Leading Indicators | Changing tides: All Property total return hits two-year high
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Softer inflation sparks easing in bond yields
UK inflation eased in December for the first time in three months, dropping to 2.5% and aligning with the Bank of England’s forecasts. This decline could bolster the case for a quarter-point rate cut at next month’s monetary policy meeting. In response to the softer inflation data, bond yields eased, with the 10-year UK gilt yield down -22bps over the week.
UK All Property total return hits two-year high in December
The MSCI UK All Property total return rose by +22bps m/m in December to +1.10%, marking its highest level in over two years. All sectors posted gains – with Retail leading the growth, up +31bps to +1.31%. Total returns have been supported by rising capital values. UK All Property capital values rose by +0.62% in December, up from +0.41% in the month prior.
The UK’s growth outlook has been upgraded
The IMF has upgraded the UK’s 2025 growth outlook by +10bps to +1.6%, positioning it as the third fastest-growing G7 economy, trailing only the US and Canada. Supporting this growth outlook, Prime Minister Keir Starmer’s recent plans to establish the UK as an ‘AI superpower’ includes bold initiatives aimed at boosting productivity, growth, and the UK’s living standards.
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