(Alliance News) - The UK housing sector rounded off a strong year with more double-digit price growth, figures from building society Nationwide showed on Thursday.
In December, house prices rose 10% on a yearly basis, in line with November's surge. Monthly, prices climbed 1.0% in December to an average of GBP254,822, following growth of 0.9% in November.
Nationwide Chief Economist Robert Gardner said it was the strongest year for UK house prices since 2006. In cash terms, 2021 saw the largest single year house price hike.
UK house prices have been on the upturn since the sector re-emerged from 2020's spring Covid-19 lockdown. It benefited from stamp duty relief.
In March 2021, UK Chancellor of the Exchequer Rishi Sunak extended the stamp duty cut to the end of June at a GBP500,000 nil rate band, which was then tapered to a GBP250,000 threshold until the end of September.
"Prices are now 16% higher than before the pandemic struck in early 2020," Gardner added.
"It appears likely that the housing market will slow next year, since the stamp duty holiday encouraged many to bring forward their house purchase in order to avoid additional tax. The Omicron variant could reinforce the slowdown if it leads to a weaker labour market. Even if wider economic conditions remain resilient, higher interest rates are likely to exert a cooling influence."
Gardner added: "The strength of the market surprised in 2021 and could do so again in the year ahead. The market still has significant momentum and shifts in housing preferences as a result of the pandemic could continue to support activity and price growth. Indeed, the Omicron variant could serve to reinforce the shift in preferences in the near term."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 7,410.72
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Hang Seng: up 0.1% at 23,102.03
Nikkei 225: closed down 0.4% at 28,791.71
S&P/ASX 200: closed marginally higher, up 3.60 points at 7,513.40
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DJIA: closed up 90.42 points, or 0.3%, at 36,488.63
S&P 500: closed up 0.1% at 4,793.06
Nasdaq Composite: closed down 0.1% at 15,766.22
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EUR: down at USD1.1317 (USD1.1346)
GBP: soft at USD1.3464 (USD1.3476)
USD: up at JPY115.15 (JPY114.95)
Gold: down at USD1,797.10 per ounce (USD1,802.90)
Oil (Brent): firm at USD78.84 a barrel (USD78.22)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's key economic events still to come
0830 EST US initial jobless claims
0945 EST US consumer comfort index
1030 EST US EIA weekly natural gas storage report
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A record low number of UK firms are set to have fallen into administration in 2021 despite the heavy toll of the pandemic. Insolvency specialists at Interpath Advisory said furlough measures particularly reduced the number of non-voluntary insolvencies over the year but warned there could be a rise next year. Latest figures from the advisory firm, which was spun off from KPMG and bought by HIG Capital earlier this year, revealed 618 administrations in the UK in the 11 months to November. This is expected to increase by the end of the year but will remain significantly short of the 1,121 from last year and the record low of 1,044 in 2015. Blair Nimmo, chief executive at Interpath, told the PA news agency that extensions to financial support measures, including furlough, meant much fewer companies collapsed than expected at the start of the year.
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BROKER RATING CHANGES
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none reported Thursday
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COMPANIES - FTSE 250
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Harbour Energy said it has completed the drilling of the Dunnottar exploration well in licence P2399 in the UK North Sea. The well reached a total measured depth of 15,639 feet, finding hydrocarbon-bearing intervals in the Palaeocene, Jurassic and Triassic. Harbour will now assess the "commerciality of these marginal accumulations". In the meantime, the well will be plugged and abandoned.
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COMPANIES - MAIN MARKET AND AIM
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Consumer goods firm Creightons reported a slip in first half profit but was able to maintain its interim payout amid underlying business momentum. In the six months to September 30, pretax profit fell 21% to GBP2.3 million from GBP2.9 million, as revenue declined by 7.4% to GBP30.0 million from GBP32.4 million. Administrative expenses rose 6.3% to GBP8.5 million from GBP8.0 million. Creightons noted its "excellent progress" in the recent half-year in offsetting the loss of one-off hygiene sales worth GBP11.5 million a year before related to the virus pandemic. "These hygiene sales were very significant so to have substantially replaced in the first half by growth in core sales across branded, private label and contract business units before the full impact of recent acquisitions reflects the underlying strength and momentum of the business," Creightons said. Despite the drop in revenue and profit, Creightons maintained its interim dividend at 0.15 pence.
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Natural gas distribution company Indus Gas reported a rise in profit in the first half of its financial year but continues to hold out hope for a "step change" in fortunes if its Rajasthan project gets a new pipeline. In the six months to September 30, pretax profit improved by 10% to USD23.0 million from USD20.9 million as revenue grew by 17% to USD27.1 million from USD23.2 million. Chair Peter Cockburn said: "While the pandemic continues to present operational challenges, revenues in the interim period recovered to the comparable pre-pandemic level achieved in 2019. The company continues to anticipate a step change in revenues once the additional gas supplies commence through the new pipeline." Indus Gas owns a 90% interest in block RJ-ON/6 in Rajasthan, India. Regulators in India, Indus noted, have re-invited bids for the laying of a gas pipeline from the gas processing facility for the evacuation of gas from the block.
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President Energy spin-off Atome Energy started trading on AIM on Thursday having raised GBP6 million in its initial public offering with an option for GBP3 million more. Shares were sold in a placing and via PrimaryBid at 80 pence each, giving Atome a market capitalisation of GBP26 million on admission. Atome said it is the first London Stock Exchange listing focused solely on producing green hydrogen and ammonia, with projects in Iceland and Paraguay. President Energy said it retains a 27.9% stake in Atome, with other Atome shares distributed directly to President Energy shareholders as a dividend in specie. President said it will given an update on its remaining conventional oil and gas business in the new year, adding that operations are in line with expectations.
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Thursday's shareholder meetings
Electra Private Equity PLC - GM re delist from London Main Market and relist on AIM
Genedrive PLC - AGM
SimiGon Ltd - AGM
Supply@Me Capital PLC - GM re historical serious loss of capital
Secure Property Development & Investment PLC - AGM
Universe Group PLC - GM re takeover by Professional DataSolutions
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By Tom Waite; thomaslwaite@alliancenews.com
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