House prices rose again in November, recording their fastest rate of growth in 15 years as the market continues to break new records.
The average property price gained 1pc last month to hit £272,992 – the fifth consecutive month of growth and a new record high.
The figures mean the quarterly rate of house price inflation is now at its strongest level since late 2006.
Typical values are up by almost £13,000 since June and more than £20,000 since this time last year, according to the latest Halifax house price index.
Eurozone economy grows as households splash out
The eurozone economy grew 2.2pc in the third quarter, driven largely by a rise in household expenditure as lockdown measures eased.
Household spending contributed 2.1pc to the GDP growth, while government outlays lifted it by 0.1 percentage points, according to the latest figures from Eurostat.
Employment also increased by 0.9pc in the three months to the end of September, showing a positive rebound across the continent.
However, output remained 0.3pc below its pre-Covid levels at the end of 2019, while a fresh wave of infections and new lockdowns in Austria and Slovakia – alongside surging inflation – threatens to derail the recovery.
SSE hits back at Elliott over break-up calls
SSE has hit back at Elliott after the activist investor ramped up the pressure on the energy giant to break up its business.
In response to a letter published by Elliott this morning, chief executive Alistair Phillips-Davies said separating SSE’s renewables business did not support growth and would harm its ability to fund the shift to net zero.
Separation risks valuable growth options across the clean energy value chain, would jeopardise our ability to finance and deliver the major infrastructure the UK needs to create jobs and achieve net zero, and would lose shared skills that benefit the group.
Separation does not support the financing of our core growth businesses and would rule out adjacent growth options, as well as reducing the resilience of the business model – it is not the right outcome to maximise value for shareholders or our other stakeholders.
Gas prices jump as US weighs mulls more Russia sanctions
Gas prices are on the rise again as traders weighed the risk of fresh sanctions against Russia if it invades Ukraine.
US President Joe Biden is due to hold talks with Russian President Vladimir Putin later today to warn Moscow of severe economic penalties if it moves troops over the border into its neighbour.
The rising tensions add to existing worries over Russian gas supplies to the continent, which has already lagged in recent months, pushing prices ever higher.
Benchmark Dutch prices rose as much as 7.6pc this morning, while the UK equivalent gained up to 7.1pc.
While prices have eased back from record highs in reached in October, analysts and traders expect futures to remain high through the winter as the continent’s gas inventories are at their lowest in more than a decade.
Instagram tells users to ‘take a break’ from scrolling
Instagram is launching a new feature that encourages users to take a break from scrolling as the social media giant battles criticism that its app harms children’s wellbeing.
The company will let users opt to see pop-up messages when they’ve spent a lot of time looking at a particular topic, prompting them to explore other subjects.
Users can also be nudged to take a break after they’ve spent 10, 20 or 30 consecutive minutes on the app.
It comes amid growing scrutiny on Facebook-owned Instagram after documents released by whistleblower Frances Haugen showed the company knew how much harm it was having on younger users.
Instagram boss Adam Mosseri is due to appear in front of US politicians on Wednesday at a hearing into children’s safety on social media.
Pound stumbles ahead of Bank of England meeting
Sterling is faltering this morning as traders weigh up the chances of an interest rates rise at the Bank of England’s key meeting next week.
The pound pushed up as much as 0.1pc against the dollar earlier in the day, but is now flat at around $1.3256. Against the euro, it ticked up 0.1pc to 85.21p.
Attention is turning to next week’s MPC meeting, with some betting the central bank will leave rates unchanged again, waiting until February for the first move.
In a note published on Monday, JP Morgan said it reckoned the BoE would buy more time as “the emergence of the omicron variant has introduced new uncertainty about the timing of the first tightening”.
Ashtead cashes in on reopening boom
Another big winner this morning is Ashtead, the FTSE 100 firm specialising in industrial equipment rentals.
Ashtead posted first-half revenue of $3.9bn (£2.9bn) – up 18pc on last year. Growth came largely in the second quarter, as demand bounced back strongly from its pandemic slump.
The company hailed a record performance and pointed to strong momentum as the trend for renting equipment continues to gather pace. It announced an interim dividend of 12.5p – up by almost a third.
Shares rose as much as 4pc following the update, before paring gains to rise 2.7pc.
Liontrust snaps up Majedie in £120m asset manager merger
Liontrust has agreed to buy boutique fund manager Majedie for up to £120m in the latest example of consolidation in the sector.
FTSE 250-listed Liontrust said the deal, which consists of £97m in shares and the remainder in cash, will boost its assets under management and administration to £42.3bn.
It’s Liontrust’s third takeover in just over three years, following its 2019 takeover of Neptune Investment Management and a deal for Architas last year.
As part of the deal, Majedie’s investment team will join Liontrust and become its global fundamental team, led by co-founder James de Uphaugh.
Shares in Liontrust gained 1.8pc following the announcement.
Oil prices rise as omicron fears fade
As stocks push higher this morning, oil prices have also gained ground amid hopes the omicron variant may not be as bad as initially feared.
West Texas Intermediate is up 2.4pc to more than $71 a barrel after closing 5pc higher on Monday, while benchmark Brent crude has gained 2pc.
The emergence of the omicron strain sparked fears of dented demand over the winter, but the initial data suggests the rise in cases hasn’t overwhelmed hospitals so far. Still, fresh travel restrictions will put some pressure on jet fuel demand.
Ferguson jumps as sales top estimates
Let’s take a closer look at Ferguson, which is leading the FTSE 100 risers this morning.
The company, which distributes plumbing and heating products, topped expectations with revenue of $6.8bn (£5.1bn) in the first quarter – up 27pc year on year.
Ferguson said price inflation had risen to the low teens over the period, but said it had mitigated this impact to deliver strong profit growth.
Chief executive Kevin Murphy said: “Given the strong momentum in the business and the agility of our business model, our full-year expectations have increased.”
Shares rose 4.7pc following the update.
Veolia and Suez given five days to avoid competition probe
French waste management firm Veolia and Suez have been given five days to address the competition watchdog’s concerns about their planned merger or face an in-depth investigation.
The Competition and Markets Authority (CMA) said the tie-up, worth almost €13bn (£11.1bn), could lead to higher prices for councils and taxpayers in the key waste and recycling markets.
The CMA said it had received complaints from customers and other firms in the market during its initial investigation and that it had found a number of competition concerns which could see prices increase for councils and a reduced quality of services.
The watchdog said it will refer the deal for an in-depth investigation if the companies did not put forward suitable proposals to address the concerns within five working days.
Andrea Coscelli, chief executive of the CMA, said:
Councils spend hundreds of millions of pounds on waste management services.
Any loss of competition in this market could lead to higher prices for local authorities, leaving taxpayers to foot the bill, and reduced innovation to achieve net-zero targets.
Everyone in the UK uses waste and recycling services in some way; it is therefore vital that this deal is subject to more detailed scrutiny if our concerns aren’t addressed.
FTSE risers and fallers
The FTSE 100 is now up more than 1pc, building on strong gains to kick off the week as jitters over the omicron strain recede.
Miners are among the biggest gainers on the blue-chip index, buoyed by rising copper prices after China loosened monetary policy to help shore up its struggling property sector.
A string of upbeat corporate results also boosted the index.
Plumbing parts group Ferguson is up 4.7pc, rising to the top of the FTSE 100 after forecasting strong revenue growth.
Equipment rental firm Ashtead has also risen 2.3pc after raising full-year forecasts and hiking its dividend.
The domestically-focused FTSE 250 is up just shy of 1pc, supported by recovery in travel and leisure stocks.
Britons to fork out for Christmas dinner as inflation surges
Inflation has driven up the average price of a Christmas dinner, but Britons show no signs of tightening the purse strings just yet.
A festive meal for four now costs £27.48 on average, up 3.4pc on last year. It comes amid wider grocery inflation of 3.2pc – its highest level since June 2020.
However, this hasn’t had a major impact on shopper behaviour yet, with consumers still splashing out on premium own-label ranges, according to new figures from Kantar.
Overall, grocery sales fell by 3.8pc over the 12 weeks to 28 November 2021 compared to last year, though they remained above pre-pandemic levels.
Tesco won 0.7 percentage points of market share this period, the retailer’s biggest jump since 2007.
Activist Elliott pushes for break-up of SSE
Activist investor Elliott has dialled up the pressure on SSE, pushing for a break-up of the company and bemoaning its failure to address concerns about corporate governance.
In a letter to chairman John Manzoni, Elliott said the energy giant had failed to provide a convincing reason for why it wasn’t pursuing a listing of its renewables business – a move the activist said would create £5bn of value.
The activist, which is a top five investor in SSE, urged the firm to provide a “detailed and credible plan” to address investor concerns.
It comes after SSE last month said it wouldn’t be breaking itself up, saying this would lead to £95m a year of lost value. It also announced a dividend cut to 2024 to fund a £12.5bn increase in spending on net zero infrastructure over the next five years.
FTSE 100 jumps at the open
The FTSE 100 has gained ground at the open, building on strong gains to kick off the week.
The blue-chip index is up 0.7pc at 7,285 points after rising 1.5pc on Monday.
British American Tobacco hails vaping boost
British American Tobacco said it’s gained around 3.6m users of its vaping, heated tobacco and oral products since the start of the year as it continues to shift its business away from cigarettes.
The rise in vapers – which is bigger than in all of 2020 – takes the total number of customers for BAT’s non-combustible products to 17.1m at the end of September.
The tobacco giant, which owns brands including Pall Mall and Camel, still makes a loss on these products, but it reported a narrowing of these losses for the first time. The company is targeting profitability by 2025.
Revenue grew 5pc over the period, in part thanks to the rise in vaping, but also due to traditional cigarette sales.
More expert reaction: Supply shortage is ‘biggest issue’
Anna Clare Harper,chief executive of property consultancy SPI Capital, agrees that house price growth will slow, but says low interest rates will support prices in the short term.
Going forward, it is likely that the pace of growth will slow, in particular through the colder winter months which make it harder for many potential buyers logistically, with fewer daylight hours for viewings.
However, growth is likely to continue while interest rates remain low, since the cost of holding on to a property is cheap, and competition amongst lenders means low cost, fixed rate mortgages are widely available.
The biggest problem the housing market faces is the shortage of available stock, which means that prices are likely to remain strong. This issue is unlikely to change anytime soon due to higher costs of materials and labour, a backlog of planning applications and a growing burden of rules and regulations for property developers to contend with.
Expert reaction: Uncertainty weighs on house market
Russell Galley, managing director at Halifax, warns current house price levels are unlikely to last long.
The performance of the market continues to be underpinned by a shortage of available properties, a strong labour market and keen competition amongst mortgage providers keeping rates close to historic lows. Those taking their first step onto the property ladder are also playing an important role in driving activity, with annual house price inflation for first-time buyers at 9.1pc compared to 8.8pc for homemovers […]
Looking ahead, there is now greater uncertainty than has been the case for quite some time, with interest rates expected to rise to guard against further increases in inflation. Economic confidence may be also be dented by the emergence of the new omicron virus variant, though it remains far too early to speculate on any long-term impact, given insufficient data at this stage, not to mention the resilience the housing market has already shown in challenging circumstances.
Leaving aside the direct impact of a possible resurgence in the pandemic for now, we would not expect the current level of house price growth to be sustained next year given that house price to income ratios are already historically high, and household budgets are only likely to come under greater pressure in the coming months.
House prices surge again
The UK house market is breaking records once again, with prices growing for the fifth consecutive month to another new high.
Average house prices added another 1pc in November to hit £272,992. Quarterly house price growth is now at its strongest level in 15 years.
The numbers show continued resilience in the market even after the end of the stamp duty holiday, which helped spur on activity during the pandemic.
This points to other underlying factors supporting prices, including a supply shortage and cheap borrowing rates.
5 things to start your day
1) Block Chinese takeover of lithium miner, ministers told Opponents fear allowing Bacanora Lithium to be bought risk giving Communist China even greater production control
2) Donald Trump’s new social media venture hits obstacle Two regulators request records from Digital World regarding trading procedures and investor identities
3) Guardian under pressure to stop spilling red ink News publisher’s trust announces governance shake-up
4) Brussels attack on gig economy sends shares in Deliveroo and Just Eat tumbling Takeaway firms hit as EU prepares to hand employment rights to millions
5) Cyber attack forces Spar stores to close Card payment and IT systems at the convenience store chain affected by the online incident
What happened overnight
Asian stocks edged higher on Tuesday on receding worries about the impact of the omicron variant while Chinese markets gained after the central bank there eased monetary policy.
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.6pc after declining on Monday to the lowest level in one year.
The benchmark has lost 6pc so far this year, with Hong Kong markets figuring among the big losers, while Indian and Taiwanese stocks outperformed.
On Tuesday, Australia’s S&P/ASX200 rose 0.5pc, while Japan’s Nikkei advanced 1.1pc as risk-on sentiment pushed US stocks higher.
China’s CSI300 index gained 0.7pc and Hong Kong’s Hang Seng Index advanced 1.3pc as the central bank freed up $188 billion in liquidity through a policy easing.
Coming up today
- Corporate: Paragon Banking Group, Renew Holdings, CareTech (Full-year results); Babcock, Supreme, Mercia Asset Mgmt (Interim results); Ashtead Group, British American Tobacco, Ferguson (Trading update)
- Economics: Kantar supermarket sales (UK), ONS mergers and acquisitions (UK), Consumer credit (US)