Investor confidence rising ahead of tomorrow’s inflation figures

A respected measure of investor confidence says it’s on the rise as a result of growing optimism over UK inflation figures tomorrow.

The Hargreaves Lansdown Investor Confidence Index rose in August as economists and investors alike predicted that the worst of the inflationary period was now over 

Expectations this week amongst economists is that the July inflation rate, due to be published on Wednesday, will reveal a slower rate of inflation for the UK. This regional outlook is reflected in investors views towards the domestic market, with confidence in the UK jumping significantly in this month’s Index. 

But Hargreaves Lansdown says inflation – and associated higher interest rates – is still driving consumer and corporate decisions across the globe, from the slowing housing market, to striking public sectors, to gilt purchases. 

Meanwhile letting agency chain Fine & Country, which also has a sales wing in all of its branches, says the signs of slowing inflation provide a glimmer of hope for a more competitive mortgage market in the coming months. 

According to Nicky Stevenson, managing director of Fine & Country, the property market continues to exhibit promise, with motivated buyers still actively seeking correctly priced homes, bolstered by a relative scarcity of properties for sale compared to historic norms. 

Although a cooling in house prices is widely anticipated, forecasts suggest a more moderate pace than initially projected earlier in the year.

“Despite prevailing economic conditions, transaction numbers are holding steady. The latest data from HMRC indicates a seasonally adjusted total of 85,870 transactions in June, representing a six per cent increase over May figures. 

Although this marks a 15 per cent decline from June 2022, it demonstrates resilience in the market. Moreover, mortgage lending exhibited an uptick in June, reaching £20 billion, with net approvals reaching 54,700, the highest since October 2022, indicating positive signs for future borrowing” Stevenson comments.

She notes that in response to buyer affordability constraints and rising mortgage costs, the average price of properties coming to market experienced a slight decline of 0.2 per cent this month. Sellers are becoming increasingly receptive to market realities, with 6.5 per cent of available homes seeing asking price reductions of 5.0 per cent or more, surpassing the five-year average.

Stevenson continues: “According to the latest market update from TwentyCi, there are ‘no signs of a housing market crash,’ based on Q2 sale volumes and a significant 70 per cent of all properties listed being sold thus far in 2023. 

“Notwithstanding this optimism, an uncertain economic backdrop is reflected in a 10 per cent increase in fall-throughs compared to Q1. Nonetheless, both buyer and seller sentiment have surprisingly remained robust, with two-thirds of sellers confident they will find buyers within three months, and 74 per cent of buyers expressing confidence in purchasing property within the same timeframe. 

Demand from buyers has also shown a three per cent increase compared to 2019, as reported by Rightmove, signifying continued interest in correctly priced homes.”