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More than 10,000 extra homes planned for Shropshire – with some on green belt land

Shropshire Council is reviewing its local plan, moving it forward by ten years.

The plan is now set to be presented to cabinet on October 18.

Although almost 19,000 homes are already set to be built in the county, the plan says a further 10,000 will be needed by 2036.

Adrian Cooper, planning policy manager at Shropshire Council, said: “Shropshire Council has got a local plan already, the job at hand is keeping it up to date.

“The current plan covers 2006 to 2026, the new plan we’re working on is moving forward by 10 years to 2016 to 2036.

“Back in January we asked the public the big questions in an eight-week consultation and we had about 400 responses from across different sectors.

“This next step is about responding to these comments and starting to take decisions about the preferred approach for the new plan.

“We’ve gone for the highest housing growth, there’s a nine year overlap between the current plan and the plan we’re doing so we’ve got quite a lot that we can count towards that 28,000.

“If you add up those houses that have already been built it comes to 18,583, so the new housing required by 2036 is 10,347.”

About 300 hectares of employment development would be earmarked under the new plans.

Mr Cooper added: “We’re looking to deliver a balance between the level of housing and employment.”

The extra 10,347 houses are mostly planned for the towns in Shropshire, with 30 per cent planned for Shrewsbury, 24.5 per cent planned for the bigger towns such as Market Drayton, and Whitchurch, 18 per cent for smaller towns such as Much Wenlock and Bishop’s Castle, and 27.5 per cent for rural areas.

Mr Cooper added: “It will focus the development in towns. About 70 per cent of the development will be in towns.”

Green belt land in Shropshire could also be released for development under the new local plan.

Mr Cooper said: “The green belt is very specific planning designation.

“Shropshire’s green belt was established in the 1970s, it includes the land east of the River Severn and south of the A5, land around Shifnal, Claverley, Alveley, Quatt.

“The planning inspector we had last time instructed us that we had to do this.

“We’ve got a specialist consultant who has done a piece of work which will be published looking at the green belt in Shropshire and has divided it up in manageable chunks.

“They have measured how well these chunks of land are performing as green belt.

“We will then look at what the impact would be if we were to release that land. It then falls to Shropshire Council to see how we want to run with that.”

The housing growth of 28,000 is equivalent to an average of 1,430 homes being built a year.

Ian Kilby, planning services manager, said: “In the recession there were about 800 houses built per year, and last year we had 1,910 delivered.

“It’s only a few years ago that next to no houses were being built.

“There was significant more development last year that what would be happening.”

But as of this year, there were more than 11,000 cases where planning permission has been granted for homes, where construction is yet to start.

Mr Cooper said: “We are to some extent dependent on our colleagues in the industry to build the houses. If they don’t build them it impacts on us.”

Mr Kilby said: “We’re trying to get the industry to raise its game on quality, so this year we’ve brought in industry awards.”

There will now be an eight-week public consultation on the plan, which will start on October 27 and close on December 22.

Source: Shropshire Star

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Bank of England under pressure for interest rate rise after ONS error

The UK’s official statistics agency has added to the pressure on the Bank of England over whether to raise interest rates as soon as next month after admitting it underestimated the pace of rising labour costs.

The Office for National Statistics said on Monday it made a mistake in its original calculations for the growth in unit labour costs, which is the price paid by employers to produce a given amount of economic output. The measure stood at an annual 2.4% in the three months to June, as opposed to the 1.6% initially published by the country’s official statistics body on Friday.

The revision could indicate momentum for wages in the UK, which is a factor under close observation from Threadneedle Street, as it looks to raise interest rates for the first time in more than a decade. Rising labour costs could indicate economic strength and justify a rate hike.

Howard Archer, the chief economic adviser to the EY Item Club, said the change “may facilitate” a November rate hike by the Bank. The cost of borrowing could increase from 0.25% to 0.5% should the monetary policy committee decide the economy is able to withstand the increase.

Despite the positive signal for the economy, there have been numerous readings to paint a much weaker picture. The construction sector is reporting signs of a slump, while the Organisation for Economic Co-operation and Development – a thinktank for developed economies – has warned that UK growth will slow next year.

Analysts at the Swiss bank UBS said on Monday a rate hike could also “exacerbate” potential headwinds for the UK economy generated by the Brexit process. “We think there is a strong case for erring on the side of caution,” they wrote.

Despite the lowest levels of unemployment since the mid-1970s, wages for British workers have failed to rise above the rate of inflation. Pay growth is rising nonetheless, although it lags behind a spike in the cost of living from the increasing cost of imports linked to the weak pound.

While the increase in unit labour costs potentially indicate an increase in wages for British workers, the increase could have been driven by non-wage elements such as taxes and pensions contributions paid by employers. This would weaken the ground for increasing rates, according to economists at Barclays.

However Mark Carney, the Bank of England governor, has previously said that rising labour costs could pave the way for a rate rise. Speaking over the summer, he justified the reluctance of the monetary policy committee to increase rates due to “subdued” wages and labour costs.

The ONS apologised for the error, saying it was a consequence of income data from the second estimate of GDP being using instead of data from the quarterly national accounts. “We have corrected this error,” the organisation said.

Source: The Guardian

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The UK housing market’s perfect storm, and five steps to avoid it

Britain’s housing market is dysfunctional. The rate of home ownership is plummeting, and the average age at which people become owner-occupiers is rising. In London and other property hotspots, the rents are unaffordable for those working at the sharp end of the service sector. Homelessness is on the up.

William Beveridge identified housing as a postwar challenge for Britain back in 1942 when he named squalor as one of the “giant evils” that barred the way to progress. Three-quarters of a century later, the giant still is alive and well.

One curious thing about the housing market is that it is not really a market at all, at least not in the classic sense. As every student learns on their first day of economics, markets work through the law of supply and demand. Low prices act as a disincentive to produce but as prices rise so supply increases. Conversely, demand falls as prices rise because buyers consider products too expensive. There is a point where there is neither too little nor too much supply, but just the right amount to satisfy demand.

The world of real estate, however, is a million miles away from the textbooks. Economic theory suggests that homeowners would be encouraged to put their homes on the market when prices are rising, and that potential buyers would lose interest until prices start to fall.

This is not what tends to happen. Homeowners hold on to their homes because they assume that their property will continue to go up in price. Nor do rising prices dampen demand. Rather, people think they had better scramble on to the ladder before it is too late.

Policy decisions also matter. Britain is a small country with strict planning laws, which makes it harder for the supply of new homes to respond to rising demand than it would, for example, in the United States. The tax treatment of domestic property is generous, meanwhile, with no capital gains tax on prime residences and a ludicrously outdated council tax system.

The mismatch between supply and demand has been made worse still in recent years by the government’s help to buy scheme, whereby people can top up a 5% deposit on a new-build home with a 40% state loan in London and 20% elsewhere in the country.

The scheme has led to still higher prices without doing much to boost supply, but that didn’t stop Philip Hammond from announcing last week that he was putting another £10bn into it. This dwarfed the £2bn the prime minister announced for the building of new affordable homes.

Help to buy exists because the combination of rising prices and stagnant wages has made life tougher for buyers. In 2002, the median house price in England was 5.11 times average earnings, according to the Office for National Statistics. The ratio had risen to 7.14 by the time the financial crisis put an end to the noughties property boom, after which it slipped back to 6.39 during the recession. It then started rising again and hit 7.72 last year. The trend has been even more marked in London, where the house price to earnings ratio rose from 6.9 to 12.88 between 2002 and 2016.

Those on the lowest incomes in London have fared worst of all. In 2016, someone among the bottom 25% of earners looking to buy a property in the cheapest 25% band would expected to pay 13.52 times their annual earnings. In 2002, the figure was 7.11.

These figures give rise to two questions. How has it been possible for house price increases to outpace wage rises to such an extent? And how are people managing to keep up the payments on the mortgages required for such expensive homes?

The answer to both questions is the same. The monetary stimulus provided by the Bank of England – ultra-low interest rates and quantitative easing – has put a rocket under prices, but slashed the cost of servicing a mortgage. Although the price of the average home in London has increased from £174,000 to £435,000 in the past 15 years, the fact that official interest rates have been 0.5% or lower for getting on for nine years has meant that the share of income spent on the mortgage has not risen. It has been a different story for those in the private rented sector, who pay almost twice the housing costs of those buying a home. It is estimated that a quarter of households who rent privately in London spend more than half of their income on rent.

Anyone who imagines that this state of affairs can continue indefinitely is kidding themselves. There comes a point when prices become so hot that buyers find their monthly payments too much of a stretch even with interest rates at rock bottom levels. The fizzling out of house price inflation during the course of 2017 suggests that moment has arrived.

There comes a point too when pressure starts to build for interest rates to rise. That moment is also upon us, with the Bank of England gearing up to tighten policy next month. In reality, the Bank’s freedom of movement is limited and it is inconceivable that interest rates will return to their pre-recession level of 5%, or anything like it, but the very high ratio of house prices to earnings means that even a modest increase in borrowing costs will reduce discretionary household spending at a time when it is already being squeezed. All that stands between Britain and a rip-roaring housing crash is Threadneedle Street’s willingness to spare borrowers from chunky increases in mortgage rates.

The alternative to yet another boom-bust is to try to construct a saner housing market. There are five steps to this. The first is to stop doing more harm through counter-productive policies such as help to buy. The second is to change the tax system, starting with council tax reform and action to prevent land hoarding. The third is to increase supply, and the housing expert Kate Barker has suggested ways the government could do so, such as identifying large sites abutting urban areas and acquiring them at a modest premium to the value of their existing use.

Step four is for the Bank of England to adopt a kid-glove approach to raising interest rates. The idea is to engineer a gradual fall in real – inflation-adjusted – house prices, not a recession that leads to a sharp increase in unemployment.

Step five is to find a way of boosting wages, because there are two ways in which houses can become more affordable. Earnings can rise or house prices can fall. The housing market will only become less dysfunctional when Britain becomes more productive.

Source: The Guardian

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Don’t count on our independent Bank to stop Brexit disaster

In common with Sir John Major, Denis Healey, the Bank of England’s historian David Kynaston, and former governor (1983-93) Robin Leigh-Pemberton, I had great reservations about the granting of independence to the Bank.

By independence – more precisely “operational independence” – was meant control of monetary policy: giving the Bank the power to change interest rates, as opposed to merely offering advice to chancellors and prime ministers that could be ignored.

We doubters were mindful of the excessively deflationary bent of the Bank during the interwar years. When the Bank was nationalised by the Attlee government in 1946 – a reaction to Labour’s problems with the economy and the Bank’s influence in the 1920s – the Labour peer Lord Passfield said, recalling those troubled interwar years: “Nobody told us we could do that.”

It was with this history in mind that I was so shocked when Gordon Brown, encouraged, indeed ably assisted, by Ed Balls, granted the Bank independence in a first dramatic act after the 1997 general election.

This year sees the 20th anniversary of the granting of independence and, given the depth of the economic problems facing this country, it was a good moment recently for the Bank to hold a public conference, at which Brown, Balls and others were able to reflect on the record of their creation.

It is also good timing that Kynaston’s magnificent Till Time’s Last Sand: A History of The Bank of England 1694-2013 has recently been published.

At the conference, most of the media coverage concentrated on a speech by Theresa May that had little to do with the Bank, but was billed as a defence of capitalism at the end of a week when most of the press had done its best to pillory Jeremy Corbyn and John McDonnell for their leftwing programme.

But the high spot of the conference was a brilliant presentation by Brown, in which he acknowledged what had gone wrong with the original concept.

Few were in doubt that the monetary policy committee had done a pretty good job. The problem had been with the independent Bank’s approach to financial stability, or the lack of it. Inflation has hardly been a problem these past 20 years. It is an open question to what extent this has been due to the central Bank, as opposed to the impact of globalisation and competitive forces emanating from China. Nevertheless, operational independence in monetary policy has worked better than some of us feared; the point was made at the conference that knowledge of the inflation target has probably had a beneficent influence on wage bargainers who, in the past, would assume the worst of the prospect for inflation, and bargain everyone into the kind of wage-price spiral that only ends in disaster.

The governor of the Bank of England, Mark Carney, is threatening a rise in interest rates.
 The governor of the Bank of England, Mark Carney, is threatening a rise in interest rates. Photograph: Afolabi Sotunde/Reuters

But back to financial stability. It was a theme of the 20th anniversary conferencethat the newly independent Bank had been asleep at the wheel, both in the run-up to the onset of the financial crisis in 2007 and the immediate aftermath. In particular, the blame fell on the then governor Mervyn, now Lord, King, for allegedly having placed all the emphasis on monetary policy, at the expense of the Bank’s overall responsibility for the financial system; for the Bank still possessed this function, even though day-to-day supervision had been hived off to the Financial Services Authority.

Brown was scathing about the behaviour of the governor he had appointed, not only for going on about “moral hazard” – ie being reluctant at first to bail out banks for fear it would set a bad example, but also for publicly offering advice on fiscal policy. The deal was supposed to be that the chancellor would not intervene in monetary matters, nor the Bank in matters of public expenditure and taxation– which King did, negatively, when the economy was nowhere near enjoying sustained recovery from the crisis.

All in all, the independent Bank did not emerge well from the crisis, as Kynaston underlines in his book, although he goes out of his way to be fair, noting that some senior officials were not unaware of mounting problems at Northern Rock and elsewhere. Anyway, both Brown and Balls have concluded that lessons have to be learned, and that there needs to be more cooperation between Bank and government in future.

One of the ironies they concede is that, by removing decisions on interest rates, which used to take up a lot of ministerial and Treasury time, the hope was that the Treasury would be able to concentrate more on wider economic policy.

Well, to judge from the state of the economy now, there is a lot left to be desired when it comes to the achievement of a successful economic policy. This was all too apparent last Monday when, at that bizarre Conservative party conference in Manchester, chancellor Philip Hammond devoted his main thrust to attacking Labour, in the face of whose success with the younger generation the Tories are running scared.

But the problems of the economy now are nothing compared with what is to come if our leaders, and the people they are supposed to lead, do not come to their senses and recognise that Brexit has to be stopped. The present Bank governor Mark Carney is well aware of the absurdity of Brexit, but his powers are reduced to damage limitation. Which makes me wonder why a manifest slowdown in the economy now is being met by threats of a rise in interest rates.

This Brexit business is an unmitigated disaster. As a senior European politician recently observed of the British: “It was heroic of you in 1940 to stand on your own against your enemies; it is ridiculous in 2017 to stand on your own against your friends.”

Source: The Guardian

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Another dent to landlords’ profits

Renting out a house as a multiple-occupancy let can be very lucrative, allowing landlords to rent out rooms on an individual basis rather than via one tenancy. However, government plans to crack down on the sector are about to make this type of investment less attractive than it once was.

The Department for Communities and Local Government published a consultation paper on houses of multiple occupancy (HMOs) last October, setting out its plans to “raise the standards”. The rules are expected to come into effect next spring, later than expected (probably because of June’s surprise general election). But despite the fact that thousands of properties could be affected by the government’s proposals, as many as 85% of landlords are still unfamiliar with the proposed changes, according to a survey by Simple Landlords Insurance.

One of the main aims of the legislation is to widen the definition of properties that require a licence to be legally let. At the moment, a property is classed as being a HMO if three or more people from more than one household live there, and share toilet, bathroom or kitchen facilities. Currently, only houses that are classed as “large HMOs” – properties rented to five or more people (from more than one household) – and set over three or more storeys, need to have a licence. However, the new legislation would mean that all large HMOs – regardless of the number of storeys – would require a licence. The government also plans to extend mandatory licensing to flats above and below business premises. Currently around 60,000 HMOs across the UK require a licence, but the government reckons that a further 174,000 properties will need a licence if the rules come in.

Although the cost of a licence will vary between local authorities, a five-year licence typically costs about £500. Landlords may also be subject to new, enhanced “fit and proper” tests before they can be granted a licence, which, if introduced, would probably require them to submit a Disclosure and Barring Service (DBS) check, at a cost of £25. Note that if your HMO should be licensed, but isn’t, you can be fined and ordered to repay up to 12 months’ rent.

The government also plans to impose a new minimum room size of 6.52 square metres for a single person, in line with the current standard for overcrowding. For couples, the minimum is likely to be 10.23 square metres. Importantly, this new minimum may affect the number of rooms in a home that can be legally let. For example, if a “box room” in a four-bedroom student house falls below the minimum room size, the property would be considered a three-bedroom house. Landlords letting a room smaller than the prescribed dimensions would be liable for an unlimited fine or a civil penalty of up to £30,000. Finally, owners of licensed HMOs will need to provide “adequate” waste-disposal facilities.

Once the rules are confirmed, landlords should be careful to budget for any added expense they bring. The changes also come at a time when many landlords are already under increasing financial pressure, with lenders now required to take a more stringent approach to buy-to-let mortgage applications from those who own four or more mortgaged properties. That’s on top of the recently introduced 3% stamp-duty surcharge on second homes, and the scaling back of mortgage interest tax relief. If you didn’t already have the message, buy-to-let looks like an increasingly risky bet as an investment.

Yours for £25m: a 30ft hole

A Grade II-listed London townhouse with a 30-foot hole in its garden has been put on the market for £25m, says Sean Morrison in the Evening Standard. The Knightsbridge house was once owned by conman Achilleas Kallakis, who ordered the excavation of the home’s “mega-basement”, which was designed to hold a swimming pool, spa and car-lift. However, workers abandoned the job in 2008 when Kallakis was convicted of 21 charges related to his property business, including conspiracy, forgery and money laundering. In December, Kensington and Chelsea council approved plans to build an “astonishing” nine floors of living space, featuring a pool, underground parking and reception areas.

Source: Money Week

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UK house prices rise at fastest pace since February

LONDON (Reuters) – British house prices regained momentum in September, recording their fastest annual rise since February as buyers shrugged off the possibility of higher Bank of England interest rates, figures from major mortgage lender Halifax showed on Friday.

House prices rose 0.8 percent on the month in September alone, beating all economists’ forecasts in a Reuters poll, while prices in the three months to September were 4.0 percent higher versus average expectations of a 3.6 percent rise.

But economists doubted the figures, which contrast with more subdued numbers from rival lender Nationwide, heralded a real end to the slowdown in British house prices seen since the start of the year.

“Despite some overall firming in mortgage activity from mid-2017 lows, we remain sceptical about any marked housing market upturn,” Howard Archer of consultancy EY ITEM Club said.

British house prices were likely to be “muted” for the rest of the year and would rise by 2-3 percent in 2018, he predicted.

Halifax said prices were boosted by a lack of properties for sale and solid growth in full-time employment, though a squeeze on spending power from higher consumer price inflation and the high cost of property might limit future demand.

Most economists expect the BoE to raise interest rates for the first time in more than a decade next month. But Halifax said it did not expect this likely increase in official rates to 0.5 percent from 0.25 percent to hurt the housing market.

“There has been recent speculation on the possibility of a rise in the Bank of England base rate. We do not anticipate this will have a significant effect on transaction volumes,” said Russell Galley, managing director of Halifax’s community bank.

Halifax is part of Lloyds Banking Group (LLOY.L), and is one of Britain’s two biggest mortgage lenders, alongside Nationwide Building Society.

Earlier this month, Nationwide reported 2.0 percent annual growth in house prices and the first fall in London prices for eight years.

Source: UK Reuters

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Can Britain really cope with a fall in housing prices?

Britain is locked in a seemingly constant battle with the burden of its overheated housing market. Theresa May has announced measures at the Conservative Party conference designed, at the very least, to dampen criticism over a lack of housing and ever-increasing prices.

It is unclear for now just what impact May’s announcement for land releases and an extra £2 billion for affordable housing may have. After all, the UK’s housing stock is valued at close to £7 trillion. But her announcement comes after London real estate prices registered their biggest fall in a decade, stoking expectations for further drops in real estate prices.

But what would falling house prices mean for Britain? How might it affect employment, household consumption, investment, the government deficit and, critically, the UK current account – the net measure of cash flows in and out of the economy.

The greater fool

Brexit and associated uncertainty about the future of the UK financial sector are making real estate investors, home buyers and households more cautious. One of the things that has fuelled London real-estate prices over the years is the “greater fool” mechanism. Buyers knew that a property was expensive, and perhaps ridiculously expensive, but they counted on the fact that they could sell it later to a “greater fool” at an even higher price, for a handsome profit.

That phenomenon was perhaps best displayed in the first recorded crisis in free markets. Tulip mania in 17th century Holland built to a crescendo which saw single, rare tulip bulbs change hands for extraordinary sums. Historian Mike Dash has described it as enough to “purchase one of the grandest homes on the most fashionable canal in Amsterdam for cash, complete with a coach house and an 80 foot garden”.

As tulip mania went on to show, however, if prices show indications of a fall, the upward trend reverses violently. If property investors become skittish, they will try to sell before prices fall further, and all of them at the same time. Property values built over decades could collapse within months: the expectation of falling prices causes the falling prices.

This mechanism is a real danger in London which relies heavily on local and international investors who view properties not as a home but as a commodity, readily sold to maximise profit. In 2013 alone, international investors accounted for 82% of London property activity.

Falling for it

However, most properties in the UK still belong to households. Families, by and large, don’t need to sell. So what would falling property prices mean for them?

First, many pension funds and investment bonds rely on UK property to generate income for their beneficiaries. Second, we have what economists call the Wealth Effect.

Economists have long associated consumers’ perceived real estate wealth with spending behaviour: if you believe your house is worth a lot, you feel financially secure. And then you allow yourself to save less and spend more. Just consider the rising number of people who plan to subsidise their retirement with wealth generated by their homes.

If their assumed valuations start to look shaky, these people will spend less to build up their savings. The pain would be felt by many: about 64% of households in England are owner-occupiers.

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More land needs to be released for new homes in the UK to meet demand

A rapid expansion of the house building industry has the UK on track to deliver the Government’s target of one million new homes by 2020, but more are needed, according to a new analysis.

Indeed, an additional 100,000 homes are needed each year if the new supply is to have any effect on housing affordability and to boost volumes and improve affordability more land needs to be released in the areas of greatest need, including green belt swaps, says the report from international real estate adviser Savills.

It explains that new homes volumes are up almost 50% on three years ago, meaning that new housing supply is almost meeting demand across most of the UK. However, London and South East regions are bearing the brunt of the shortfall, accounting for 104,000 of the 2015/2016 total, which puts great pressure on affordability. Only a fifth of households can afford to buy the average new home in these regions.

‘Policymakers must take this shortfall in the south east of England seriously if we are to finish the job of solving the housing crisis. Many more new homes are needed at price points that are affordable to the many, and across a range of tenures, if affordability pressures are to be eased,’ said Chris Buckle, director of Savills residential research.

New homes need to be priced as a mass market product to ensure high sales rates, the report says. Increased land release in areas of high housing demand would reduce competition for development sites, leading to lower land values and enabling new homes to be sold at lower price points.

If there were more land on the market, land owners may need to realign expectations on the value of land, Savills argues, though that value will still need to be high enough to persuade them to sell. For the policymaker, it means recognising that lower new homes values may result in less land value to be captured through CIL and section 106.

A commitment to solving the housing crisis is evident in the housing white paper, but to address the crisis where it is most acute will require a regional market led strategy for land release, including a programme of green belt swaps, the firm says.

The report also points out that Government aid, particularly in the form of Help to Buy, has helped boost the number of homes being built and will support around 20% of the 190,000 new homes expected to be built in 2016/2017, compared with 34,000 in 2015/2016 and 28,000 in 2014/2015.

Far the biggest increase has been in the number of homes being built without public funding, both market sale and built to rent units, up from only 62,000 in 2015 to an expected 111,000 this year, an increase of 79%.

The Savills report details evidence of high delivery sites in high demand areas across the South East. These include sites in Andover, Aylesbury and Bedfordshire where homes are priced at a discount of up to 15% compared to the local market on an average price per square foot basis. Each of these sites completed more than 600 new homes for sale in the past three years, a build-out rate significantly above average.

Even in high demand areas, such as Cambridge and Horsham, there are large numbers of homes being sold at a discount to market averages on a per square foot basis, the firm’s researchers found.

‘To build on this momentum, policy needs to go further, and our report contains some uncomfortable truths. Help to Buy may have helped boost housing delivery and given aspiring home owners a welcome leg up onto the market, but something more fundamental needs to be done to ensure we deliver more homes quickly, and at prices that more people can afford, whether to buy or to rent,’ said Buckle.

‘Policymakers need to recognise that high volume delivery of lower priced housing will limit the capacity of developers to fund infrastructure and affordable housing in the way they currently do, via section 106 and CIL payments, so other sources of funding for infrastructure and affordable housing will be essential,’ he added.

Developers will need to change their approach, Savills says, adding that the Government clearly wants to hold developers to account for new home delivery, through better, more transparent data and sharper tools to ensure housing with planning permission is built.

‘Although it is unclear what form these tools will take, this pressure, combined with the new housing delivery test for local authorities, means that it will not be enough for the development industry simply to maintain current modes of delivery,’ Buckle concluded.

Source: Property Wire

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The World Bank’s new Women Entrepreneurs Finance Initiative: Recycling a broken model?

In July at the G20 meeting in Hamburg, the World Bank announced the Women Entrepreneurs Finance Initiative (We-Fi), a financial intermediary facility housed and managed by the Bank, that seeks to “advance women’s entrepreneurship” in developing countries by providing “increased access to the finance, markets, and networks necessary to start and grow a business”. The brainchild of Ivanka Trump, daughter of US president Trump, the facility aims to “leverage donor grant funding of over $325 million and mobilize more than $1 billion in international financial institution and commercial financing, by working with financial intermediaries, funds, and other market actors”.

The Bank will act as We-Fi’s trustee and secretariat whilst, “Multilateral development banks, including the World Bank and IFC [International Finance Corporation, the Bank’s private sector arm], are eligible as implementing partners to propose private and public sector activities”, and apply for funding. A governing committee, composed of the founding donors, such as United Arab Emirates and Saudi Arabia, will make its allocation decisions. The first meeting of the governing committee is planned in October 2017.

Concerns raised about facility’s ability to reach poorest women

In July, Devex reported concerns that “We-Fi’s mission will overlap” with pre-existing initiatives such as the joint IFC and Goldman Sachs’ Women Entrepreneurs Opportunity Facility (WEOF) and the Banking on Women program (see Update 85). While We-Fi is dubbed, “the first World Bank-led facility to advance women’s entrepreneurship at this scale”, the IFC’s 2014 WEOF press release stated that its 10,000 Women programme, comprised a $600 million global facility, would, “increase access to finance to as many as 100,000 women entrepreneurs in emerging markets”. It further stated that it “is the first of its kind to be dedicated exclusively to financing women-owned small and medium businesses in developing countries”.

Women who own SMEs [small and medium-sized enterprises] are not among the poorest segments of the populationCINDY HUANG, CGD

In July, Nancy Lee of the Center for Global Development (CGD) raisedquestions about how the success of We-Fi and the previous Bank initiatives are measured, stating that, “It would be helpful to know more about the track record of IFC’s WEOF so far”. There are no updates available on WEOF, which makes it difficult to assess the outcomes of the programme and use lessons learned for We-Fi. Cindy Huang of CGD made detailed suggestions in August on how We-Fi can learn from existing research on women’s economic empowerment, reminding the Bank that, “a well-designed approach to empower women must recognise and incorporate the rich evidence base that supports the connections between economic outcomes for women and investments to improve their health and education, decrease gender-based violence and unpaid care work responsibilities, and promote women’s voice and agency in advocating for their own rights” (see for example GADNBreaking Down the Barriers). Huang questioned whether the Fund will reach poor women, stating that “women who own SMEs [small and medium-sized enterprises] are not among the poorest segments of the population”.

Elaine Zuckerman of Washington-based NGO Gender Action also expressed concerns about the facility’s target audience, saying: “While We-Fi may empower some women it is questionable whether it will contribute to achieving the Bank’s goal of ending extreme poverty. We-Fi loans will target small to middle-sized enterprises, which evidence shows fail to reach poor women. We-Fi aligns with the Bank’s ‘Gender Equality as Smart Economics’ framework that supports female enterprises as instruments of economic growth without complementarily promoting women’s and men’s equal human rights”

Source: Bretton Woods Project

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Will the UK housing market follow London property prices lower?

Recent figures suggest that the London housing market is falling quicker than anywhere else in the UK. Despite appearing to defy gravity in light of last year’s Brexit vote, many experts believe that the negative comment and negative sentiment has finally caught up with the London market. We’re not talking massive falls in London house prices, we’re not talking about an imminent collapse but a 3.2% annual fall in London property prices is the largest since 2010. So, will the rest of the UK housing market follow suit?

MARKET WITHIN A MARKET

On numerous occasions we have covered the London property market which is in effect a market within a market. It often bears no resemblance to the wider UK housing market, where 54% of property prices have yet to return to their 2008 levels, and the sooner real estate investors appreciate this difference the better for all concerned.

It would be incorrect to suggest that the rest of the UK is riding high on the crest of a wave when it evidently is not. Brexit is causing concern, a political stand-off between the Conservatives and Labour is helping nobody and constant ridiculing and stick poking by the European Union is aggravating the situation. The European Union is also adamant that London financial markets will not have easy access to European financial trade once the UK leaves the European Union. However, realistic experts fully appreciate that London is a unique financial market and perhaps the European Union needs London as much as the UK needs the European Union?

ARE WE CURRENTLY LIVING A WORST-CASE SCENARIO?

A number of financial companies have expressed interest in transferring their European head offices to Dublin to remain within the European Union. While the numbers who have actually transferred so far is minimal this threat has caused some concern amongst London property investors. The 3.2% year-on-year decline in London property prices still sees them higher than they were in the aftermath of the 2008 economic downturn but obviously sentiment has turned.

Many people were not aware that the rest of the UK has not regained the heady heights of 2008/9 just prior to the worldwide economic collapse. The further north you go in the UK, through the Midlands and the North East of England up to Scotland, the more depressed housing markets become. It is possible to attain double-digit rental yields in the North of England and Scotland although these properties will offer limited capital growth for the foreseeable future.

While any further concerns regarding Brexit and an economic downturn in the UK will impact prices across the country, we are unlikely to see anywhere near the kind of movement outside of London than we have seen in London property prices over the last 12 months.

LONDON IS A DRAG ON UK HOUSE PRICE PERFORMANCE

If we were taking a realistic view of the UK property market it would make perfect sense to quote prices excluding London because London bears no resemblance to the rest of the UK. In the good times London property price rises make the rest of the UK seem better than it is and in the downturns the average falls are overdone because of the London weighting. This effects sentiment, investor timing and is therefore a little misleading to say the least.

UK wide property prices, excluding London, are not immune from general market movements and no doubt the south-east of England will suffer the most outside of London. However, anyone who suggests that the rest of the UK market will follow London property price falls to the same degree should perhaps review their research and statistics. House prices outside of London have not been inflated to anywhere near the same extent than those in London as we are starting to see now.

Source: Property Forum