The Financial Times reports that the Bank of England is keeping a careful watch on the property market, but a policy maker at the central bank said it’s not its job to micromanage fluctuations in asset prices. Donald Kohn, a member of the MPC said the BoE would ensure lending standards did not get too loose and that lenders are adequately capitalised to manage losses that might arise.
IN other economic news, UK manufacturing picked up in September, with factory output returning to growth after an unexpectedly poor August. ONS data showed manufacturing output rose 1.2% between August and September, against forecasts of a 1.1% rise. After the data were released, the National Institute of Economic and Social Research estimated the UK economy grew 0.7% in the three months to the end of October. While this would be less than the 0.8% recorded in the three months to the end of September, the estimate suggests the recent economic recovery remains fairly robust.
The Telegraph’s lead story (and Daily Mail p.2) is focussed on the fact that British households pay the highest property taxes in the developed world with the amount of stamp duty paid on the average house almost doubling since the peak of the last housing boom. UK residents are now paying twice as much as the international average according to Policy Exchange. Property taxes in Britain cost the equivalent of 4.1% of GDP – around £70 billion – in 2011. The OECD average is 1.8%. The average amount paid on housing sales is on course to reach £6,700, up from less than £4,200 in 2007-08 according to the CML. Instead of using taxes to depress demand for housing, Policy Exchange suggests more houses should be built with an aim of hitting 1.5m new homes by the end of the decade. This would require double the current rate of construction. Telegraph, p.1,4 (James Kirkup). In the Times Jones Lang LaSalle is predicting a 5% rise in house prices by 2014, with London prices rising 8%.
A little outside the box – but very relevant for equity release, care and pensions – according to the ONS the UK population is set to rise 9m (14%) to 73m in the next 25 years. The ONS forecasts an increasingly aged population with the number of state pensioners rising by a third between 2012 and 2037 to 16.1m people. The average age will rise from 39.7 years in 2012 to 40.6 years in mid-2022 and 42.8 by mid-2037. This means the elderly rather than the young will increasingly form the bulk of those dependent on the working age population. The number of working population for each person of state retirement age will fall to 2.7 from the current 3.2. 6.2m people are projected to be aged 80 or over by 2037.
Research from the OECD has cast doubt on the widespread belief that the British work longer hours than everyone else. The figures show that British workers put in an average of 1,625 hours a year, or a 31 hour working week, well below the OECD average of 1,776. That puts Britain 24th in the table of 34 developed countries. Experts say it is the preponderance and growth of part-time jobs that is responsible for the short working week. Mexicans work the longest hours – 42 hours per week – while workers in the Netherlands have the easiest life, working only 26 hours. The Times, p.6 (Rosemary Bennett)