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15th March 2014

Singapore Economy

Bosses face more painful labour crunch this year

Source: Business Times / Top Stories

EMPLOYERS who have been moaning about labour shortage in the past year face a more painful crunch in 2014 as the jobs market tightens further and puts upward pressures on wage costs, the Ministry of Manpower has warned.

This makes it even more urgent for Singapore to raise productivity and switch to manpower-lean ways to grow business, it said yesterday when releasing the annual Labour Market 2013 


Sounding the alert on a tighter labour squeeze, the ministry said that previously announced measures - such as lower dependency ratio ceilings and higher foreign worker levies - to slow the inflow of foreign employees would come into force in July this year, while the growth in local workforce is running into demographic constraints.

At the same time, it noted, ongoing infrastructure projects such as the Downtown and Thomson MRT lines, hospitals and housing developments as well as the opening of new hotels and shopping malls would lead to strong demand for workers in the construction and services sectors.

In urging employers to put in more effort to improve productivity, the ministry said it is reviewing the Continuing Education and Training Masterplan to support the re-skilling and upgrading of workers.

According to the Labour Market 2013 report, productivity improved last year after a 2.0 per cent dip in 2012, but growth was still flat, especially in the construction and parts of the services sectors.

While labour productivity rose 1.5 per cent yearly between 2008 and 2013, real median income grew 1.7 per cent per annum in the same period.

"There is a need to sustain and broaden the recent improvement in productivity growth," the ministry said.

The pressures on wages are already evident. The report revealed that real median monthly income (include employers' CPF contributions) jumped 4.6 per cent in 2013, up from 1.2 per cent in 2012.

"This reflected strong nominal income gains amidst tight labour market conditions, as well as moderating inflation," it said.

The average overall unemployment rate slipped 0.1 percentage point in 2013 to 1.9 per cent.

The jobless rate for citizens also fell by the same amount to 2.9 per cent, as employers turned more to local workers because of the tighter foreign worker policy.

Driven largely by local employment gains, total jobs growth was 4.1 per cent (or 136,200) in 2013, against 4.0 per cent (129,100) in 2012. Foreign workers accounted for 36.9 per cent of the total growth (minus foreign domestic workers) last year, down from 53.3 per cent in 2012.

Local employment rose 4.0 per cent (82,900) last year, compared to 2.9 per cent (58,700) in 2012, as employers lured economically inactive older and female Singaporeans back to work.

"Overall, the bulk of the growth in local employment were in the services sector (77,100), led by the community, social and personal services, professional services, administration and support services and food and beverage services industries," the ministry said.

Foreign employment gains slowed for a second straight year to 4.6 per cent (48,400) in 2013, against 6.8 per cent (67,100) in 2012. The bulk of the growth came from the construction sector.

Excluding construction and foreign domestic maids, foreign employment grew 2.3 per cent (16,800) last year, down from 4.6 per cent (32,200) in 2012.

-By Chuang Peck Ming

Singapore retail sales flat in January

Excluding sales of vehicles, retail sales rose 9.2% year-on-year

Source: Business Times / Top Stories

RETAIL sales edged up 0.1 per cent year-on-year in January this year, as sales of motor vehicles took a dive.

Stripping out the sales of vehicles, retail sales rose 9.2 per cent from a year earlier, data released by the Department of Statistics yesterday showed. Sales of motor vehicles fell 33.2 per cent year-on-year, but went up 2.5 per cent month-on-month.

On a month-on-month, seasonally adjusted basis, retail sales crept up 0.6 per cent in January and inched up 0.2 per cent after excluding sales of motor vehicles.

Sales of food & beverages (F&B), supermarkets and department stores got a boost from the Chinese New Year holidays in January, surging by 44.9 per cent, 19.4 per cent and 18 per cent respectively from the corresponding month in 2013.

-By Nisha Ramchandani

Singapore Real Estate

Developers fear being boxed in by prefab

Source: Straits Times

Using prefabrication technology in building can deliver productivity gains but developers fear it could compromise the uniqueness of luxury projects. They say prefabrication's one-size-fits-all approach can mean the personal touches and extra attention to detail that many buyers demand will be lost.

St James in $1.5b RTO deal with Perennial

This will be followed by other transactions to transform loss-making Catalist firm into a larger integrated real estate player

Source: Business Times / Companies

ST JAMES Holdings has proposed a series of transactions that will transform the loss-making Catalist company into a larger integrated real estate player holding assets held by Perennial Real Estate Holdings (PREH) through reverse takeovers.

The first phase of the transaction is a proposed $1.56 billion acquisition of the unlisted assets of PREH and listed assets under PREH-sponsored business trust Perennial China Retail Trust (PCRT) via the issuance of new shares.

This will be followed by a transfer of St James' existing hospitality and entertainment business to a newly incorporated company, and shares in the new company will be issued to shareholders on a pro rata basis. At the same time, St James will undertake a 50-to-one share consolidation.

-By Lynette Khoo

Draycott 8 unit up for auction; 4 Sentosa Cove condos up for sale

JLL marketing by private treaty the Sentosa units, put up for sale by their mortgagees

Source: Business Times / Wealth 

A FOUR-BEDROOM apartment in the prime Draycott 8 project has been put up for sheriff's auction on March 27. JLL, which is conducting the auction, is also separately marketing by private treaty four condo units in Sentosa Cove that have been put up for sale by their mortgagees (or lenders).

Private treaty deals entail negotiations unlike an auction where all the bidders come publicly.

Two of the apartments are in the Turquoise project; they are four-bedroom units, one above the other and believed to be owned by the same party.

Potential in suburban office space

Source: Straits Times

Suburbia may be the way to go when it comes to investing in offices. As Singapore steps up the drive to decentralise, many office tenants have been moving away from the pricier city centre, Ms Christine Li, head of research at OrangeTee, observed in a report.

Commercial investors can benefit from Yishun buzz

Source: Straits Times

Far-flung Yishun is headed for some downtown-style buzz with the completion of two mixed developments, along with more homes and amenities. The mature town's mushrooming population also means commercial investors can expect good returns from a large catchment of residents living in the area, experts said.

Quick action makes short work of HDB market woes

Source: Straits Times

When Mr Khaw Boon Wan put up his hand after the last general election to take over the National Development Ministry, he inherited a full slate of policy issues that had troubled voters. Newlyweds and young families complained that their housing options were limited. They couldn't buy private property because prices had shot through the roof. HDB resale flats were unaffordable because cash over valuation (COV) was high.

Removing COV is a bold, timely U-turn

Source: Straits Times

It's been a long time coming, but on Monday the Government finally bit the bullet and did what it should have done years ago - it found a way to get rid of cash over valuation (COV) from the public housing market sales process for good. COV is the cash premium a buyer pays over and above the valuation of an HDB resale flat. As it must be paid in cash, it has a significant impact on affordability and is often used as a barometer of demand in the housing market.

New lease of life for oldest Teochew temple

Source: Straits Times

More than two years and a $7.5 million makeover later, Singapore's oldest Teochew temple is ready for a new beginning. The Yueh Hai Ching temple on Phillip Street will officially re-open on March 31 after an extensive restoration, which involved 45 craftsmen from Swatow, China.

Turn Ubin into ecotourism spot?

Source: Straits Times

Pulau Ubin could be promoted as an ecotourism destination, a biodiversity hub or a village where Singapore residents weary of the city can go to relax. Such were the suggestions in response to the Government's callon Monday for views on how to "sensitively" protect and enhance the isle's rustic character and natural environment.

Fire breaks out at construction site next to Junction 10

Source: Channel News Asia / Singapore

SINGAPORE: A fire occurred at a construction site next to the Junction 10 shopping mall in the Choa Chu Kang area.

The Singapore Civil Defence Force (SCDF) said it received a call about the fire at about 3.45pm.

SCDF said the fire involved building materials and was quickly extinguished by its officers.

SCDF is investigating the cause of the fire.

- CNA/ac

Real Estate Companies' Brief

S'pore Reits may be back in favour

Source: Straits Times

Rekindling a love affair can be a tall order when the attraction fades, so analysts deserve some kudos for trying to reawaken the passion investors once felt for real estate investment trusts (Reits). Their rationale is simple: Reits offer investors an attractive high-yield return when compared with the measly sub-zero interest rates which banks pay savers for their deposits.

Fortune Reit sees costs rising on utility rates, minimum wage hikes

Source: Business Times / Companies

RISING utility rates, inflation and statutory minimum wage hikes in Hong Kong will hike up its operating expenses in the medium term, Fortune Reit said in its annual report released yesterday.

The retail Reit also faces risks from Hong Kong's economy which is "bottoming out". The country's growth in 2013 has been "gradual", wrote Chiu Kwok Hung Justin, chairman of ARA Asset Management (Fortune) Limited which manages the Reit, in the 'Chairman's Report'.

Hong Kong's real gross domestic product grew 2.9 per cent in 2013, higher than the 1.5 per cent expansion in 2012, although far short of 2011's 4.8 per cent growth.

-By Lee Meixian

Soilbuild unit clinches $39.5m deal

Source: Business Times / Companies

Two firms to join watchlist

ALLIED Technologies and Chinasing Investment Holdings will be placed on the Singapore Exchange's watchlist from March 17, after recording pre-tax losses for the three last consecutive financial years. Allied Technologies's market capitalisation as at its last-traded day was about $28.4 million, while Chinasing's was $4.5 million. They have two years to meet the criteria necessary for removal from the watchlist.

Soilbuild unit clinches $39.5m deal

SOIL-BUILD (Pte) Ltd, a unit of Soildbuild Construction, has secured a $39.5 million contract from a consortium led by Tong Eng Brothers to build a residential flat development, 16 Balmoral Road. The project is expected to start by April 2014 and be completed by Q3 2016. It brings the group's latest order book to date to $410.4 million.

SingHaiyi JV on Anchorvale EC

Source: Straits Times

Singhaiyi Group has invited construction firm Kay Lim Investment Pte Ltd to be its 20 per cent joint venture partner in Anchorvale Residences Pte Ltd, the developer for an executive condominium project at Anchorvale Crescent. SingHaiyi Group will hold the remaining 80 per cent stake and be the manager of the project.

First Real Estate

Source: Business Times

First Reit (FReit) has entered into a conditional sale and purchase agreement with PT Purimas Elok Asri (PT PEA), an unrelated party, for the acquisition of Siloam Hospitals Purwakarta (SHPW), which is located in West Java, Indonesia. The purchase consideration is $31 million (subject to unitholders' approval), and represents a discount of 17.3 per cent to the average of two independent valuations obtained.

Parkway Life Reit

Source: Straits Times

Parkway Life Reit (P-Reit) announced the acquisition of two nursing homes and an extended-stay lodging facility for the elderly in Japan for a total of three billion yen (S$37.4 million). The purchase consideration is estimated to be 6 per cent below the aggregate valuation of the properties.

Global Economy & Global Real Estate

Trim UK housing stimulus, say economists

More than 80% of those polled want govt to curtail Help to Buy plan to prevent a bubble

Source: Business Times / Wealth

BRITAIN'S Chancellor of the Exchequer George Osborne should scale back his housing market stimulus next week to prevent prices spiralling, according to a survey of economists.

Almost three-quarters of 33 analysts in a monthly survey by Bloomberg said property in the UK is at risk of overheating.

The poll, published yesterday, also showed that more than 80 per cent said Mr Osborne should use his March 19 budget to curtail the Help to Buy programme, which allows people to buy a home with a down payment of as little as 5 per cent.

-From London, UK

Emaar Plans to Raise Up to $2.45 Billion in Malls Listing

Source: Bloomberg / News

Emaar Properties PJSC (EMAAR), builder of the world’s tallest tower, said it expects to raise as much as $2.45 billion in the public offering of a 25 percent stake in its shopping malls and retail business after revenue surged.

The estimated 8 billion dirhams ($2.18 billion) to 9 billion dirhams generated from the secondary public offering in the Emaar malls and retail unit will primarily be distributed to the company’s shareholders as a dividend, according to an e-mailed statement today from Emaar. The Dubai-based company didn’t give a time frame for the share sale or location.

Emaar is benefiting from a tourism and retail boom in Dubai that’s driving up visitor numbers at its flagship malls and boosting sales. The malls and retail business posted a 20 percent increase in revenue to 2.84 billion dirhams in 2013, while the Dubai Mall received 75 million visitors last year.

“Emaar’s shopping malls and retails subsidiary is our high-performing business, which derives its growth impetus from the sustained growth of Dubai,” Mohamed Alabbar, chairman of Emaar Properties, said in the statement.

Emaar also said it proposed a cash dividend of 15 percent of the company’s share capital for 2013 as well as 10 percent bonus shares to shareholders.

Most Recent

Emaar is the most recent company in the region to take advantage of surging markets and asset prices to plan public offerings. Emirates Reit, U.A.E.-based real estate investment trust, will sell shares on Nasdaq Dubai (DPW) in the first IPO in the sheikdom in at least five years, it said Mar. 11. The company is seeking at least 500 million dirhams for acquisitions and investments.

Abu Dhabi’s Senaat, which owns companies including National Petroleum Construction Co., is seeking approval from the emirate for an IPO this year, two people familiar with the matter said last month. It hired HSBC Holdings Plc (HSBA) and JPMorgan Chase & Co. for a sale on the Abu Dhabi Securities Exchange.

Dubai’s economy expanded about 4.9 percent in 2013, four years after it was rescued from near default with a $20 billion bailout from neighboring Abu Dhabi. Property prices are surging and companies including real-estate developer Nakheel PJSC are repaying debt early to win back investor confidence.

Dubai’s benchmark DFM General Index has more than doubled in the past year and has gained 18 pecent so far in 2014. Emaar rose more than 13 percent this year and gained 1.1 percent to 8.66 dirhams on March 13.

-By Dale Crofts

Blackstone’s Home Buying Binge Ends as Prices Surge: Mortgages

Source: Bloomberg / Personal Finance

Blackstone Group LP (BX) is slowing its purchases of houses to rent amid soaring prices after a buying binge made it the biggest U.S. single-family home landlord.

Blackstone’s acquisition pace has declined 70 percent from its peak last year, when the private equity firm was spending more than $100 million a week on properties, said Jonathan Gray, global head of real estate for the New York-based firm. After investing $8 billion since April 2012 to buy 43,000 homes in 14 cities, the company has narrowed most of its purchasing to Seattle, Atlanta, Miami, Orlando and Tampa.

“The institutional wave has passed,” Gray, who oversees almost $80 billion in property investments, said in a telephone interview. “It’s at a much lower level than it was 12 or 24 months ago.”

Private-equity firms, hedge funds, real estate investment trusts and other institutional investors have spent more than $20 billion to buy as many as 200,000 rental homes in the last two years. They snapped up properties after prices fell as much as 35 percent from the 2006 peak and rental demand rose from the almost 5 million owners who went through foreclosure since 2008. President Barack Obama credited the investors for helping put a floor under the plunging housing market and consumer advocates such as the National Community Reinvestment Coalition later blamed them for soaring prices in some cities.

Foreclosures Fall

American Homes 4 Rent and Colony American Homes, the second- and third-largest single-family landlords, also have been scaling back as bargains dry up. Home prices have risen 24 percent since a post-bubble low in March 2012, which was about when corporate buyers started their buying spree, according to the S&P/Case-Shiller index. The rate of U.S. foreclosure starts fell to its lowest level in eight years in the fourth quarter as higher prices allowed more delinquent homeowners to sell without taking a loss, according to the Mortgage Bankers Association.

Jade Rahmani, an analyst for Keefe, Bruyette & Woods Inc., said large investors are focusing on fewer locations as they gain experience and prices go 

“Home prices have increased, which narrows the acquisition opportunity,” Rahmani said. “In addition, these companies have done this for a certain amount of time and there are lessons learned.”

While institutional purchases nationwide fell to a 22-month low in January, corporate investors were more active in the Atlanta region, buying 25 percent of homes sold, according to data firm RealtyTrac. That helped drive up Atlanta prices 37 percent since the March 2012 trough.

Outbidding Homebuyers

Last week, a group of 80 tenant and neighborhood advocacy organizations, including the California Reinvestment Coalition, the National Community Reinvestment Coalition and the National Consumer Law Center, asked federal regulators “to address first-time homebuyers being outbid, tenants being displaced, and neighborhoods undergoing dramatic changes as private equity and investor cash continues flooding into local housing markets.”

Gray, 44, said the influence of corporate investors on home prices has been exaggerated. They represent at most 10 percent of the 2 million homes bought by investors in the last two years, according to Rahmani, the analyst.

“There’s a narrative out there that institutional buyers are driving the market,” Gray said. “But the reality is that institutional buyers are in a relatively limited number of markets, their buying is tapering and yet home prices continue to go up at a pretty strong clip nationally -- even in markets where institutional buyers haven’t purchased a single home.”

American Homes

At the height of its activity, Blackstone’s Invitation Homes LP made purchases that may have comprised as much as 6 percent of sales for several months in one or more of its 14 markets, Gray said. This may have had a short-term impact on prices, he added.

“We definitely helped alleviate excess distressed housing stock,” he said. “We weren’t 5 or 6 percent for a sustainable period of time in any market.”

American Homes 4 Rent (AMH) added 2,001 homes in the quarter ending Dec. 31, down 32 percent from the previous quarter’s 2,941 homes, according to a statement yesterday. Purchases since the start of the year brought its portfolio to more than 25,000, a pace that may decline until the company raises more money, Chief Executive Officer David Singelyn said during an earnings conference call with investors today.

“We’re going to have to probably slow down a little bit on our acquisition pace until we have a better view or actual certainty of the capital being available,” Singelyn said.

Colony Financial Inc. (CLNY), a REIT that invests in Colony American Homes, slowed its funding for acquisitions last year to focus on improving operations, CEO Richard Saltzman said in a November conference call. Colony Financial has been gradually allocating less to the landlord business and capped its investment at $550 million for the quarter ending Dec. 31, Saltzman said last month.

Slowing Purchases

Colony American, which owns 16,000 homes, declined to comment, according to Owen Blicksilver, an outside spokesman for the Scottsdale, Arizona-based landlord. American Homes 4 Rent Chief Financial Officer Peter Nelson didn’t reply to a phone message seeking comment.

American Residential Properties Inc. (ARPI), a landlord with 6,000 homes, slowed acquisitions by almost half in its latest quarter ending Dec. 31. It invested $104 million in 633 homes compared with $204 million on 1,251 homes in the previous quarter, the Scottsdale, Arizona-based company said in a statement.

“We intend to maintain the pace of our acquisition activity at roughly the same rate we had in the fourth quarter,” CEO Stephen Schmitz said in an earnings conference call yesterday.

Ramping Up

Some corporate rental companies are still focused on growth.

“We’ve been ramping up acquisitions,” David Miller, CEO of Silver Bay Realty Trust, which owned 5,642 homes as of Dec. 31, said in a conference call with investors last week.

“Looking ahead, we plan to acquire in Florida and Texas while opportunistically adding properties to our Atlanta market and perhaps other markets as well.”

While their acquisitions slow, Blackstone and Colony are extending their reach into the rental business by offering financing to smaller landlords. Last month, Blackstone’s B2R Finance LP originated its first loan for $5.7 million and Colony formed a joint-venture with plans to originate $1 billion in landlord financing this year.

Both companies plan to package the loans as mortgage-backed securities, similar to Blackstone’s $479 million bond issue in October, the first securitization of single-family rental properties.

Long Haul

That’s concerning to U.S. Representative Mark Takano, a Democrat from California. This month he called for the Consumer Financial Protection Bureau, the Department of Housing and Urban Development, the Securities and Exchange Commission and the Treasury to report on the possible risks of “the recent increase of investor owned rental properties and the development of single-family rental-backed securities.”

Institutional investors are not going away even though their size will remain a modest part of the market, Gray said.

“We’re not selling the homes. We’re building a long-term business,” he said.

-By John Gittelsohn and Heather Perlberg

U.K. Commercial Property Values Rise for 10th Straight Month

Source: Bloomberg / News

U.K. commercial real estate values rose for the 10th straight month in February as tenants paid more to rent offices and warehouses, Investment Property Databank Ltd. said.

The average value of stores, offices and industrial properties climbed 0.6 percent from a month earlier, London-based IPD said in a statement today. Total return, which combines changes in real estate values and rental income, was 1.1 percent.

Office and industrial real estate showed improvement after the U.K. economy started to recover last year, while retail demand has lagged because of weak demand, IPD said today. Bank of England Governor Mark Carney has stepped up assurances to keep the benchmark interest rate at a record low, as an improving economy and falling unemployment add to pressure for an increase.

“February saw the same steady growth seen in January continuing, though even more of this was due to regional asset improvements, as returns for London offices slowed slightly,” Phil Tily, head of U.K. and Ireland at IPD said in a statement. “Industrial assets saw a particularly strong month, with their capital growth now equalling that seen in the office market.”

Office and industrial property values both rose 0.9 percent from January, while retail assets gained 0.2 percent, IPD said. Total returns for offices and warehouses were almost double those of retail properties over the last 12 months.

Income-producing commercial property values began to rally in May after 17 straight months of losses through March and no growth in April.

-By Ross Larsen

Clydesdale Offers Prime U.K. Mortgage Bonds as Home Prices Surge

Source: Bloomberg / Luxury

Clydesdale Bank Plc is selling the first bonds backed by prime U.K. residential mortgages since October as home prices climbed by the most in almost two years.

The Scottish lender, owned by National Australia Bank Ltd., offered $997 million of debt in euros and pounds, according to people familiar with the deal. House values in England and Wales increased 1 percent from January to an average 257,951 pounds ($431,000) in the biggest monthly increase since May 2012, according to real-estate researcher Acadata and LSL Property Services Plc. (LSL)

Britain’s $118 billion prime residential mortgage-bond market will return to growth this year after issuance slumped to a five-year low in 2013, according to Srikanth Sankaran, head of European asset-backed securities research at Morgan Stanley in London. The Bank of England’s decision to withdraw support for home loans under its Funding for Lending Scheme will provide impetus for new sales.

“The modification of FLS, increased activity in the housing market and an increase in gross lending will put greater requirements on banks for funding and will incentivize them to look at issuance,” said Sankaran. “We estimate about 20 billion euros of prime U.K. RMBS will be sold this year with the majority coming in the second half.”

Sales of prime RMBS totaled 4 billion euros ($5.5 billion) last year, down from 22 billion euros in 2012 and a peak of 100 billion euros in 2006, according to Morgan Stanley.

Glasgow-based Clydesdale is paying 40 basis points more than the euro interbank offered rate on 300 million euros of notes and 50 basis points over Libor for 350 million pounds of securities, according to people familiar with the transaction.

That compares with a 68 basis-point spread paid when Yorkshire Building Society issued the 1 billion-pound Brass No.3 Plc securitization in October, Bloomberg data show.

-By Alastair Marsh

Osborne Told to Curb U.K. Housing Aid to Prevent Bubble

Source: Bloomberg / Luxury

U.K. Chancellor of the Exchequer George Osborne should scale back his housing-market stimulus next week to prevent prices spiraling, according to a survey of economists.

Almost three-quarters of 33 analysts in a monthly survey by Bloomberg said property in the U.K. is at risk of overheating. The poll, published today, also showed that more than 80 percent said Osborne should use his March 19 budget to curtail the Help-to-Buy program, which allows people to buy a home with a down payment of as little as 5 percent.

“House prices are already in frothy territory,” said Philip Rush, an economist at Nomura International Plc in London. Help to Buy “is encouraging a worsening of fragilities, creating the illusion of wealth by subsidizing house prices and encouraging a further leveraging up.”

Introduced by Osborne a year ago, the incentive program has helped boost mortgage lending. This stimulus, combined with a strengthening recovery and record-low interest rates, has bolstered demand for property and fueled concern that a bubble may be forming. A report from Acadata today showed house prices soared the most in almost two years in February as London continued to power growth.

While the program has stoked the market, Rush said politically it wouldn’t make sense for Osborne to curtail it before next year’s general election. The chancellor has said the plan is helping “aspiring families” to own a home.

Price Surge

Acadata said all 10 regions its tracks registered annual home-price growth in the most recent three months, with London jumping 10.9 percent. Bank of England Governor Mark Carney, who ended his institution’s support for housing loans this year, said on March 11 that officials “have to be alive” to the possibility that rapid increases will spread beyond the capital.

“In London, the market clearly is overheating, but the rest of the regions aren’t benefiting as much,” said Brian Hilliard, a former BOE official who is now an economist at Societe Generale SA in London. “Osborne will be reluctant to do anything. The increase isn’t just caused by Help to Buy, it’s caused by other factors, like foreign buyers, too.”

Economists in the Bloomberg survey were divided over how Osborne should scale back the stimulus. Twenty-eight percent said he could increase the minimum size of down payment needed to access the program, while 25 percent said Help to Buy should be restricted to first-time buyers.

Economic Outlook

Twenty-two percent said the chancellor should lower the maximum price of houses that can be bought with the plan’s help from 600,000 pounds. According to the statistics office, the average U.K. house price in December was 249,792 pounds. In London, the average was 449,551 pounds.

Asked when the BOE will begin raising interest rates, 53 percent predicted the first half of 2015, little changed from last month’s survey. In the survey, 58 percent of respondents said Carney’s forward guidance on rates has been effective, up from 46 percent last month.

Economists have become more optimistic about the outlook. The economy will expand 2.7 percent this year, according to the median estimate in the poll, up from 2.6 percent last month. In 2015, growth will slow to 2.5 percent. Inflation will be 1.8 percent at the end of this quarter and average 2 percent this year, the economists predicted.

Construction increased 1.8 percent in January from December, when it rose 2 percent, the Office for National Statistics said today in London. While the statistics office said it revised construction in the fourth quarter to a 0.2 percent decline from a previous estimate of 0.2 percent growth, it said the revision won’t have an impact on Britain’s GDP.

“Growth was certainly strong the past quarters,” said Duncan de Vries, an economist at Nibc Bank NV in The Hague. “Prospects remain very uncertain as a consequence of the highly-indebted economy.”

-By Emma Charlton and Andre Tartar