevity – less than a third of 55 to 64-year-olds, for example, currently prioritise funding retirement. Preparation and setting life goals typically makes us feel more in control of, and optimistic about, our futures and is undoubtedly key to confronting the realities and practicalities of living longer. Such targets, though, do need to be focused beyond current life stages. 

Talk, support, plan, live 

Encouragingly, the research also found that people who use an adviser tend to be better prepared for later-life eventualities, whether that be financing retirement or providing support for loved ones. Considerations extend to emotional and practical, as well as financial. Another element of longevity is successful communication. Advice helps clients successfully navigate the financial landscape as well as encouraging them to engage family in financial conversations; we can support you on all counts – it’s all in the planning! 

1IMF, 2Canada 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. 

Record sales in 2024 and a surge expected in early 2025

In the latter part of 2024, the UK housing market experienced robust sales momentum, driven largely by higher disposable incomes and easing rates on some mortgages. What can we expect for the housing market as we enter 2025? 

Last year marked the highest level of new sales since late 2020, with house prices rising modestly at just 1% year-on-year1. This restrained price growth was partly due to a wide selection of available properties and ongoing affordability concerns limiting buyer spending power. 

Regional variances persisted, with stronger price growth in more affordable regions. Notably, house prices rose in Northern Ireland (5.6%), Scotland (2.4%), and North West England (2.3%), while prices dipped slightly in the South East (-0.1%) and Eastern England (-0.3%). In November, data suggested that UK house prices overall were likely to be around 2% higher across the year. 

Substantial sales pipelines  

According to Zoopla, there was a substantial sales pipeline towards the end of 2024. This was valued at £113bn, the largest in four years, with over 306,000 properties in the purchase process – 26% more than the previous year. First-time buyers (FTBs) were the most active buyer group in 2024, motivated by reduced mortgage rates, making homeownership more affordable compared to renting. In fact, the average mortgage repayment in October 2024 was 17% cheaper than renting, a stark contrast to just a 2% difference in October 2023. 

Surge expected in Q1 

Going into 2025, it’s expected that the housing market in England may experience a surge in early transactions due to the end of a temporary Stamp Duty relief confirmed in the Autumn Budget. With Stamp Duty thresholds set to revert to previous levels on 31 March, analysts predict a rush to complete purchases in the first quarter, potentially followed by a slowdown in activity as demand tapers. The coming months are expected to see a continuation of strong sales momentum, but the market’s trajectory beyond early 2025 will likely depend on evolving economic conditions and affordability trends. 

1Zoopla, 2024 

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

News in Review

“The underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease” 

House prices increased by 4.7% over the year to December 2024, to finish only slightly below an all-time high, according to new data released last week by Nationwide Building Society. Having accelerated by 0.7% month-on-month, the average house price finished the year at £269,426. 

Commenting on the release, Robert Gardner, Nationwide’s Chief Economist, said, “UK house prices ended 2024 on a strong footing, up 4.7% compared with December 2023, though prices were still just below the all-time high recorded in summer 2022.” 

Even so, analysts noted that upcoming changes to Stamp Duty Land Tax (SDLT), due to be implemented this spring, could lead to a quieter period for the housing market. The temporary nil rate threshold for first-time buyers, currently set at £425,000, will return to £300,000 on 1 April. 

In the coming months, therefore, there could be “volatility as buyers bring forward their purchases to avoid the additional tax,” Mr Gardner added, which will “make it more difficult to discern the underlying strength of the market.” 

On the whole, however, the latest data suggests that the outlook for house prices is robust going into 2025. Mr Garner concluded, “Providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”  

Savers optimistic for 2025 

Carrying on the new year cheer, research by Tesco Bank revealed a more positive outlook among savers for their finances in the year ahead. In total, some 39% of Britons feel they will have more control of their finances in 2025, up from 34% a year earlier.  

Almost two in five have added to their savings in the past six months, the research showed, with the average saver stashing away £1,572. Amid persistent cost-of-living pressures, this financial resilience is impressive, analysts noted. 

The younger generations are especially eager to prioritise their finances in the New Year: nearly three in five savers between 18 and 34 said they are determined to be in control of their finances in 2025. 

Shoppers snub Boxing Day sales 

Footfall data for the Boxing Day sales showed that more people stayed at home than last year, with high streets (down 6.2%) and shopping centres (down 4.2%) both attracting less shoppers than in 2023. 

Analysts pointed to the continuing trend towards online shopping dominating the traditional Boxing Day sales as the major reason for lower footfall. Indeed, some major retailers including John Lewis and Next chose not to open most of their stores on Boxing Day. 

Jenni Matthews, of MRI Software, which gathered the data, commented, “This [drop] could be reflective of the shift in consumer behaviour influenced by the ongoing cost-of-living crisis.” 

Spring Forecast test for government 

Looking ahead in 2025, Chancellor Rachel Reeves has confirmed that the Office for Budget Responsibility (OBR) has been commissioned for an Economic and Fiscal Forecast, due to be published on 26 March.  

The release will be accompanied by a statement to Parliament by Ms Reeves, though the Chancellor also confirmed her commitment to holding only one major fiscal event a year. According to the government this is ‘to give families and businesses stability and certainty on upcoming tax and spending changes and, in turn, to support the government’s growth mission.’ 

Energy prices rise again 

The second increase in Ofgem’s price cap this winter took effect last Wednesday, sending domestic energy prices £21 a year higher for the average billpayer. 

In total, under the new price cap, someone paying by direct debit and using a typical amount of gas and electricity will pay £1,738 a year. Bills are now 50% higher than pre-pandemic levels. 

Analysts predict that the price cap will rise by a further 3% in April. Longer term, they foresee a small drop in July, before another rise in October. Yet, almost three years since Russia’s invasion of Ukraine sparked global volatility, uncertainty still reigns, making future movements hard to predict. 

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 (8 January 2025) 

Economic Review December 2024

Headline inflation at eight-month high 

Release of the latest inflation statistics showed consumer prices are now rising at their fastest rate since March 2024, while last month also saw Bank of England (BoE) policymakers become more divided over the need to cut interest rates. 

Data published by the Office for National Statistics (ONS) showed the Consumer Prices Index (CPI) 12-month rate – which compares prices in the current month with the same period a year earlier – rose from 2.3% in October to 2.6% in November. ONS said the rise was primarily driven by an increase in motor fuel and clothing prices, which was only partially offset by a drop in air fares. 

November’s CPI rise was, though, in line with expectations expressed in a Reuters poll of economists. Additionally, there was some relief in relation to underlying price pressures, with services inflation – a measure closely monitored by the BoE – remaining unchanged at 5.0%.  

The latest decision of the BoE’s interest-rate setting body was announced a day after the inflation release, with the nine-member Monetary Policy Committee (MPC) voting by a 6-3 majority to maintain Bank Rate at 4.75%. The three dissenting voices each preferred an immediate 0.25 percentage point reduction in order to boost growth, but the six-strong majority, which included BoE Governor Andrew Bailey, expressed concern about wage growth and ‘inflation persistence.’ 

Commenting after announcing the Committee’s decision, Mr Bailey said he still believed the path for interest rates was “downwards.” However, he added, “We think a gradual approach to future interest rate cuts remains right, but with the heightened uncertainty in the economy we can’t commit to when or by how much we will cut rates in the coming year.”   

The next MPC meeting is scheduled for early next month, with the outcome of the Committee’s deliberations due to be announced on 6 February. 

UK economy has ‘largely stalled’  

Figures released last month by ONS showed the UK economy shrank for a second successive month in October, while more recent survey evidence suggests it remained ‘largely stalled’ as 2024 drew to an end. 

The latest official monthly gross domestic product (GDP) statistics revealed that economic output declined by 0.1% in October, defying analysts’ expectations for a small monthly expansion. October’s decline followed a similar-sized contraction in September and represents the first consecutive monthly drop in GDP since March and April 2020. 

Revised data subsequently released by ONS also revealed that the economy performed worse than previously thought during earlier parts of last year. The updated statistics showed a growth rate of 0.4% across the second quarter, down from a previously published figure of 0.5%, while the economy is now estimated to have produced zero growth in the third quarter of 2024, down from an initial estimate of 0.1%. 

The current economic malaise was also highlighted in updated growth projections published last month by the BoE. The Bank now estimates the UK will have seen no growth during the final three months of 2024. 

Preliminary data from the latest S&P Global/CIPS UK Purchasing Managers’ Index (PMI) also points to a loss of economic momentum. While December’s flash headline growth indicator did remain at November’s 50.5 level, this left the Index only marginally above the 50.0 no change threshold. 

S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “The flash PMI data for December indicate the UK economy remained largely stalled at the end of 2024. New orders fell in December for the first time in over a year, reflecting a deterioration in demand as a deepening downturn in manufacturing shows growing signs of spreading to the services economy.”  

Markets (Data compiled by TOMD) 

Although most major indices closed 2024 higher year-on-year, trading at month end was mixed. 

US markets outperformed Europe in 2024. In the US, major indices registered double-digit annual gains, supported by interest rate cuts, Trump’s return to the White House and enthusiasm for AI. The Dow closed the year over 12% higher on 42,544.22, while the tech-orientated NASDAQ closed the year up over 28% on 19,310.79. 

Meanwhile, the Euro Stoxx 50 closed the year over 8% higher on 4,895.98. In Japan, the Nikkei 225 ended the year on 39,894.54, gaining over 19% in 2024, despite retreating on the last trading day of the year from a five-month high reached the previous session. 

In the UK, the blue-chip FTSE 100 index closed December on 8,173.02, a gain of just under 6% for 2024 as a whole, locking in gains for a fourth straight year. The domestically focused FTSE 250 closed the year just under 5% higher on 20,622.61, while the FTSE AIM closed on 719.63, a loss of over 5% in the year. 

On the foreign exchanges, the euro closed the month at €1.20 against sterling. The US dollar closed at $1.25 against sterling and at $1.03 against the euro.  

Gold closed the year trading around $2,637 a troy ounce, an annual gain of over 26%, its strongest since 2010. The price was supported by various factors including central bank reserve purchases and rising geopolitical tensions, prompting investors to seek safe haven assets. Brent crude closed the year trading at around $74 a barrel, an annual loss of over 2%. At year end, robust economic data from China and a weakening US dollar supported the oil price. 

Retail sales post small November rise  

Official retail sales data released last month showed a small rise in sales volumes during November, although more recent survey evidence continues to show a tough retail environment despite another modest rise in consumer sentiment.  

Figures released last month by ONS revealed that retail sales volumes rose by 0.2% in November. While this did represent a bounce back from October’s 0.7% decline, the figure was below economists’ expectations and left sales in the three months to November up by only 0.3%, the weakest performance according to this measure since the three months to June 2024. 

Evidence from the recently released CBI Distributive Trades Survey also suggests retailers had a relatively weak run-up to Christmas. The CBI said retailers had ‘endured a gloomy festive period’ and looking ahead, they expected ‘sales to fall again in January’ with wholesalers and motor traders ‘braced for sharper sales declines.’  

Data from GfK’s latest consumer confidence index, however, did offer the retail sector some hope for the new year, with the long-running survey showing households becoming modestly more cheery about their finances for the year ahead. Overall, December’s headline sentiment figure rose to -17 from -18 in November, lifting consumer morale to a four-month high. 

Wage growth surprise: vacancies fall again 

The latest batch of labour market statistics revealed a surprise pick-up in pay growth as well as a fall in both the level of job vacancies and the number of staff on payrolls.  

According to the latest ONS data, average weekly earnings excluding bonuses rose at an annual rate of 5.2% in the three months to October 2024; this was up from 4.9% across the preceding three-month period and higher than a consensus forecast of 5.0% from a Reuters poll of economists. ONS Director of Statistics Liz McKeown commented, “After slowing steadily for over a year, growth in pay excluding bonuses increased slightly in the latest period driven by stronger growth in private sector pay.”  

Job vacancies, however, fell once again, with 31,000 fewer reported in the September–November period compared to the previous three months. The latest release also revealed a drop in the number of people on payrolls, with provisional data indicating a 35,000 decline in November.   

Last month, Reed Chief Executive Officer, James Reed, also noted that his firm had seen a “significant decline” in the number of jobs being advertised, while a number of surveys highlighted a slowdown in recruitment activity in the face of rising employers’ National Insurance Contributions. 

All details are correct at the time of writing (02 January 2025) 

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. 

How to align wealth and purpose

Purpose has lately become a buzzword for investors and companies. Whether ‘mission-oriented’ investing excites you or makes you want to run for the hills, aligning your wealth with your values and interests can bring rich rewards. 

Give and grow 

Historically, wealthy people wanting to make a difference have done so through philanthropy. In response to major challenges from climate change to poverty, some billionaires have devoted large chunks of their wealth to finding and funding worthy causes. 

Many wealthy families are motivated simply by a desire to make a positive difference in the world. However, doing good does not always mean compromising returns; with the rise of impact investing, more people are combining the pursuit of financial returns with societal benefit. 

Investing for world peace 

The rise to prominence of environmental, social and governance (ESG) investing brought opportunities to make money while having a positive impact. 

‘Investing for Global Impact,’ a report released by Barclays, found that 68% of ultra-high-net-worth private investors with an average $730m in assets felt that philanthropy and impact investing should be used in tandem to generate impact. 

Indeed, some 58% of respondents said they are already seeking to coordinate their portfolios into tackling common aims and themes across both1. 

What’s your impact? 

The modern purpose-driven investor has abundant ways to make a difference. Wealthy investors cite a responsibility to make the world better as one reason for choosing impactful investing. 

With a clear-minded strategy that considers wealth holistically, investors can look to pursue opportunities and build a family legacy. A deeply personal process, the challenge is to balance a wide breadth of factors from what the world needs, to your own circumstances and motivations. For you, your family and society, it can prove enormously enriching. 

1Barclays, 2023 

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. 

Ambitious sellers beware!

Selling a house is the biggest financial deal many people will ever make. Understandably, sellers want to get the best possible price; new research1 has cautioned, however, that aiming too high is not without risk. 

Discount dangers 

Analysis by Rightmove of sales over the past five years has revealed the risks associated with pricing your house too high. On average, if a home doesn’t sell and later needs to be discounted, it will then take longer to sell and be more likely to remain unsold. It will also be twice as likely that the sale will fall through. 

Is the price right? 

The research warned that many sellers continue to ask for more than their home is worth. “We’re hearing that some sellers have struggled to adjust from the pandemic frenzy market mindset, into the calmer market mindset of the last 18 months or so,” explained Rightmove’s Tim Bannister. 

Instead of pushing for extra gains, the report urges sellers to listen to the advice of their estate agent. By coming to market at a competitive price, sellers reduce the risk of having to face the consequences of lowering the asking price. 

1Rightmove, 2024 

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

Hopeful FTBs consider buying with friend or sibling

Did you know that 46% of aspiring first-time buyers would consider buying a home with a friend or sibling to help them get onto the property ladder?1 

Most people (62%) would ideally like to purchase a home with a partner; however, many have been forced to look at alternative options. The main reason for considering ‘non-traditional’ routes was improving affordability (60%), 56% said they trusted the person they would co-own with and 14% believed there was no other way for them to buy a home. 

Whether you are purchasing a home with a friend, sibling or partner, there is a lot to consider. It is essential that you make a declaration of trust – a legal agreement between joint owners that clarifies each person’s share in the property. This is also strongly advised if a family member is contributing towards the deposit. We can help you think about your options – contact us for professional advice. 

1Lloyds, 2024 

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

Get into the savings habit to enhance your wellbeing

A report from UK Savings Week shows that having a savings habit improves wellbeing. 

Savers on the lowest incomes were found to benefit the most from regularly putting money aside, with 53% of this group reporting that they are satisfied with their life. However, only 40% of low-income non-savers could say the same1. 

Interestingly, low-income savers had similar satisfaction levels to those on much higher incomes who were not regularly saving. This highlights that, no matter how much money you are saving, it is an important action which boosts wellbeing – it helps savers to feel positive about the future and feel financially protected against unexpected events. 

Andrew Gall, Head of Savings at the Building Societies Association, commented, “The UK Savings Week campaign encourages organisations to promote the benefits of having and actively managing savings. Its overarching aim is to help individuals build their financial resilience and make their savings work as hard as possible for them.” 

1UK Savings Week, 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. 

Residential Property Review – December 2024

Property market trends in 2024 

As we approach the new year, Zoopla has highlighted trends in the UK property market in 2024.  

It is expected that, by the end of the year, there will have been 1.1 million sales completed – 10% more than last year. Meanwhile, January was the busiest month for visitors to the Zoopla site, followed by March and February. Interestingly, 80% of potential buyers were looking at the floorplans of a property before the photos, highlighting that pictures aren’t everything.  

As for sellers, May was the most popular month to put a home up for sale – just in time for the summer, which is typically the busiest period for house moves. August saw 104,740 completions – the busiest month of the year according to HMRC. It took the average homeowner 33 days to sell – a slight reduction on 34 days in 2023. The most popular property type this year was a three-bedroom semi-detached house. 

The top five fastest moving markets in the UK were all located in Scotland – Falkirk took the top spot with an average of 15 days to sell. In Scotland, properties are listed with a valuation and survey upfront, thus speeding up the sales process.  

Where has buyer demand increased? 

Comparison site GetAgent has revealed the levels of buyer demand in cities across Britain.    

The report highlighted the areas with the strongest growth in buyer activity this year. Out of 21 major cities, Sunderland came out on top; half of all homes on the market have currently found a buyer – 10% more than the start of the year. Leicester was second on the list with a 9% increase in buyer demand, followed by Liverpool (8%), Newcastle (7%) and Leeds (6%).  

Aberdeen saw the lowest increase, with only a +0.2% change in buyer demand this year. London was also near the bottom of the list, with a 3.3% increase in activity. Although some increases were marginal, it is promising that every major UK city did see some growth in buyer demand in 2024.  

What’s in store for residential property investment? 

2025 is expected to be a good year for residential property investment, despite recent policy changes. 

Labour’s target to build 1.5 million new homes during this Parliament is likely to encourage investment in the residential property market. Capital Gains Tax on residential property remained unchanged in the Chancellor’s Autumn Budget, which came as a relief for many. However, those buying a second home are now subject to a higher rate of Stamp Duty Land Tax.  

Following the Budget, the Bank of England warned that inflation could rise again, causing interest rates to fall at a slower pace. There was concern that this could make the UK less appealing to European investors, who could play an important role in achieving the government’s housing target. The impact remains to be seen; however, the Bank still hopes to reduce interest rates in 2025.

  

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 December 2024) 

Commercial Property Market Review – December 2024

Robust demand for Scottish hotels 

The Scottish hotels market continued to show resilience in Q3 according to Colliers. 

Hotel investment in Scotland hit £110m in quarter three – £40m more than Q2 and 150% higher than the five-year quarterly average of £44m. The year-to-date investment total is £200m – up 18% when compared with the same period in 2023. The report highlighted that investors are showing notable interest in leisure hotels in popular areas and larger hotels in built-up locations.  

Head of Colliers UK Hotels Agency, Julian Troup, commented, “These latest figures show that we’re continuing to see robust demand for hotel assets north of the border, with Scotland’s popular cities and stunning landscapes making it a desirable market for those looking to invest in UK regional hotels.” 

  

Office availability continues to tighten in Prime London 

Knight Frank data shows that Prime London office availability has dropped to near record lows.  

In the last year, office availability has fallen by 6.8% in the Prime London area, causing a vacancy rate of 9.1% and bringing total availability to 23.4 million sq ft. Supply of top-quality space is even more limited, as Grade A offices have a vacancy rate of just 1.8%.  

Availability is a particular challenge in the business districts. In the City & Southbank market, availability decreased by 5.8% due to increased letting activity. The vacancy rate is now 8.9%, which is 1.7 percentage points higher than the long-term quarterly average. True Grade A availability has fallen by 19.5% over the last 12 months, with a vacancy rate of only 0.5% in the City Core.  

In the West End, availability of new space is especially low – it fell to its lowest level in two years due to a 7.1% drop in Q3. As a result, the vacancy rate for new offices is only 1.3% in this area.  

An industrial revolution for the modern day 

The net-zero transition and artificial intelligence (AI) are expected to be the driving forces behind a new industrial revolution in the UK.  

The manufacturing sector will play a key role in meeting the nation’s target to reach net zero by 2050. With the transformation of the energy system already underway, demand has increased for green products such as wind turbines and electric vehicle batteries. JLL reported that ‘in the next 20 to 25 years the demand for new factories will become a more significant component of overall industrial property demand.’ These new factories could crop up in unexpected places – the growth of offshore wind means that towns and cities near ports will experience heightened demand.  

AI can accelerate the transition to net zero; it enhances the efficiency of wind and solar power generation, improves industrial efficiency and speeds up relevant research and development. However, it does use a significant amount of energy and will drive an increase in data centres to store the computer systems.  

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 December 2024)