LONDON, Oct 30, (Agencies): UK house prices climbed 0.5 percent in October, marking the sixth consecutive monthly rise, although at a slower pace, a major mortgage lender reported on Friday. The Nationwide Building Society said that the strong upward momentum in property values seen over the summer is showing some signs of moderating.
October’s rise followed an increase of 0.9 percent in September and 1.4 percent in both July and August. The rate of change between three-month periods, generally considered a smoother indicator of the near term trend, dropped back slightly from 3.8 percent to 3.4 percent. “A moderation in the rate of house price inflation was to be expected, as the very strong monthly increases seen over the summer months were unlikely to be sustainable over the long run,” said Martin Gahbauer, Nationwide’s Chief Economist. “Although too early to tell for sure, it may also reflect a more natural level of stock available for sale coming to the market, alleviating some of the extreme shortages of property on the market seen during most of this year.”
Rachel Waring and Mark Hughes, analysts at Panmure Gordon & Co., said the low numbers of properties for sale had boosted home values recently, and that prices could ease as supplies normalize. They also cautioned that the Financial Services Authority, the government regultator, has called for stricter controls on lending. “This makes it difficult to see any significant rebound from current levels, and reiterates our belief that any recovery will be slow and steady,” Hughes and Waring wrote. Gahbauer added that last week’s gross domestic product figures, showing that the British economy remained in recession, have mixed implications for the housing market. On one hand, a deeper and longer recession implies higher levels of unemployment and a longer period of subdued wages, both of which will act as constraints on the housing market’s recovery. On the other hand, the figures mean that interest rates are likely to remain at or near their current record lows for well into next year, making mortgage affordability more favourable.
Confidence
Meanwhile, British consumer confidence rose in October to its highest level since January 2008, after improvements in households’ financial situation and view of the past 12 months, a monthly survey by GfK NOP showed on Friday. GfK’s headline confidence indicator rose 3 points to -13, slightly better than analysts’ forecasts of a rise to -15, and continuing an unbroken string of monthly increases in place since January. However, households’ view of how much the economy would strengthen over the next 12 months worsened slightly from September — when it was the most optimistic since May 1998 — dropping to 3 from 4. “Consumers are still wary of the future and so the overall trend towards uplift is still fragile,” said GfK’s Rachel Joy. The survey, conducted for the European Commission, also showed that shoppers’ belief that now was the right time to make major purchases was its strongest since November 2007. A temporary cut in value-added tax to 15 percent from 17.5 percent is due to end on Dec 31, and incentives to trade in second-hand cars for new ones expire early in 2010.
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LONDON: Offshore financial centers in the British Caribbean should consider introducing more taxes to shore up their increasingly shaky finances, according to a UK government-commissioned report published Thursday.
Many of the British Caribbean islands have seen the world economic downturn cut into their revenues and put pressure on public spending, according to a review of UK-affiliated tax havens led by Michael Foot, a former director of the Bank of England. Foot investigated the economies of Britain’s Caribbean territories — Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands and the Turks and Caicos Islands — as well as Gibraltar, the Channel Islands of Guernsey and Jersey and the Isle of Man. “None of the nine jurisdictions I have reviewed can afford to be complacent,” Foot said, although he noted that Guernsey and Jersey were weathering the downturn better than the Caymans, Anguilla or the Turks and Caicos.
His report argued that the Caribbean territories needed a diversified tax base, explaining that there was “a compelling case” for value-added taxes, a consumption tax assessed on the value added to goods and services, and corporation taxes, which are levied on companies’ profits. Such new levies would be a major departure for the Caribbean tax havens, which have traditionally used their rock-bottom rates to attract thousands of multinational corporations, hedge funds, and other tax-dodgers. The nine British territories comprise nearly two-thirds of the offshore market, according to report, which noted that the Caymans and Bermuda also handle large chunks of the US overnight banking and American reinsurance business. But Foot said that many of the territories were running out of money as tourism and finance withered away amid the worldwide economic meltdown. The Turks and Caicos have already exhausted their government reserves, while in Anguilla reserves are forecast to run dry by the end of the year, the report said.
While some of the offshore centers have resisted pressure to implement new taxes, Foot said that keeping rates too low might hurt in the long term as cash-strapped governments in Europe and the United States move to crack down on tax havens. Britain’s government, which has varying degrees of control over the territories’ domestic and foreign policy, expressed its support for the report. “This report sends a strong signal to overseas financial centers that they must ensure that they have the correct regulation and supervision in place, while also ensuring their tax bases are more diverse and sustainable to withstand economic shocks — this is essential to their long term stability,” said Stephen Timms, the financial secretary to Britain’s Treasury.