A MUCH-touted house price crash has failed to materialise in 2005, forcing one of the harshest pessimists in the market to renounce its forecast for a 20% slide in property values, according to the Daily Telegraph .
Economist Roger Bootle's Capital Economics yesterday conceded the scarcity of new housing combined with easier access to mortgages would defend property prices against a sharp drop, scaling back its forecast to a modest 5% fall over the next two years, says the paper.
"Several factors have come to light which might suggest that house prices are likely to remain more firmly supported than we had expected," said property economist Ed Stansfield of Capital Economics. He cited lower interest rates, strong employment growth and looser criteria for securing a mortgage.
"None of this is to suggest that the danger of a sharp fall in house prices has evaporated altogether," he added swiftly.
MEANWHILE, SCOTLAND'S housing market is expected to outperform the rest of the UK in 2006, with prices rising 7% compared with the rest of the UK's 3%, says the Scotsman.
The upbeat prediction came yesterday from the Bank of Scotland in its 2006 economic forecast, which also suggested that the economy as a whole north of the Border is expected to grow by 1.8% - a slowdown on this year as consumers continue to rein in spending in the wake of higher oil prices.
The BoS figures estimate house prices in Scotland have risen by 10% in 2005, putting the market behind only Wales and Northern Ireland in the UK. Martin Ellis, the bank's chief economist, said he now considers housing in Scotland remains "more affordable than elsewhere in Britain", with average house prices in Scotland less than in any other part of the country.
TONY BLAIR hit out at claims his concession over Britain’s European Union budget rebate will end up costing the UK £2bn a year yesterday, arguing the costs could be considerably lower, reports the Financial Times.
At a Downing Street press conference, Mr Blair made three arguments as to why it had still been a good deal for Britain. First, he argued the rebate concession would have little immediate impact on UK public finances because the cost had been back-loaded as requested by the Treasury. “It’s not a bad thing for us, it’s a good thing,” said Blair.
Second, he said the UK’s rebate concession may not end up being as big as it appears. The UK has agreed the rebate should not apply to EU spending on development projects in eastern Europe. But Blair argued the take-up of such projects was frequently far smaller than planned. This means, he said, the £7bn cost of the rebate concession over the next seven years is a “ceiling” that may not be reached.
Third, Blair said the £1.9bn rebate cut would not necessarily be the baseline for the next round of negotiation in 2014. He argued that, seven years from now, there will be so many changes to the EU’s economic circumstances that it is impossible to judge how future negotiations will go.
ROBIN SAUNDERS, the former WestLB financier, has teamed up with Paul Bloomfield, the veteran property dealmaker, to launch a £1bn European property fund, reports the Times.
The European Continental Real Estate Fund has already secured £250m from investors, mainly from the Middle East, but the aim is to raise £1bn, which with debt will provide up to £10bn of buying power.
Saunders and Bloomfield are working in partnership with Birch Capital, an investment company run by Benoit de Biolley, the former banker for Deutsche Bank and Morgan Stanley.
JONATHAN MALINS, an active member of London's second-tier mining and energy investment community, has fallen foul of the Financial Services Authority's aggressive market abuse regime, receiving a £25,000 fine yesterday for share dealing while holding privileged information, says the Guardian.
The financial watchdog found that, as finance director of Cambrian Mining, Malins first bought shares in this specialist investment holding company ahead of news of a share placing and then bought more shares ahead of the firm's half-year results announcement a week later. The suspect trade took place in March. As the only executive director of Cambrian to be based in Britain, Malins had chaired a meeting to discuss an issue of new shares that was due to be carried out above the prevailing market price, the FSA said.
He bought 50,000 shares in Cambrian almost one hour before news of the placing was formally announced - quickly netting himself a paper profit of £6,000. Then, having chaired a board meeting on March 30 to finalise Cambrian's interim results, Malins bought another 20,000 shares the next morning before the results announcement was made.
The Cambrian figures were better than the market was expecting and a subsequent rise in the share price that day handed the director a paper profit of £400.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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