Economic growth lost some momentum through the second half of 2018 in the UK, as it did across much of Europe. Uncertainty has weighed on investment and trade, but the labour market has remained a pillar of strength for the UK economy. The latest data show that the economy created almost half a million jobs over the last year, and 220,000 over the last 3 months. This was the fastest quarterly job creation since the EU referendum and pushed the unemployment rate down to just 3.9%, its lowest level since the 1970s. It has also driven an acceleration in earnings growth, which is now running at an annual rate of 3.5%, a rate of growth last seen in the UK before the GFC. These factors should be supportive of the UK economy and property markets through 2019, regardless of political events.
Despite uncertainty that Brexit has created, 2018 investment volumes in the UK were 35% above the 10-year average. The main sectors all saw a slowdown in investment volumes in 2018 compared to previous year, with retail really dragging down the All Property aggregate. There was a slowdown in industrial transactions but compared to the 10-year average the volumes were still significantly higher. The one sector recording a year-on-year increase in 2018, was the ‘Other’ sector, with a 9% year on year increase leaving investment 83% above the 10-year average. This reflects perceived structural trends benefiting certain asset types, often ‘beds’ related, and demand for secure long income streams. This is increasingly pushing investors into other non-traditional parts of the market and is yet to show signs of abating.
Source: Property Data