On the whole, equity markets seem to have shaken off most of these worries, with many indices finishing the summer flirting with new highs. That can partly be explained by the sheer pressure of money that has flowed into markets because of government stimulus, such that even more-than-pointed hints at coming rate rises have barely caused a ripple. Equities have been the trade that you could not afford to miss, a self-reinforcing characteristic that's sucked in more money still.
The same has also been true of the UK’s property market, which has also remained resilient in the face of myriad political uncertainty, not least Brexit and attempts to discourage buy-to-let buyers from the market with tax changes (see Will buy-to-let still pay for your retirement needs?). And if equities have been the trade not to miss, within the UK market housebuilders have been the place to be in recent years. Again, cheap money has been supportive of this price appreciation, as has the Help to Buy policy, which according to the Council of Mortgage Lenders had driven first-time buyers into new-build properties. As Ian Smith writes in this week's Taking Stock, on some fundamental metrics valuations in the sub-sector are looking a little stretched. But, as announced alongside this week’s Conservative Party conference, government largesse is to be extended, including new funding for affordable housing that could stimulate the sector further still. Whether it’s enough to tackle the problems in the housing market remains to be seen, but at least something is being done.
Like housing, another massive social problem that we can’t afford to ignore is the issue of late life care – even if, after the ‘dementia tax’ manifesto disaster, it is a subject the Tories seem to be avoiding. Politics aside, the IC view is that with rising longevity more of us will need to set aside ever greater amounts to fund this cost because a five-year stay in a care home could easily rack up a bill of £250,000. Many of us will need to manage the transition of an elderly relative into care – as I and several colleagues have recently – and good financial planning can help take some of the pain out of what will always be a stressful life moment. This week’s cover feature contains the benefits of our collective experiences – we hope it helps.
