August 8, 2017

Pegler’s market report – 08.08.17: The most affordable cities in the UK for first-time buyers – not Brighton!

As published in the Brighton Argus (08.08.17) Business section under the title Pegler’s Market Report:

The most affordable cities in the UK for first-time buyers – not Brighton!

First-time buyers in the UK face a tough market, with average house prices up 181pc since the start of the millennium. Prospective buyers can now expect to pay an average of £211,000 for their first home, significantly more than in 2000 when the average spend was £75,000. The research shows that the most affordable place for first-time buyers today is Burnley in Lancashire, where property prices average just £70,311.

Virtually all first-time buyers in Brighton are being priced out of their own city, with new data revealing that only 2pc of properties in the seaside resort are affordable for new buyers. While most would assume that London is the least affordable place for first-time buyers, it’s Brighton that takes the dubious title, with average property prices at £352,303 and a minuscule percentage of properties considered affordable.

Speculation that the Government will begin to taper or even ditch the Help to Buy scheme sent housebuilders sliding. Help to Buy is believed to have provided a 15pc boost to volumes in the sector. The government flatly denied the press reports, which speculated that the scheme could be altered before the original 2021 end date, however there was some noise about the scheme’s future, recognising the need for certainty on the policy which underpins around 30pc of new house sales.

Global stock markets enjoyed a strong end to last week after the US jobs data for July smashed expectations. US equities have been lifted by the data signalling a booming labour market and strengthening economy whereas the pound and euro’s weakness against the dollar has pushed up the big exporters on European markets.

A bumper earnings season in the US has underpinned the major US indices’ advances of late with Apple’s results recently being the latest in a long line to surpass expectations. What is encouraging about Q2 earnings season is that virtually every sector exceeded expectations, while sales and earnings growth was generally positive across the board.

Sales of new cars have continued to tumble as economic uncertainty in the wake of the EU referendum has put potential customers off making big purchases. Official data on the number of cars registered in July show a 9.3pc decline compared with the same month a year ago. Just 161,997 cars were registered last month, the fourth consecutive month of decline and a trend which is sounding alarm bells in the industry.

In company news, German insurance giant Allianz has confirmed it has struck a joint venture deal with British firm LV=, creating the UK’s third largest personal insurer. Allianz will pay £500m to LV=, formerly known as Liverpool Victoria, in exchange for a 49pc stake in its general insurance business, with the deal expected to close in the second half of this year.

By David Pegler, Brighton Capital Management