House price inflation in the UK has stagnated since the Brexit vote amid ongoing uncertainty and political turmoil. In a signal of Brexit’s negative impact on the housing market, September was the worst month for house price growth in the UK for more than six years, according to mortgage lender Halifax.
After increasing by 1.8% year-on-year in August, house prices rose by just 1.1% last month. Month-on-month, house prices fell by 0.4% in September after growing by 0.2% in August. Not a single one of the UK’s biggest cities saw annual property growth edge above 5% in August for the first time since 2012. According to a new index published by property website, the market is in the process of adjusting to more realistic pricing. At the time of the referendum in 2016, the Halifax index was indicating house price growth of about 8% a year. But with the economy largely struggling and the outlook highly uncertain, experts suspect that house prices will remain soft in the near term at least.
The march of ETFs
Institutional investors have shown high preference for Exchange Traded Funds (ETFs) and Fund of Funds (FoF) over other category of mutual fund schemes in the past three-four years. Of the total investments in ETFs and FoFs, at the end of August 2019, close to 93% has come from institutional investors and a meagre 7% from individual investors. Institutional investors include banks, insurance companies, Employees’ Provident Fund Organisation (EPFO) and other domestic institutions. As well as lower charges, at times when it is difficult to identify alpha or returns higher than the benchmark in active funds due to slowdown, investment in ETFs becomes a prudent choice. The European ETF retail market has long lagged its US counterpart. While there are no solid statistics on ETFs by client type, the consensus among industry players is that more than 80% of ETF assets in Europe are in the hands of private banks, wealth managers, pension funds, hedge funds, and other types of institutional investor. While the European retail investor community is relatively untapped by ETF providers, most agree they could play a key role in the growth of the market looking forward. Commentators think the major barriers to retail uptake in Europe have been education and technology. Both of these are slowly being broken down.
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