House prices predicted to soar 
PwC, one of the big four accountancy practices, has predicted in their latest economic outlook, UK house prices could rise as much as 35 per cent by the end of this decade. Should this prove correct, average house prices will rise from the £242,000 recorded at the end of 2013, to £328,000 by the end of 2020. Given this scenario, average house prices would represent 10 times the average salary of £27,000. This figure assumes average wage growth of 4 per cent a year. They predict average house price rises of 8 per cent this year, but with London prices rising further at 13 per cent. As detailed above, in central London the situation is dramatically inflated. Currently average central London property prices are expected to reach £500,000 by the end of this year, but then accelerate to £565,000 by the end of the decade; according to John Hawksworth and Will Zimmern, the PwC economists. Their report states: “The UK housing market has leapt back into life. Prices across all regions are accelerating in stark contrast to the generally weak picture (at least outside London) seen until 12-18 months ago.” Addressing the potential “bubbly” housing market, they say that whilst London prices may be a cause for concern, they believe as the Bank of England has already taken measures to reign in mortgage lending, especially for higher loan-to-income borrowers (defined as those attempting to borrow more than 4.5 times their income), and limit these loans to 15 per cent of any lenders mortgage book; they say: “We expect the housing market will cool on its own and actually in the UK as a whole we don’t think there is a bubble.” As a caveat, Mr. Zimmern closed: “in the longer term, measures to boost housing supply more directly should be the priority”
Markets (July) (Data supplied by the Outsourced Marketing Department) Geopolitical events continue to hang over the equity markets, with continuing bloodshed in the Ukraine invoking punitive economic sanctions against Russia, massive loss of life in the Gaza Strip and Argentina defaulting on its national debt on the last day of the month. In the UK the FTSE100 struggled to make any ground, closing July at 6,730.1, down a marginal 0.2% on the month. The wider FTSE250 fared worse, losing 1.45% at 15,495.64 and the AIM market compounding the losses at 2.14% to finish at 768.56. The USA markets followed suit, as the Dow Jones index lost 1.56% of value ending the month at 16,563.3, and the technical stocks orientated Nasdaq also losing 0.87% to close at 4,369.77. There was no respite in Europe either, as the Eurostoxx50 headed south, finishing July at 3,115.51, down 3.5% on the month. In Japan, however, we saw a reverse of fortunes with the Nikkei 225 managing to gain 3.03% to finish at 15,620.77. On the foreign exchange markets, UK sterling continued to be in demand, despite the fear of currency flight by Russian oligarchs, as a result of threatened sanctions. Against the US Dollar it closed at $1.68, off 1.75% on the month but up 0.8% against the Euro at €1.26. The Euro itself lost 2.19% against the US Dollar, closing July at $1.34. Surprisingly, despite the global unrest, the price of oil remained subdued; with the benchmark Brent Crude price falling just short of 6% lower at $106.02 a barrel. Likewise gold, the usual safe-haven asset in times of unrest, fell by 3.07% to close out July at $1,284.92 a troy ounce. Download full report here

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