Today's business and finance round up 2nd December 2022
🔗House prices fall at fastest rate since lockdown
2nd December 2022
Bite-sized business news from the UK and beyond
- House prices fall at fastest rate since lockdown
- Next swoops in to save Joules retail chain
House prices fall at fastest rate since lockdown
Yesterday Nationwide Building Society revealed that house prices in the UK fell last month by 1.4% to an average of £263,788. It's the second monthly drop in a row and the biggest since the first lockdown in June 2020.
How did we get here?
The bigger than forecast slowdown in November house prices came in the aftermath of September’s mini-budget, which spooked financial markets and increased mortgage rates. At the start of the year the average two-year fixed loan was under 2% and now it’s over 5%.
That has caused the cost of mortgage payments for a new home purchase to rocket to a similar level to 2008, pricing many buyers out of the market.
Leaving out the period of 2020 when the housing market was basically shut down, November’s drop was the largest monthly fall seen since February 2009 during the height of the global financial crisis.
With inflation at 11.1% - a 40-year high – the Bank of England will continue to raise interest rates to tame prices rises which could weigh on the housing market in the coming months. So if people want to sell, prices could still have to come down further.
Zooming out: There remains a lot of uncertainty over how far house prices could drop, it depends on high the Bank of England raises rates and how much unemployment rises during the incoming recession. However economists think that the excess savings that many households built up during the pandemic could help to soften the blow of higher mortgage rates over the coming months.
Other stories to keep you in the loop
Next swoops in to save Joules retail chain
High-street giant Next has bought clothing retailer Joules out of bankruptcy for £34m.
How did we get here?
Founded in 1989 at a country show in Leicestershire selling clothes, Joules has become known for its upmarket outdoor wear and grown to 124 stores employing more than 1,000 people.
The company has had a difficult year repeatedly slashing sales and profit targets. It’s battled with rising costs and a slowdown in consumer confidence in recent months as the UK high street struggles with 40-year high inflation. It said consumers feeling the squeeze amid a rising cost of living had become more cautious on making high end purchases putting pressure on its profits.
Last month the company went into administration after it failed to secure emergency funding.
What followed was a bidding war for the failed retailer between several high street brands including Marks & Spencer and Sports Direct owner Frasers Group.
Next won out with a last minute bid and says it plans to keep open 100 Joules stores and along with most jobs but 24 stores will close with 130 redundancies.
Next has track record of buying into smaller retailers
In recent years the retailer has taken advantage of the string of high street collapses to add to its stable of brands. Next has taken stakes in fashion retailer Reiss, lingerie brand Victoria's Secret and maternity retailer JoJo Maman Bebe.
Stat of the day
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