Finance
West Midlands set to see hike in houseprices
The West Midlands could experience the highest house price inflation of all English regions over the next two years. PwC’s latest UK Economic Outlook says the region
is behind only Wales in terms of UK house price growth. An average house price growth of 3.4 per cent is
predicted in 2019 and 4.2 per cent in 2020, compared to the UK average of 1.2 per cent and 2.1 per cent. The average house price in the West Midlands is
estimated to rise from £194,000 in 2018 to around £223,000 by 2022. This comes at a time when the cost of private
renting is proving to be a significant challenge for tenants, with those working in certain key professions increasingly unable to afford rent. PwC’s report warns that this will potentially lead
to a shortage of employees. Using the conventional benchmark that renting
must cost less than 30 per cent of gross annual income for it to be considered affordable, the report finds that an employee would need an annual salary of £23,800 to afford the median private rent in the UK.
Currently, workers in the West Midlands between
22 and 29 years of age are spending 27 per cent of their monthly earnings on rent.
Matthew Hammond, Midlands chairman for PwC,
said: “House price inflation in the 12 months to April 2019 was strong in both the East and West Midlands at 2.9 per cent and 2.2 per cent respectively. “The Midlands was in the top five of the UK
regions for the underlying house price growth. “Growth rates are forecast to continue strongly
through 2019 and 2020 at between 3.1 per cent and 4.1 per cent, with the medium term average for 2021 and 2022 settling at the lower end of this range at 3.2 per cent.”
Matt Hammond
Sector Focus
More firms issue profit warnings
Twelve profit warnings were issued by listed companies based in the Midlands in the second quarter of 2019 – double what was seen in the same period last year. According to EY’s latest Profit
Warnings Report, the warnings were made across ten sectors, including Construction, Automotive, General Retailers and Support Services. Half of all profit warnings were
issued by businesses with a turnover of less than £200m, with many continuing to blame uncertainty over Brexit. While profit warnings in the
West Midlands more than halved in Q2 of 2019, they rose from two to eight in the East Midlands. Dan Hurd, EY’s Head of
Restructuring in the Midlands, said: “There is now clear evidence that prolonged Brexit uncertainty has created a hiatus in business activity, with companies struggling to forecast and plan. And the economic impact is spreading, affecting a broad range of sectors. “In the short to medium term I
would expect to see businesses continuing to look closely at their structures to see where greater cost efficiencies can be found.”
September 2019 CHAMBERLINK 73
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