Household wealth surges, a boost from booster jabs and the government's green homes mess
Making sense of the latest trends in property and economics from around the globe.
3 minutes to read
Wealth
UK household wealth expanded to a record £11.2 trillion last year despite the economy experiencing its most significant contraction in 300 years, according to new data from the ONS.
Household wealth grew 8.4% during the year, driven largely by rising house prices, followed by the rising value of insurance and pension schemes, savings and bank deposits. It marks the second largest annual uplift in household wealth since the 2008 financial crisis.
The data underlines the degree to which those already on the property ladder with jobs suited to remote work were able to weather the pandemic. Land and property contributed 40.1% of the growth in net worth, which in turn was driven by a 7.3% increase in average house prices. Currency and bank deposits contributed 21.5% of the growth as consumers tucked away record savings while they were unable to splash out on hospitality and holidays.
Omicron
A large study of booster jabs show they "massively" strengthen the body's defenses - increasing antibody levels thirty fold while tripling the level of T-cells. T-cell responses were similar for the original variant, plus Delta and Beta, which adds to hopes that boosters will effectively combat Omicron, according to quotes in this morning's Times from the head of the study.
Meanwhile, we should find out how effective the vaccines are within days, according to Ana-Maria Henao-Restrepo, who co-leads the WHO’s research and development blueprint for vaccines and innovations.
The economic consensus is coalescing around more of the same. We talked on Wednesday about views from the Bank of England Monetary Policy Committee that Omicron threatens to push inflation higher for longer by preventing consumers switching their spending from goods to services and prolonging disruption to global supply chains. The OECD agrees and so does the Fed.
Construction
More disruption to global supply chains is the last thing the construction industry needs. The cost of materials climbed 24.5% during the year to October, according to the latest data from the Department of Business, Energy and Industrial Strategy.
The largest increases during the period were for fabricated structural steel (+71%), imported sawn or planed wood (+70%) and concrete reinforcing bars (+61%). The UK gets about half its total imported building materials from just five markets - Turkey, Spain, Italy, Germany and China. China accounts for the largest share, at 18%.
After four successive quarters of growth, construction output fell during the third quarter. Respondents to the ONS survey said that order books were healthy but the availability of materials was hampering progress.
Green homes
When the government scrapped its green homes voucher scheme after just six months it was pretty clear things were going very wrong. Just how wrong was revealed by the Public Accounts Committee on Wednesday in a report that hints at the scale of the challenge faced by ministers as they attempt to get a grip on emissions from existing homes.
The scheme led to upgrades of around 47,500 homes compared to the 600,000 originally envisaged, delivered a small fraction of the expected jobs and accounted for just £314 million out of the original £1.5 billion budget. Administration costs are likely to amount to more than £1,000 per home upgraded, totalling just over £50 million in all. By August 2021, 52% of homeowners’ voucher applications were rejected or withdrawn, and 46% of installer applications failed. From the report:
"It is a matter of concern that green homes schemes have repeatedly been short term and have underdelivered on over optimistic promises on green targets and job creation. The department needs to consider carefully how to approach such schemes in future."
In other news...
The super-prime rent race in London (FT), interest rate hikes will not dim the allure of property (FT), Google delays the return to the office (Bloomberg), NYC suburban homes sales plunge because there's nothing to buy (Bloomberg), and finally, Omicron makes an early mark on UK hospitality (Times).