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| Version 1 | Version 2 |
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| London property slump drags back UK house price growth | London property slump drags back UK house price growth |
| (about 5 hours later) | |
| London house prices slipped in October, dragging the growth in average property prices to its lowest level since July 2013. | London house prices slipped in October, dragging the growth in average property prices to its lowest level since July 2013. |
| The slump in the capital, which began after the Brexit vote in 2016 and reached a fall of 1.7% for the year to October 2018, pulled down the average increase across the UK to 2.7%, down from 3% in September, according to official data. | The slump in the capital, which began after the Brexit vote in 2016 and reached a fall of 1.7% for the year to October 2018, pulled down the average increase across the UK to 2.7%, down from 3% in September, according to official data. |
| A slowdown in growth across the south-east and the east of England also put the brakes on national price rises, leaving the average cost of a home in England at £248,000. | A slowdown in growth across the south-east and the east of England also put the brakes on national price rises, leaving the average cost of a home in England at £248,000. |
| The decline in property inflation was mirrored on the high street after annual inflation figures showed the consumer prices index (CPI) for November had nudged lower to 2.3% from 2.4% in the previous month. | The decline in property inflation was mirrored on the high street after annual inflation figures showed the consumer prices index (CPI) for November had nudged lower to 2.3% from 2.4% in the previous month. |
| Discounted clothing, footwear, food and furniture accounted for much of the fall while the rising cost of transport and private education pushed up the index. | Discounted clothing, footwear, food and furniture accounted for much of the fall while the rising cost of transport and private education pushed up the index. |
| The Office for National Statistics said its preferred measure of inflation, which includes the cost of housing services and council tax, remained unchanged at 2.2%. | The Office for National Statistics said its preferred measure of inflation, which includes the cost of housing services and council tax, remained unchanged at 2.2%. |
| Analysts said slowing inflation and property prices, combined with the uncertainty about the government’s Brexit plans, meant the Bank of England would suppress its urge to raise interest rates at a meeting on Thursday and wait until at least the middle of next year. | Analysts said slowing inflation and property prices, combined with the uncertainty about the government’s Brexit plans, meant the Bank of England would suppress its urge to raise interest rates at a meeting on Thursday and wait until at least the middle of next year. |
| Mike Jakeman, a senior economist at PwC, said: “Inflation returning towards the Bank of England’s 2% target is good news for workers, who are receiving the dual benefit of accelerating wages and slowing inflation, pushing up their income growth in real terms. | Mike Jakeman, a senior economist at PwC, said: “Inflation returning towards the Bank of England’s 2% target is good news for workers, who are receiving the dual benefit of accelerating wages and slowing inflation, pushing up their income growth in real terms. |
| Inflation is when prices rise. Deflation is the opposite – price decreases over time – but inflation is far more common. | Inflation is when prices rise. Deflation is the opposite – price decreases over time – but inflation is far more common. |
| If inflation is 10%, then a £50 pair of shoes will cost £55 in a year's time and £60.50 a year after that. | If inflation is 10%, then a £50 pair of shoes will cost £55 in a year's time and £60.50 a year after that. |
| Inflation eats away at the value of wages and savings – if you earn 10% on your savings but inflation is 10%, the real rate of interest on your pot is actually 0%. | Inflation eats away at the value of wages and savings – if you earn 10% on your savings but inflation is 10%, the real rate of interest on your pot is actually 0%. |
| A relatively new phenomenon, inflation has become a real worry for governments since the 1960s. | A relatively new phenomenon, inflation has become a real worry for governments since the 1960s. |
| As a rule of thumb, times of high inflation are good for borrowers and bad for investors. | As a rule of thumb, times of high inflation are good for borrowers and bad for investors. |
| Mortgages are a good example of how borrowing can be advantageous – annual inflation of 10% over seven years halves the real value of a mortgage. | Mortgages are a good example of how borrowing can be advantageous – annual inflation of 10% over seven years halves the real value of a mortgage. |
| On the other hand, pensioners, who depend on a fixed income, watch the value of their assets erode. | On the other hand, pensioners, who depend on a fixed income, watch the value of their assets erode. |
| The government's preferred measure of inflation, and the one the Bank of England takes into account when setting interest rates, is the consumer price index (CPI). | The government's preferred measure of inflation, and the one the Bank of England takes into account when setting interest rates, is the consumer price index (CPI). |
| The retail prices index (RPI) is often used in wage negotiations. | The retail prices index (RPI) is often used in wage negotiations. |
| “It also suggests that the Bank’s current monetary policy is suitable for now, with the central bank highly likely to leave interest rates unchanged until there is more clarity on the circumstances through which Brexit will be resolved. We continue to expect inflation to slow to the Bank’s 2% target in the coming months.” | “It also suggests that the Bank’s current monetary policy is suitable for now, with the central bank highly likely to leave interest rates unchanged until there is more clarity on the circumstances through which Brexit will be resolved. We continue to expect inflation to slow to the Bank’s 2% target in the coming months.” |
| Jeremy Thomson-Cook, the chief economist at the currency dealer World First, said: “In a normal world, we would be talking about interest rate increases but the spectre of Brexit and the continued uncertainty about our position come 29 March means that investors will only start to meaningfully price in interest rate rises as part of the Bank’s mandate to keep inflation stable once a deal has been agreed between the UK and EU.” | Jeremy Thomson-Cook, the chief economist at the currency dealer World First, said: “In a normal world, we would be talking about interest rate increases but the spectre of Brexit and the continued uncertainty about our position come 29 March means that investors will only start to meaningfully price in interest rate rises as part of the Bank’s mandate to keep inflation stable once a deal has been agreed between the UK and EU.” |
| He said that a Brexit deal would likely be accompanied by quarter-point interest rate rises in May and November of next year. | He said that a Brexit deal would likely be accompanied by quarter-point interest rate rises in May and November of next year. |
| While the average house price in England grew by 2.7% in October, they rose in Wales by 3.8% over the previous 12 months to reach £161,000. In Scotland the average price rose by 4.4% to stand at £152,000. The average house price in Northern Ireland stands at £135,000, an increase of 4.8% over the year. | While the average house price in England grew by 2.7% in October, they rose in Wales by 3.8% over the previous 12 months to reach £161,000. In Scotland the average price rose by 4.4% to stand at £152,000. The average house price in Northern Ireland stands at £135,000, an increase of 4.8% over the year. |
| Howard Archer, the chief economic adviser to the EY Item Club, said: “The fundamentals for house buyers currently remain challenging. Consumers have faced an extended serious squeeze on purchasing power, which is only gradually easing. | Howard Archer, the chief economic adviser to the EY Item Club, said: “The fundamentals for house buyers currently remain challenging. Consumers have faced an extended serious squeeze on purchasing power, which is only gradually easing. |
| “Additionally, housing market activity remains hampered by relatively fragile consumer confidence and limited willingness to engage in major transactions.” | “Additionally, housing market activity remains hampered by relatively fragile consumer confidence and limited willingness to engage in major transactions.” |
| However, he said a no-deal Brexit was unlikely to bring about a slump while the number of homes for sale remained relatively low. | However, he said a no-deal Brexit was unlikely to bring about a slump while the number of homes for sale remained relatively low. |
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