Preliminary estimates of GDP growth improved to 0.4% in Q2, up from 0.2% in Q1. The rebound in growth suggests the poor weather in March largely contributed to the weakness in output during Q1.
The Monetary Policy Committee (MPC) expects domestic cost pressures to rise given the tight labour market conditions and unanimously voted to raise the Bank Rate by 25 basis points to 0.75% in August.
All-property average rental growth has slowed in recent months, with the weakness of the retail sector being a particular drag on the average. We expect all-property rental growth to remain sluggish this year as a whole, in line with continued occupier uncertainty and below-trend economic growth.
The prospect of a ‘hard’ Brexit is causing some degree of caution among investors. However, demand from both international and domestic investors still outweighs the level of supply.