cityam--2020-11-05--Insurer RSA share price rockets after £7.1bn takeover deal approach

Insurance giant RSA confirmed it is in talks with a consortium of Canadian insurer Intact Financial and Danish insurer Tryg about a possible break-up deal that will value it at £7.1bn .
Shares in RSA shot up 46 % to close at 670p by the close of play today .
RSA said its board would be minded to recommend the proposal for 685p in cash per RSA share , plus the payment by RSA of its previously announced interim dividend of 8p per share .
Read more : RSA , Hiscox and others drop appeal against Covid-19 business interruption insurance @ @ @ @ @ @ @ proposal 2 October , which values the home , motor and commercial insurer at a premium of 50 % to its closing price on the day before .
Intact and Tryg have until 3 December to make a firm offer .
Jefferies analysts said the offer price represented “ more than fair value.
” Robey Warshaw , Goldman Sachs and Bank of America are working with RSA on the deal , the insurer said .
Best known its More Than brand , RSA also has large operations in Canada , Ireland and Scandinavia @ @ @ @ @ @ @ , Intact will keep RSA ’ s Canada and UK & International operations , while Tryg will take control of RSA ’ s Sweden and Norway business .
RSA appointed Christian Baltzer , a former CFO of Tryg , as head of its Danish business last year .
The insurer has been open to offers since 2015 when a previous bid approach by Zurich Insurance fell through , industry sources say .
Both Intact and Tryg have been mooted as potential bidders for several years .
Read more : Supreme Court to hear @ @ @ @ @ @ @ RSA chief executive Stephen Hester , a former boss of NatWest who joined RSA in 2014 , has been scaling back underperforming business .
Rising commercial insurance rates , lower non-pandemic related claims and a tightening up of its underwriting strategy boosted RSA ’ s underwriting profit in the first nine months of 2020 , despite the impact of Covid-19 , it said earlier .
RSA ’ s combined ratio , a measure of performance in which a level below 100 % indicates a profit , stood at 90 % in the third @ @ @ @ @ @ @ the end of 2019 .
The insurer said it was revising down its initial estimate of the gross impact of a September judgment in a UK test case brought by the British markets regulator around the payment of business interruption insurance by around 20 million pounds .

Insurer RSA share price rockets after £7.1bn takeover deal approach
RSA Insurance is led by former NatWest boss Stephen Hester
Insurance giant RSA confirmed it is in talks with a consortium of Canadian insurer Intact Financial and Danish insurer Tryg about a possible break-up deal that will value it at £7.1bn.
Shares in RSA shot up 46% to close at 670p by the close of play today.
RSA said its board would be minded to recommend the proposal for 685p in cash per RSA share, plus the payment by RSA of its previously announced interim dividend of 8p per share.
RSA said it received the proposal 2 October, which values the home, motor and commercial insurer at a premium of 50% to its closing price on the day before.
Intact and Tryg have until 3 December to make a firm offer.
Jefferies analysts said the offer price represented “more than fair value.”
Robey Warshaw, Goldman Sachs and Bank of America are working with RSA on the deal, the insurer said.
Best known its More Than brand, RSA also has large operations in Canada, Ireland and Scandinavia.
Split decision
Under the terms of the deal, Intact will keep RSA’s Canada and UK & International operations, while Tryg will take control of RSA’s Sweden and Norway business.
Intact and Tryg would co-own RSA’s Denmark business.
RSA appointed Christian Baltzer, a former CFO of Tryg, as head of its Danish business last year.
The insurer has been open to offers since 2015 when a previous bid approach by Zurich Insurance fell through, industry sources say. Both Intact and Tryg have been mooted as potential bidders for several years.
RSA chief executive Stephen Hester, a former boss of NatWest who joined RSA in 2014, has been scaling back underperforming business.
Rising commercial insurance rates, lower non-pandemic related claims and a tightening up of its underwriting strategy boosted RSA’s underwriting profit in the first nine months of 2020, despite the impact of Covid-19, it said earlier.
RSA’s combined ratio, a measure of performance in which a level below 100% indicates a profit, stood at 90% in the third quarter, compared with 93.6% at the end of 2019.
The insurer said it was revising down its initial estimate of the gross impact of a September judgment in a UK test case brought by the British markets regulator around the payment of business interruption insurance by around 20 million pounds.


cityam--2020-11-05--TfL to start ferry service at Hammersmith Bridge

The Department for Transport has announced a ferry service will begin at Hammersmith Bridge just days after it hammered out a new bailout with TfL .
In a statement this evening the transport department said that , as part of the London bailout , TfL has been “ required to procure a ferry service for passengers across the Thames near Hammersmith Bridge.
” Read more : TfL to review driverless trains as condition of new bailout Under the terms of the rescue package , which will see the transport network receive £1.7bn in financial support , ministers have set a @ @ @ @ @ @ @ as having to review driverless trains as a condition of the new bailout , the government has now insisted TfL start work on the temporary ferry service .
It has also asked the transport system to establish how Hammersmith Bridge could be brought back into use .
Heidi Alexander , deputy mayor for transport said : “ I am pleased the procurement for a ferry service can now start , which will make a big difference to local communities and ensure Londoners can travel across the river .
It is now vital that @ @ @ @ @ @ @ strengthening of the bridge itself.
” The bridge has been at the centre of fierce rows between City Hall and DfT , with transport secretary Grant Shapps previously saying there had been a “ lack of leadership in London on re-opening this vital bridge ” .
The bridge was closed to vehicles last year due to potentially dangerous cracks , but stayed open for cyclists and pedestrians .
During the summer heatwave , it closed to cyclists and pedestrians as the cracks widened and fears grew of a “ catastrophic failure ” .
@ @ @ @ @ @ @ Khan in fierce row with government over closure In a statement today Shapps said : “ For too long residents have suffered as those responsible have failed to deal with this issue .
I ’ m pleased to say that , following our funding deal with TfL , alongside the excellent work of our Hammersmith Bridge Taskforce , this first step is becoming a reality.
” David Rowe , TfL ’ s head of major projects sponsorship said : “ Now that TfL has a funding agreement until next March , we are @ @ @ @ @ @ @ is available to get people across the river as soon as possible .
”

TfL to start ferry service at Hammersmith Bridge
77 per cent of workers aged between 18-34 in the capital are looking forward to coming back to the office
The Department for Transport has announced a ferry service will begin at Hammersmith Bridge just days after it hammered out a new bailout with TfL.
In a statement this evening the transport department said that, as part of the London bailout, TfL has been “required to procure a ferry service for passengers across the Thames near Hammersmith Bridge.”
Under the terms of the rescue package, which will see the transport network receive £1.7bn in financial support, ministers have set a number of requirements.
As well as as having to review driverless trains as a condition of the new bailout, the government has now insisted TfL start work on the temporary ferry service.
It has also asked the transport system to establish how Hammersmith Bridge could be brought back into use.
Heidi Alexander, deputy mayor for transport said: “I am pleased the procurement for a ferry service can now start, which will make a big difference to local communities and ensure Londoners can travel across the river. It is now vital that Government confirm funding for the stabilisation and strengthening of the bridge itself.”
The bridge has been at the centre of fierce rows between City Hall and DfT, with transport secretary Grant Shapps previously saying there had been a “lack of leadership in London on re-opening this vital bridge”.
The bridge was closed to vehicles last year due to potentially dangerous cracks, but stayed open for cyclists and pedestrians. During the summer heatwave, it closed to cyclists and pedestrians as the cracks widened and fears grew of a “catastrophic failure”.
In a statement today Shapps said: “For too long residents have suffered as those responsible have failed to deal with this issue. I’m pleased to say that, following our funding deal with TfL, alongside the excellent work of our Hammersmith Bridge Taskforce, this first step is becoming a reality.”
David Rowe, TfL’s head of major projects sponsorship said: “Now that TfL has a funding agreement until next March, we are doing everything possible to ensure a ferry is available to get people across the river as soon as possible.”


cityam--2020-11-05--The Week In Sportbiz: Premier League set to axe pay-per-view (for now), Formula E gets cosier with E

Less than a month after its introduction , Premier League clubs are expected to ditch their unpopular pay-per-view service .
Since debuting on 17 October , half of all games have been restricted to those willing to pay £14.95 a time .
Fans groups protested the extra charges by successfully urging people to donate thousands of pounds to food banks instead .
Read more : The definitive live sport TV guide you need to make it through lockdown 2 Even Sky Sports pundit Gary Neville criticised the move to monetise matches made available for free earlier this year .
Seemingly @ @ @ @ @ @ @ now set to shelve the scheme after this weekend ’ s fixtures , multiple reports say .
The bad news ?
The league is said to be considering reviving pay-per-view , possibly at a lower price , for the busy Christmas period .
That should be about as popular as the fifth day of turkey sandwiches .
Formula E and Extreme E have strengthened their ties , with the former investing in the latter .
Both electric racing series are the brainchild of Alejandro Agag , who remains Formula E chairman while launching @ @ @ @ @ @ @ executive .
The latest development sees Formula E chief exec Jamie Reigle join the board of Extreme E , which debuts next year .
Lewis Hamilton and Nico Rosberg are among the owners of teams in the off-road series .
All eyes have been on the United States this week , especially those of the top brass at World Rugby .
Brett Gosper , the governing body ’ s chief executive , talked up an American bid to host the Rugby World Cup in 2027 or 2031 .
“ There is no commercial @ @ @ @ @ @ @ he said .
Rugby has had a rough ride across the pond , with USA Rugby only emerging from bankruptcy two months ago .
Gosper ’ s words will encourage talk of USA making formal representations ahead of a bid next year .
Cycling chiefs have revealed further details of the inaugural Track Champions League .
The competition , aimed at raising the profile of velodrome action , will take place over six weekends in November and December next year .
Read more : Will Tao Geoghegan Hart ’ s Giro d ’ @ @ @ @ @ @ @ cycling ?
Organisers the UCI , cycling ’ s governing body , and Eurosport Events hope the scheduling will capitalise on renewed interest sparked by the delayed Tokyo Olympics .
The short-form racing will be held at six different venues and entry will be restricted to elite male and female riders .
Super League chiefs are on the hunt for a 12th team following the end of the Toronto Wolfpack experiment .
Clubs voted not to readmit the Canadian team for 2021 after they pulled out during the coronavirus-interrupted current campaign .
Candidates @ @ @ @ @ @ @ relegated in 2019 , Toulouse Olympique , Featherstone Rovers and Leigh Centurions .

The Week In Sportbiz: Premier League set to axe pay-per-view (for now), Formula E gets cosier with Extreme E, and Gosper gives US his World Cup vote
Premier League clubs only introduced pay-per-view last month but it has proved unpopular
Less than a month after its introduction, Premier League clubs are expected to ditch their unpopular pay-per-view service.
Since debuting on 17 October, half of all games have been restricted to those willing to pay £14.95 a time.
Fans groups protested the extra charges by successfully urging people to donate thousands of pounds to food banks instead.
Even Sky Sports pundit Gary Neville criticised the move to monetise matches made available for free earlier this year.
Seemingly shamed into a rethink, clubs are now set to shelve the scheme after this weekend’s fixtures, multiple reports say.
The bad news? The league is said to be considering reviving pay-per-view, possibly at a lower price, for the busy Christmas period.
That should be about as popular as the fifth day of turkey sandwiches.
Our friends electric
Formula E and Extreme E have strengthened their ties, with the former investing in the latter.
Both electric racing series are the brainchild of Alejandro Agag, who remains Formula E chairman while launching Extreme E, where he is chief executive.
The latest development sees Formula E chief exec Jamie Reigle join the board of Extreme E, which debuts next year.
Lewis Hamilton and Nico Rosberg are among the owners of teams in the off-road series.
US World Cup bid gets Gosper’s vote
All eyes have been on the United States this week, especially those of the top brass at World Rugby.
Brett Gosper, the governing body’s chief executive, talked up an American bid to host the Rugby World Cup in 2027 or 2031.
“There is no commercial market like the United States,” he said.
Rugby has had a rough ride across the pond, with USA Rugby only emerging from bankruptcy two months ago.
Gosper’s words will encourage talk of USA making formal representations ahead of a bid next year.
Cycling’s Champions League on track
Cycling chiefs have revealed further details of the inaugural Track Champions League.
The competition, aimed at raising the profile of velodrome action, will take place over six weekends in November and December next year.
Organisers the UCI, cycling’s governing body, and Eurosport Events hope the scheduling will capitalise on renewed interest sparked by the delayed Tokyo Olympics.
The short-form racing will be held at six different venues and entry will be restricted to elite male and female riders.
Super League sends Toronto packing
Super League chiefs are on the hunt for a 12th team following the end of the Toronto Wolfpack experiment.
Clubs voted not to readmit the Canadian team for 2021 after they pulled out during the coronavirus-interrupted current campaign.
Candidates for the vacancy include London Broncos, relegated in 2019, Toulouse Olympique, Featherstone Rovers and Leigh Centurions.


cityam--2020-11-05--Michel Barnier tells EU that UK has 'blocked' Brexit trade deal progress

The European Union ’ s chief Brexit negotiator Michel Barnier reportedly told the bloc ’ s diplomats that the UK has “ blocked ” progress in key areas of trade deal talks .
At a confidential meeting yesterday afternoon , Barnier briefed representatives from the EU ’ s 27 member states , saying that “ fundamental differences ” remain between the two sides , Sky News reported .
Read more : HMRC urges traders to prep for end of Brexit transition period to avoid disruption According to minutes of the meeting seen by the broadcaster , Barnier said the most @ @ @ @ @ @ @ field ” , which would ensure the UK follows the same rules as the EU on issues such as labour law and state aid .
The EU is concerned that without the mechanism , the UK could undercut European laws in order to reduce costs and bring in foreign investments .
The UK government has denied that it will attempt to do so .
Barnier told the EU diplomats that the level playing field is “ the most fundamental point where we still have major differences ” , according to Sky .
Read @ @ @ @ @ @ @ clash on share trading rules “ The prime minister has stressed that alignment [ with European rules ] would breach sovereignty .
“ This question seriously throws the chances of an agreement into doubt ” .
Barnier warned the meeting that without progress on the level playing field , the EU would be left “ unprotected against unfair competition ” .

Michel Barnier tells EU that UK has ‘blocked’ Brexit trade deal progress
The European Union’s chief Brexit negotiator Michel Barnier reportedly told the bloc’s diplomats that the UK has “blocked” progress in key areas of trade deal talks.
At a confidential meeting yesterday afternoon, Barnier briefed representatives from the EU’s 27 member states, saying that “fundamental differences” remain between the two sides, Sky News reported.
According to minutes of the meeting seen by the broadcaster, Barnier said the most important hurdle was the “level playing field”, which would ensure the UK follows the same rules as the EU on issues such as labour law and state aid.
The EU is concerned that without the mechanism, the UK could undercut European laws in order to reduce costs and bring in foreign investments.
The UK government has denied that it will attempt to do so.
Barnier told the EU diplomats that the level playing field is “the most fundamental point where we still have major differences”, according to Sky.
“The prime minister has stressed that alignment [with European rules] would breach sovereignty.
“This question seriously throws the chances of an agreement into doubt”.
Barnier warned the meeting that without progress on the level playing field, the EU would be left “unprotected against unfair competition”.


cityam--2020-11-05--Luxury hotel group Mandarin Oriental warns of 'significant' full-year loss

Luxury hotel group Mandarin Oriental today warned that it will report a “ significant ” loss for the full year after demand for city centre accommodation crashed during the coronavirus pandemic .
The firm , which counts a five-star Knightsbridge hotel among its portfolio , said business levels remain low in most locations due to Covid-19 restrictions .
Manderin Oriental this morning reported a loss of $ 43m in the third quarter , following a $ 63m loss in the second quarter .
It said a recovery in business levels is not expected until the second half of next year @ @ @ @ @ @ @ therefore it will report a significant loss for 2020 .
However the firm said its financial position “ remains robust ” , with net debt at 30 September a $ 459m and cash reserves of £178m .
The hotel chain , which has venues across Asia , Europe and the Americas , has $ 184m in available , committed debt facilities .
Read more : Check out Knightsbridge ’ s Mandarin Oriental ’ s refurbishment as it reopens after summer fire In a statement today the company ’ s management said : “ @ @ @ @ @ @ @ gratitude to all Mandarin Oriental colleagues for their continuing dedication and resolve to putting customers first during these extraordinary times.
” The firm , which is a member of the Jardine Matheson Group , is incorporated in Bermuda , and has a standard listing on the London Stock Exchange , with secondary listings in Bermuda and Singapore .

Luxury hotel group Mandarin Oriental warns of ‘significant’ full-year loss
Luxury hotel group Mandarin Oriental today warned that it will report a “significant” loss for the full year after demand for city centre accommodation crashed during the coronavirus pandemic.
The firm, which counts a five-star Knightsbridge hotel among its portfolio, said business levels remain low in most locations due to Covid-19 restrictions.
Manderin Oriental this morning reported a loss of $43m in the third quarter, following a $63m loss in the second quarter.
It said a recovery in business levels is not expected until the second half of next year “at the earliest”, and therefore it will report a significant loss for 2020.
However the firm said its financial position “remains robust”, with net debt at 30 September a $459m and cash reserves of £178m.
The hotel chain, which has venues across Asia, Europe and the Americas, has $184m in available, committed debt facilities.
In a statement today the company’s management said: “We would like to express our deep gratitude to all Mandarin Oriental colleagues for their continuing dedication and resolve to putting customers first during these extraordinary times.”
The firm, which is a member of the Jardine Matheson Group, is incorporated in Bermuda, and has a standard listing on the London Stock Exchange, with secondary listings in Bermuda and Singapore.


cityam--2020-11-05--Bombardier faces SFO probe over Indonesia contracts

The Serious Fraud Office has confirmed it is investigating aircraft manufacturer Bombardier over suspected bribery and corruption relating to contracts and orders from Garuda Indonesia .
It comes after an Indonesian court sentenced Garuda Indonesia ’ s former chief executive , Emirsyah Satar , to prison in May for bribery and money laundering offences linked to the procurement of planes and engines from Airbus and Rolls-Royce .
Read more : Bombardier Belfast deal to complete this week In addition to the eight-year sentence , Satar was also fined IDR 2m ( £1.1m ) .
The SFO declined to give further @ @ @ @ @ @ @ Indonesia .
In its third-quarter results , Bombardier emphasised no charges were laid against the firm or any of its directors , officers or employers .
It has since launched an internal review into the Garuda transactions , which is being conducted externally .
“ The Corporation has met with the SFO to discuss the status of the Corporation ’ s internal review and its potential assistance with the SFO investigation on a voluntary basis , ” it said .
Read more : Alstom reduces offer for Bombardier rail unit by $ 350m @ @ @ @ @ @ @ five procurement processes involving different manufacturers , including the 2011-2012 acquisition and lease of Bombardier CRJ1000 aircraft by Garuda Indonesia ( Persero ) Tbk .
Shares in Bombardier dropped 0.85 per cent , erasing gains made earlier in the session .
Before markets opened , the Canadian manufacturer reported a wider-than-expected loss for the third quarter .

Bombardier faces SFO probe over Indonesia contracts
(Photo by PASCAL PAVANI/AFP via Getty Images)
The Serious Fraud Office has confirmed it is investigating aircraft manufacturer Bombardier over suspected bribery and corruption relating to contracts and orders from Garuda Indonesia.
It comes after an Indonesian court sentenced Garuda Indonesia’s former chief executive, Emirsyah Satar, to prison in May for bribery and money laundering offences linked to the procurement of planes and engines from Airbus and Rolls-Royce.
In addition to the eight-year sentence, Satar was also fined IDR 2m (£1.1m).
The SFO declined to give further information on the live investigation into Garuda Indonesia.
In its third-quarter results, Bombardier emphasised no charges were laid against the firm or any of its directors, officers or employers. It has since launched an internal review into the Garuda transactions, which is being conducted externally.
“The Corporation has met with the SFO to discuss the status of the Corporation’s internal review and its potential assistance with the SFO investigation on a voluntary basis,” it said.
At the centre of the probe are five procurement processes involving different manufacturers, including the 2011-2012 acquisition and lease of Bombardier CRJ1000 aircraft by Garuda Indonesia (Persero) Tbk.
Shares in Bombardier dropped 0.85 per cent, erasing gains made earlier in the session. Before markets opened, the Canadian manufacturer reported a wider-than-expected loss for the third quarter.
Bombardier was contacted for additional comment.


cityam--2020-11-06--Lockdown expected to delay client results and accounts, KPMG says

The current national lockdown across England is expected to delay the announcement of results and accounts of clients , KPMG UK has said .
The Big Four firm told City AM it is expecting and preparing to delay the announcement of results and accounts of some of the entities it audits .
Read more : PwC to take over from KPMG as M & G ’ s external auditor The England entered a second national lockdown earlier this week after the transmission rate of the Covid-19 virus and the number of cases increased across the country .
When asked how @ @ @ @ @ @ @ ’ s auditing process , KPMG UK head of audit Jon Holt said : “ While a significant amount of audit work can be done virtually , there are some aspects that have required our auditors to adapt their procedures – such as using technology to perform inventory counts and inquiries with members of staff .
“ We expect – and are preparing for – the fact that as a result of the pandemic there may be more cases where the right thing to do in the public interest is to delay our @ @ @ @ @ @ @ accounts .
“ It is likely that more work will need to be done by both preparers and auditors – particularly where estimates use recent or future cash flows as the basis of an assumption.
” Read more : UK watchdog to accuse KPMG of breaches in Carillion audit In August fellow Big Four consultancy firm PwC announced plans to delay its own annual results by four months because the coronavirus slowdown means it is unsure of what to pay partners and what to distribute in staff bonuses .

Lockdown expected to delay client results and accounts, KPMG says
The Big Four firm told City AM it is expecting and preparing to delay the announcement of results and accounts of some of the entities it audits.
The current national lockdown across England is expected to delay the announcement of results and accounts of clients, KPMG UK has said.
The Big Four firm told City AM it is expecting and preparing to delay the announcement of results and accounts of some of the entities it audits.
England entered a second national lockdown earlier this week after the transmission rate of the Covid-19 virus and the number of cases increased across the country.
When asked how the new lockdown will affect the giant’s auditing process, KPMG UK head of audit Jon Holt said: “While a significant amount of audit work can be done virtually, there are some aspects that have required our auditors to adapt their procedures – such as using technology to perform inventory counts and inquiries with members of staff.
“We expect – and are preparing for – the fact that as a result of the pandemic there may be more cases where the right thing to do in the public interest is to delay our opinion and the announcement of results and accounts.
“It is likely that more work will need to be done by both preparers and auditors – particularly where estimates use recent or future cash flows as the basis of an assumption.”
In August fellow Big Four consultancy firm PwC announced plans to delay its own annual results by four months because the coronavirus slowdown means it is unsure of what to pay partners and what to distribute in staff bonuses.


cityam--2020-11-06--UK house prices see fastest growth in four years but monthly rate slows

UK house prices grew at their fastest annual rate since 2016 in October , new figures have shown , although month-on-month price growth slowed considerably .
House prices jumped 7.5 per cent in October , according to the Halifax house price index , compared to 7.3 per cent in September .
Read more : Rush to beat stamp duty rise sees UK house prices jump again Yet growth slowed to just 0.3 per cent when looked at on a monthly basis , the slowest expansion in four months .
It followed a 1.6 per cent gain in September .
Property @ @ @ @ @ @ @ during the pandemic despite the worst economic downturn in living memory .
The bullish figures reflect increased demand from people seeking more space during the pandemic .
On top of this , chancellor Rishi Sunak ’ s stamp duty holiday has fuelled the market “ House price growth is still hurtling along , ” said Nicky Stevenson , managing director at estate agent Fine & Country .
“ This eternal summer is simply a side-effect of sustained strong demand.
” However , analysts have warned for some time that the stellar growth is @ @ @ @ @ @ @ factors – such as the rising coronavirus cases and the new England-wide lockdown – are likely to eventually catch up with the market .
Many analysts also predict a sharp drop off in transactions when the stamp duty holiday – which raised the payment threshold for the tax to £500,000 – ends in March .
UK house prices could drop five per cent There was a “ broad continuation of recent trends ” in October , said Russell Galley , managing director at Halifax .
He said the market was “ still predominantly @ @ @ @ @ @ @ houses ” .
Since March flat prices were up by two per cent , compared to a six per cent increase for a typical detached property , he said .
Galley warned that there could be trouble ahead for the housing market , however .
He said the new England-wide lockdown was a factor , and rising unemployment another .
“ We expect to see greater downward pressure on house prices as we move into 2021.
” Howard Archer , chief economic adviser to the EY Item Club , said he suspects “ @ @ @ @ @ @ @ firming of prices will prove unsustainable sooner rather than later ” .
“ October ’ s slowdown in the month-on-month increase reported by Halifax hints that prices may be starting to come off the boil.
” Archer said house prices could well be five per cent lower by mid-2021 than they are now .

UK house prices see fastest growth in four years but monthly rate slows
UK house prices grew at their fastest annual rate since 2016 in October, new figures have shown, although month-on-month price growth slowed considerably.
House prices jumped 7.5 per cent in October, according to the Halifax house price index, compared to 7.3 per cent in September.
Yet growth slowed to just 0.3 per cent when looked at on a monthly basis, the slowest expansion in four months. It followed a 1.6 per cent gain in September.
Property values have shot up in the UK during the pandemic despite the worst economic downturn in living memory.
The bullish figures reflect increased demand from people seeking more space during the pandemic. On top of this, chancellor Rishi Sunak’s stamp duty holiday has fuelled the market
“House price growth is still hurtling along,” said Nicky Stevenson, managing director at estate agent Fine & Country. “This eternal summer is simply a side-effect of sustained strong demand.”
However, analysts have warned for some time that the stellar growth is unlikely to continue. They say economic factors – such as the rising coronavirus cases and the new England-wide lockdown – are likely to eventually catch up with the market.
Many analysts also predict a sharp drop off in transactions when the stamp duty holiday – which raised the payment threshold for the tax to £500,000 – ends in March.
UK house prices could drop five per cent
There was a “broad continuation of recent trends” in October, said Russell Galley, managing director at Halifax. He said the market was “still predominantly being driven by home-mover demand for larger houses”.
Since March flat prices were up by two per cent, compared to a six per cent increase for a typical detached property, he said.
Galley warned that there could be trouble ahead for the housing market, however. He said the new England-wide lockdown was a factor, and rising unemployment another.
“We expect to see greater downward pressure on house prices as we move into 2021.”
Howard Archer, chief economic adviser to the EY Item Club, said he suspects “the current robust housing market activity and firming of prices will prove unsustainable sooner rather than later”.
“October’s slowdown in the month-on-month increase reported by Halifax hints that prices may be starting to come off the boil.”
Archer said house prices could well be five per cent lower by mid-2021 than they are now.