Increasingly, investors are setting their sights on residential properties away from the usual safe haven of London and the surrounding region. Driven by the prospect of radical house price increases within the next five years, more investors than ever before are picking up properties in select areas of Yorkshire and the north-west.

According to Savills, average house prices in this part of the country could increase by as much as 30% within the next few years. If so, this would outpace London’s house price growth rate by as much as 200%, playing right into the pockets of those who purchase properties at the right time.

2021 was expected by most to bring little other than turbulence and uncertainty to the real estate sector, which has faced one of its most difficult years on record since the beginning of the COVID-19 crisis.

The head of residential research at Savills estate agents, Lucian Cook, admitted that the initial outlook for 2021 looked to be “complex and uneven” at best. Nevertheless, the agency has been forced to revisit its projections due to the sector’s reassuring performance during the first months of the year.

“But the outlook has improved since the beginning of the year given the speed of the vaccination programme, the expected relaxation of social distancing measures, and government support for both jobs and the housing market,” he said.

Five-year predictions

In stark contrast to initial projections of a steady slowdown, Savills now expects property prices in the UK to increase on average by 4% by the end of the year. Forecasting further ahead, average growth of approximately 21% is expected within the next five years.

If this proves accurate, the average asking price for a UK home would be just slightly under £280,000.

But what could prove particularly interesting is the disparity in property price increases between certain regions of the country. According to Savills, some regions in the north-west of England could see average property price increases of 28.8% within the same time. In Yorkshire and Humberside, homes could increase in value on average by as much as 28.2%.

Meanwhile, the five-year growth forecast for London indicates potential property price increases of just 12.6%. This would therefore mean that properties in Yorkshire and the north-west could see property price growth at more than twice the speed of comparable homes in London.

More movers and buyers than ever before are setting their sights on more spacious homes in quieter regions away from major cities, having reconsidered their priorities during three consecutive lockdowns.

In addition, Savills has credited much of the shift in buyer interest to rock-bottom mortgage rates, which could be around for some time to come.

“The expectation that interest rates will stay lower for much longer than was predicted pre-pandemic means there remains capacity for medium-term house price growth despite the unexpectedly strong performance of last year. Across the country as a whole, five-year price growth of around 20% looks sustainable without unduly depleting mortgage affordability,” Cook added.

The overwhelming majority of sectors experienced catastrophic losses last year, due to the COVID-19 crisis and the effects of lockdown. The UK’s financial sector was by no means immune to the harms of the coronavirus, which was also predicted to face a monumental downturn in the wake of a turbulent Brexit.

The latest figures suggest that financial firms paid a cumulative all-time record of £75.6 billion in tax contributions last year. This enormous figure comprised £41.5 billion from customers and staff, along with £34.1 billion from the finance firms directly.

The sector’s surprisingly high contribution during such a difficult year again highlights its criticality to the UK economy, along with the importance of safeguarding its future for the benefit of the country.

Lack of prioritisation in Brexit talks

Data has once again shown that while the finance sector remains a comparatively modest sector in terms of job creation, its economic contribution is disproportionately high.

Pension funds, banks, insurers, and other specialist finance companies account for around a million jobs or just 3% of the total workforce. However, the sector continuously pays approximately 10% of all employment taxes the Treasury collects each year.

It is therefore surprising that while UK-EU post-Brexit trade deal talks were underway over the past few years, the financial services sector was largely swept to one side. Even Boris Johnson stated that the resulting agreement “perhaps does not go as far as we would like” for the sector, despite its essential economic contribution.

Speaking on behalf of the City of London Corporation, policy chair Catherine McGuinness expressed disappointment “not to see the sector’s role recognised during the trade negotiations with the EU.”

“We must now move forward and focus on an ambitious dialogue that reflects the deep integration of our two markets,” she continued.

Meanwhile, the Lord Mayor of the City of London, William Russell, re-emphasised the importance of ensuring the UK upholds its global reputation for elevated regulatory standards.

“Now is the time to be entrepreneurial, to look again at how we do things, to consider how to take full advantage of our position,” he said.

“This emphatically does not mean pushing for sweeping deregulation and tax cuts in what has often been called the ‘Singapore on Thames’ model, which rather misrepresents Singapore and the reasons for its success.”

In the weeks since Brexit became a reality, the whole UK economy has been something of a mixed bag. On one hand, predictions of immediate and outright Armageddon for the country’s entire business community turned out to be exaggerated. On the other hand, there are those who still see a doomsday scenario, but not just yet.

Either way, the financial services sector is currently in a state of limbo, with various forecasts and opinions. In 2019, the sector’s total economic contribution was an enormous 7%, somewhere in the region of £132 billion. It is also a surprisingly prolific employer, creating at least 1 million jobs, a sizeable portion of which are based in the City of London.

To date, no formal agreement has been made between London and Brussels with regard to the regulation of financial services following the UK’s departure from the EU. Talk continues of an agreement by the proposed March 31 deadline, but nothing has yet been set in stone.

This has had the potential to prove problematic, given how the financial institutions in the UK trade euro-denominated shares and bonds from within the euro bloc. Measures have been established to temporarily enable such trades to continue, and the Financial Conduct Authority is allowing companies in the UK to trade EU derivatives until June, but what happens next is a subject of heavy debate.

No mass exodus from London

Late last year, it was estimated that a minimum of 7,500 jobs and more than £1.2 trillion in assets had been relocated from the UK on the part of financial institutions and service providers preparing for the chaos to follow; however, many predictions of a mass exodus from London have so far turned out to be somewhat exaggerated, and many new European finance houses have instead relocated to London to ensure access to the UK market.

Deutsche Bank, for example, warned last year that as many as 4,000 workers would be moved to Frankfurt after Brexit. As of now, Deutsche Bank and other major players appear to be holding out, waiting to see what actually happens before making any major decisions.

Depending on the agreement reached between London and Brussels, it could become entirely unnecessary for the financial services sector to suddenly extract many thousands of workers from the UK. This will only occur if equivalence is not granted for specific segments of the market, which may or may not happen.

Strong forex sector

Irrespective of the above, Brexit has so far had no negative impact whatsoever on currency trading in the City of London. The UK continues to account for almost 45% of the entire global forex market, which over the past three years has achieved growth of six percentage points.

The United States is the second-biggest player in currency trading, with a market share of around 16.5%.

London will continue to be one of the world’s most attractive locations for currency trading, not least due to its strategic position and time zone midway between Asia and the USA. This is unlikely to be affected by any Brexit-related issues, particularly while the EU’s currency trading experience and infrastructure remain so broadly distributed and fragmented.

Tesla has once again been dominating the headlines over the past week, after the company made a historic $1.5 billion Bitcoin purchase. The huge cryptocurrency investment was not entirely surprising, given CEO Elon Musk’s public praise for Bitcoin for some time now.

Many analysts had always seen it as purely a matter of time before Musk entered the cryptocurrency marketplace, though few had predicted such a monumental investment.

Tesla’s $1.5 billion Bitcoin investment spurred another meteoric rise in the value of the world’s number-one digital asset. Having recently skyrocketed beyond $40,000 for the first time, the value of a single Bitcoin briefly broke the $50,000 barrier before settling back at $47,000 by Monday, February 15.

Confidence in cryptocurrency in general spiked alongside the value of Bitcoin, which, on the basis of this single purchase, increased by around 9%.

But at the same time, economists and market watchers are questioning whether a major investment in Bitcoin represents a savvy use of the firm’s funds. Whether Tesla is wise to begin accepting Bitcoins for purchases of its products has also been called into question.

Differences of opinion

Unsurprisingly, Tesla’s cryptocurrency investment has divided experts right down the middle. In an interview with MarketWatch, Christopher Schwarz from the Centre for Investment and Wealth Management at the University of California insisted Musk had made a mistake.

“I think this is an awful strategy on many, many levels,” he said.

“In essence, this is like creating [currency] risk since none of Tesla’s suppliers are paid in Bitcoin.”

Tesla has done little other than delight its stakeholders and shareholders as of late. Within the past 12 months alone, Tesla share prices have increased by an astonishing 472%. This is more than what Bitcoin itself has gained over the same period of time, achieving growth of 337%.

Jerry Klein, managing director and partner at Treasury Partners, likewise told MarketWatch that the decision to invest in Bitcoin was unusual and unexpected.

“Tesla’s purchase of Bitcoin is an unusual use of corporate cash, which is typically held in safer and less volatile assets, such as short-term fixed-income securities, to ensure liquidity and limit volatility,” he said.

“While Tesla shareholders are reacting positively to the news, it remains to be seen how shareholders would react if a decline in Bitcoin’s price negatively affects Tesla’s future earnings.”

“CFOs are willing to accept risk in their overall business, but not with the cash on their balance sheet. While Bitcoin has been surging in recent months, it’s been very volatile over the past few years.”

Meanwhile, there are those who believe simply allowing capital to effectively ‘go to waste’ with traditional holding options is actually the biggest mistake companies like Tesla can make.

“Corporations with ever-increasing dry powder have a most obvious cash management option: partial BTC allocation,” commented co-founder of Nexon, Antoni Trenched.

“Sitting on piles of cash offers little to no return and gets constantly devalued by central banks’ excessive QE measures. Having a Treasury policy that diversifies risk and return, as well as looking into ‘the fastest horse’, is not only a sound policy but is also the one that most adheres to the key principle of maximising shareholder value.”