16.12.11 by Rob Gill
2011 Predictions – So How Did We Do?
Earthquakes, Tsunamis, Royal Weddings, The Arab Spring, Osama Bin Laden found and killed, the London riots, near bankruptcy and credit downgrade of the world’s largest economy, the death of Steve Jobs.....in an extraordinary year it’s even more extraordinary that one story has rumbled on to overshadow all others: Europe.
The ongoing failure of the continent’s leaders to deal with their sovereign debt issues and secure a big enough “deal” to safeguard the future of the Euro has been well documented, and it certainly isn’t over yet. More on that to follow in our predictions for 2012, but in the meantime it has had quite an effect on markets over the last 12 months and indeed, on our own predictions made back in January.
House Prices London and the South East
Prediction: up 3%.
Actual: 3.6%
The Nationwide House Price Index shows that the price of a property bought in Q4 2010 would have increased by an average of 3.6% throughout the London and South East regions.
Despite the headwinds created by the Eurozone crises, the London and South East property markets continued to fare well, driven by a combination of stock shortages, foreign buyers, plus a feeling that life’s been on hold long enough and “that” move couldn’t be put off any longer. The credit crunch and its effects have been with us for 4 years now, life must go on.
UK Base Rate
Prediction: end 2011 at 1.5%
Actual: 0.5%
The Monetary Policy Committee has continued to ignore stubbornly high inflation for the duration of the year, insisting it will come crashing down in a matter of months and leaving the base rate at its historic low of 0.5%. We have not yet seen this predicted drop in inflation, but with VAT rises set to drop out of calculations in the coming months that will be the time to really judge just how sticky this inflation really is.
Although as early as April this year the markets had priced in an expected 0.5% rise, this viewpoint changed dramatically as events in the Eurozone suddenly looked borderline apocalyptic, something that has happened more than once this year.
We have a little more sympathy this time round given these events and, from May onwards at least, the MPC had very little choice, and even voted unanimously for a further £75bn of Quantitative Easing in November.
FTSE 100
Prediction: end the year 6,700
Current level: 5,424 (14:28 15 December 2011)
Having held around the 6,000 level until July, the FTSE followed stock markets globally in retreating significantly as the Eurozone crises hit one stumbling point after another; from summits which promised much and delivered little, to referendums threatened then withdrawn as one leader followed another into the abyss.
The FTSE rallied over 20% from July onwards in 2010, this time round however any such progress was well and truly stymied by the Eurozone.
Our predictions have been given almost as much of a battering as global stock and credit markets by the Eurozone crises. The one comfort we can draw is that property looks to be regaining genuine safe haven status, giving home owners and investors alike a valuable port in this particular storm.
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Monty’s Mortgage Blog
13.02.12
Mortgage Market Watch 6
There I was pondering what to write this week and all of a sudden we seem to have been inundated with some stat-tastic facts and figures from the Office of National Statistics and the good ol’ CML, as well as a controversial policy change from a major lender. But first the headlines, Swaps have risen slightly, apart from 1 year money, whilst LIBOR has remained steady.
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