Political uncertainty now dominates the global economy, with positivity from the beginning of 2014 steadily diminishing.

The World Bank revised downward its 2015 and 2016 global growth forecast as considerable risk has returned to advanced economies in the form of geopolitical issues and weakness in the Eurozone.

The UK recovery however, has continued its momentum through the final quarter of 2014 with business surveys showing that although not as strong as Q3, UK confidence remains high. The latest release of UK economic data also shows that the recovery is arguably being driven by the labour market, with unemployment falling to 5.8%. There still remain significant downside risks to the UK’s sustained recovery, one being the UK debt position. It is likely that a further spending squeeze is required if the Government aims to balance the books by 2018. Falling inflation will also be a negative pressure on the Government’s ability to pay back its debt and expectations are that prices will fall further in early 2015 as deflation fears begin to creep in. Despite these risks, confidence remains strong, and output and employment are expected to continue to grow. 

National property market
The Nationwide House Price Index saw considerably weaker growth in Q4 compared to the previous quarter, and the first half of 2014. The Index now stands 8.3% up from the same quarter in the previous year, although it should be noted that this still represents significant annual growth in prices.

Read the full Residential London Quarterly Q4 2014.