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London House Prices Climb to 14.5 Times Average Earnings

Typical white stuccoed terraced houses detail in London

London house prices have risen to a new record high, at 14.5 times the average earnings of local residents. New data from Hometrack shows that property in London continues to rise in price, often at a pace that far exceeds earnings growth.

Last year, home prices in the capital earned international attention after research showed that the average London home cost more than 14.2 times the city’s average salary. Prices this year are up even more, increasing the home-price-to-earnings ratio to 14.5.

Property prices have risen in many of Britain’s major cities over the past decade, with areas like Cambridge and Oxford following closely behind London. However, in certain parts of the UK, the average home price has remained relatively steady over the past 15 years.

Property prices in the South East, as well as Liverpool, Newcastle and Liverpool have stayed at the same earnings-to-home-price ratio for the last 15 years. In some cases, housing prices have fallen relative to local salaries.

However, London’s status as an important international business hub and desirable property market have set it apart from the average. The house-price-to-earnings ratio for London is now at its highest level in the last 15 years.

Several factors have contributed to this boom in housing prices. Falling mortgage rates over the past few years have increased buying power for many London residents, resulting in a surge in the cost of residential property.

Other factors include increased buying interest from international residents, many of whom live in London as a second home, as well as a slight decline in real wages across the UK.

Despite this recent growth, analysts believe London’s house prices may not continue to rise at current levels. A recent report in Estate Agent Today states that the London residential property market could potentially underperform as housing prices adjust to match buyer expectations.

Richard Donnell, research and insight director at Hometrack, stated that home unaffordability in London has “reached a record high despite a material slowdown in the rate of house price growth over the last year.”

“Lower housing turnover in the capital has led to a tightening of supply in recent months, which has stabilised house price growth. Even so, the gap between average earnings and house prices in the capital has never been wider.”

Rising property prices are a major cause of concern for low-income households in London, with many properties requiring a deposit of more than £100,000, putting them out of reach of many people on below-average incomes.

In spite of rising property costs relative to salaries, London has fallen slightly in its total cost of living over the last year. Currency fluctuations mean that London now ranks third in global cost of living rankings, behind New York City and Hong Kong.

Other areas of the UK with fast-growing house prices include Birmingham, where properties in the Ladywood area have increased in value by a staggering 17% over the last year, according to data from Barclays.

Growing Number of Consumers Caught in “Subscription Traps”

Chiang Mai: Netflix website showing on screen laptop with macbook pro at cafe. Netflix being popular internationally

A growing number of UK consumers are being caught in “subscription traps” — recurring weekly or monthly subscription payments that are difficult to cancel.

Data from Citizens Advice shows that the average person spends £50 per month on recurring services because of difficulties in cancelling. Gym memberships and online streaming services are among the most common recurring costs for UK consumers.

Among the complaints received from Citizens Advice is one from a person that attempted to cancel a recurring subscription after losing their job, only to be asked to provide written proof from their employer in order to terminate the contract.

Others include consumers that spent hundreds of pounds over the course of years, often for products and services they weren’t aware of.

In total, more than 600 problems have been reported to Citizens Advice over the past three months, specifically related to subscription payments. On average, customers spent £160 on subscription services — often services they did not want, need or frequently use.

Of these customers, more than 90% faced difficulties when trying to end their subscriptions, often in the form of overly difficult cancellation processes that required consumers to cancel over email or by phone.

Many of these subscriptions use free samples to lure customers in, only to charge consumers large amounts of money over the long term. A recent article in the Mirror states that many UK consumers face payments of up to £90 a month after requesting “free” samples online.

Andy Allen, service director of the UK European Consumer Centre, states that consumers are often “hooked by an advert places, for example, on social media for a free trial’.” The adverts typically advertise free samples of diet pills, teeth whitening devices or skin creams.

Most of these free trials request a small fee from consumers — often £1.99 or less — for postage and handling costs.

Hidden deep in the terms and conditions, however, is a complicated billing system that states consumers can be charged as much as £90 per month for products they never wanted due to deceptive “free trials.”

Citizens Advice has noted cases where people spent almost £1,000 in total before realising that they were being billed, all for “free” samples. One consumer spent more than £350 for a beauty product sample advertised as costing £4.95.

Many of the most common “free trial” scams and subscription traps can be avoided through a combination of research and skepticism towards offers that seem too good to be true.

Citizens Advice recommends that consumers avoid offers that look and feel too good to be real, such as heavily discounted or free trials. If a free trial is offered, check that there aren’t hidden fees buried deep inside the terms and conditions that could end up increasing the cost.

Consumers are also recommended to avoid purchasing free trial items from companies based outside the UK, as these contracts can be much harder to end. In cases of obvious fraud, your card issuer may be able to return your money via a chargeback.

Cyber Monday “Largest Online Shopping Day in U.S. History”

Woman shopping on internet

This year’s Cyber Monday is shaping up to be one of the most lucrative in recent memory for online retailers, and potentially one of the biggest ever.

According to the Los Angeles Times, online purchases hit a record high over the Thanksgiving holiday weekend, with a growing number of American consumers ordering products from online retailers such as Amazon, Walmart and others.

The data published in the LA Times piece comes from Adobe Analytics, which tracks spending and transactions from the 100 largest US-based online retailers. According to the data, upwards of $14 billion was spent online over the weekend following Thanksgiving Day.

Cyber Monday was the largest online shopping day of the season, with almost $3.4 billion spent via online e-commerce retailers by 1:30 pm — an increase of 17% from spending patterns during the previous Thanksgiving weekend.

This year’s high level of online spending can be attributed to several factors. One is the general growth in e-commerce. More than at any previous point in the last decade, consumers are more comfortable ordering products online.

A second factor is the increasing focus of many large retail chains on online sales. Major retail stores such as Kohl’s reported a “record-breaking” weekend, recording nearly 16 million visits to its online store in a single day.

Despite the increase in online sales, visits to physical retail stores — a famous, of infamous part of Black Friday — fell slightly, possibly due to retailers offering lucrative online deals for shoppers that preferred to stay at home.

According to the National Retail Federation, total holiday spending increased by 4% over the course of the year. However, visits to physical retail stores over the Thanksgiving period were down 1.6% compared to 2016, indicating that much of the season’s growth is online.

The largest winner of the Thanksgiving shopping period appears to be Amazon.com. Although the e-commerce giant hasn’t released its holiday weekend shopping results to the public yet, it has released some interesting statistics.

During the first five hours of Black Friday, Amazon reportedly sold more than 200,000 toys to its eager audience of online shoppers. The company reported that Amazon Echo devices, pressure cookers and home DNA tests were among its top-selling Thanksgiving weekend items.

Amazon, which has always been a leader in e-commerce, now makes up 43% of e-commerce transactions, according to EMarketer data. The company’s dominance in online shopping has allowed it to create its own “shopping holidays,” such as the company’s Prime Day.

According to Amazon, Prime Day sales exceeded Black Friday and Cyber Monday spending, indicating that Amazon’s existing customer base is so much of an asset that the company can shape its own demand patterns and “create” consumer holidays of its own.

Unfortunately, the Thanksgiving shopping period wasn’t as much of a success for other retail brands as it was for Amazon. Department store giant Macy’s reported credit card and gift card processing issues that affected its ability to capitalize on the increased holiday demand.

Advertising Watchdog to Crack Down on Broadband Providers

wlan antenna

From May, UK-based broadband providers will be required to advertise more realistic speeds to their public, bringing the currently used “up to” speeds seen in advertising closer to reality.

Currently, broadband providers are allowed to advertise “up to” broadband speeds — download speeds that are available to 10 per cent of customers — instead of the average speed achieved by home broadband users.

The new regulations, designed to reduce customer complaints over differences between speeds promoted in advertising and realistic connection speeds, will limit advertising claims to download speeds achievable by at least 50% of customers during periods of peak network load.

The initiative is being handled by the Committees of Advertising Practice (CAP), which recently found that broadband advertising is likely to mislead users about the average connection speed that can be achieved from a home connection.

Several independent studies have found that the majority of UK internet users don’t receive the connection speeds that are advertised by broadband providers. As many as 75% of broadband users have reportedly never received their advertised peak download speeds.

Under the new regulations, which will become law from May 23, broadband providers will need to advertise the median peak download speed. The CAP claims that this figure provides a more accurate representation of the speeds home broadband users can expect from regular use.

Broadband speeds are affected by numerous factors, from a user’s location and usage habits to their hardware. Shahriar Coupal, director of CAP, claims that the new rules will help consumers get a “better understanding of the broadband speeds offered by different providers.”

The new regulations have been praised by Ofcom, which has supported a chance to advertising rules for broadband services.

Britain has consistently lagged behind other European countries in broadband speeds — a fact that many have attributed to misleading advertising and low service quality. In August, Britain’s average connection speed ranked 31st in the world, below New Zealand and Thailand.

Poor connection speeds have resulted in consumer and political backlash. In July, dozens of MPs backed a report calling for the introduction of financial compensation for customers that paid for broadband download speeds they did not receive.

The report, which was coordinated by the British Infrastructure Group of MPs (BIG), noted that broadband is increasingly viewed as an essential utility similar to water or gas, and that service quality in the UK had “not caught up with demand” from consumers.

Connection speeds are not the only aspect of the broadband internet industry to earn criticism from consumer advocate groups. The ASA has also investigated the use of phrases like “fiber broadband” in advertising for connections that only partially use fiber optic cabling.

Despite this, progress is being made. The average home broadband speed rose to 36.2Mbps this year, up from 28.9Mbps the year before. Internet speeds are up across the UK, although rural areas continue to lag behind urban areas in infrastructure and line speed improvement.

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