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Average property price fell 5.3% annually in August as rising borrowing costs dent market

UK house prices contracted at the fastest annual pace since 2009 in August as the impact of higher interest rates hit the property market, according to the mortgage provider Nationwide.

The average house price fell 5.3 per cent last month compared with the same period last year, down from a 3.8 per cent contraction in July and the sharpest fall since July 2009, new data showed on Friday.

House prices were down 0.8 per cent between July and August, taking the average property cost to £259,153, down from a recent peak of £274,000 in August last year.

Robert Gardner, Nationwide’s chief economist, said the rise in borrowing costs “has resulted in activity in the housing market running well below pre-pandemic levels”.

Data released by the Bank of England on Wednesday showed that mortgage approvals fell nearly 10 per cent between June and July. It also showed that the average mortgage rate increased to the highest level since 2008.

The increase in mortgage rates comes as the Bank of England has been battling persistently high inflation, increasing interest rates 14 consecutive times from a record low of 0.1 per cent in November 2021 to the current 5.25 per cent. Markets expect the central bank will increase rates by another quarter point at its next meeting in September.

Alice Haine, personal finance analyst at the investment platform Bestinvest, said the increase in interest rates “means mortgage affordability is now a major challenge for first-time buyers and existing homeowners looking to refinance”.

It is also a challenge for those emerging from cheap fixed-rate mortgages taken out in 2021 who now face significantly higher repayment levels that put stretched disposable household incomes at risk, she added.

Nationwide’s analysis of official data suggested buyers are looking towards smaller, less expensive properties, with a smaller decline in transactions for flats in the first half of this year compared with 2019.

It attributed the trend to the ending of the Help to Buy scheme, which helped those with a smaller deposit purchase a newly built home. Flats have also remained relatively more affordable, it noted, with average prices up by only 13 per cent since the onset of the pandemic, compared with 23 per cent for detached properties.

Andrew Wishart, senior property economist at Capital Economics, said that with mortgage rates set to remain between 5.5 per cent and 6 per cent for the next 12 months, and second-hand supply on the market becoming less tight, “the August data marks the start of a significant further drop in house prices”.

However, Nationwide’s Gardner thinks “a relatively soft landing” for the property market is still achievable because of the unemployment rate, which is expected to remain low, and the high proportion of borrowers on fixed rates.

“While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time,” he said.

West Bank leaders are signaling that they are willing to cooperate with White House efforts to strike a landmark Middle East deal

Palestinian leaders want Israel to relinquish control over small parts of the West Bank and tear down some illegal Israeli communities there as part of any U.S.-brokered deal establishing diplomatic ties between Israel and Saudi Arabia, said Saudi and Palestinian officials—far short of demands they have publicly made in the past.

The relatively modest Palestinian demands offer another sign that the West Bank leadership is willing to cooperate with White House efforts to broker a landmark Middle East deal.

The requests, reported earlier by Axios and the Times of Israel, signal a shift for Palestinian leaders, who accused the United Arab Emirates of stabbing them in the back in 2020 when the Gulf nation secretly negotiated a U.S.-brokered deal to formally establish diplomatic relations with Israel. That agreement paved the way for Bahrain, Morocco and Sudan to follow suit, creating momentum for Israeli efforts to establish diplomatic ties with more Arab and Muslim nations.

President Biden is making a push to open up diplomatic ties between Saudi Arabia and Israel, an agreement that would send a message to other Arab and Muslim nations that their decades of shunning Israel should come to an official end.

The complicated discussions face huge hurdles but securing Palestinian support would give any deal added legitimacy. Saudi Arabia has been a longtime financial and political supporter of Palestinian efforts to create an independent nation alongside Israel, but it cut off funding for the Palestinian Authority in 2021 amid persistent concerns about incompetence and corruption.

In talks with Palestinian leaders, Saudi Crown Prince Mohammed bin Salman has offered to resume funding to the Palestinian Authority if it cracks down on militant groups in the West Bank—a move that would help demonstrate that it could govern an independent state.

In recent months, Palestinian Authority emissaries have provided U.S. and Saudi officials with specific ideas on what steps they would like to see as part of any Israel-Saudi agreement, the officials said. Those include calls on Israel to give the Palestinian Authority more control over some parts of the West Bank and a push to demolish illegal Israeli outposts often established without Israeli government permission by hard-line Jewish settlers, the officials said.

Palestinians also are pressing the Biden administration to follow through on its pledge to reopen its consulate in Jerusalem, which was closed by the Trump administration in 2019, and for the U.S. to back full Palestinian representation at the United Nations, the officials said.

The Palestinian requests don’t come close to the maximalist demands often made in public forums, where leaders hold firm to longstanding demands that Israel end its occupation and allow for the creation of an independent Palestinian state in the West Bank and Gaza Strip, with East Jerusalem as its capital.

The discussions between Riyadh and Ramallah are likely to evolve as the multifaceted negotiations gain momentum. Palestinian leaders could seek more significant concessions from Israel in the coming months, and the Biden administration has made it clear that it wants any deal between Israel and Saudi Arabia to advance efforts to create a Palestinian state.

Saudi Arabia’s leaders also publicly say that they won’t establish diplomatic relations with Israel until they meet that threshold. But the kingdom isn’t expected to hold firm to those demands, which are widely seen as unrealistic under the current conditions.

The asks suggest that the Palestinian leadership is willing to compromise and understand that they will get little to advance their interests if they refuse to work with the U.S. and Saudi Arabia during the talks, political analysts said.

“It’s a positive sign that their leadership is becoming more pragmatic in its approach, as they can use the prospect of diplomatic normalization between Israel and Saudi Arabia to bring tangible benefits to their people,” said William Wechsler, senior director of the Rafiq Hariri Center and Middle East Programs at the Atlantic Council in Washington.

Earlier this month, Palestinian Authority President Mahmoud Abbas told Egyptian President Abdel Fattah Al Sisi that he would be willing to accept the Saudi normalization deal with Israel as long as the Palestinian demands are met and stated in the deal, according to officials familiar with the meeting.

But securing any agreement to cede control of even small parts of the West Bank from the current Israeli government remains in doubt. Key members of the right-wing Israeli coalition oppose any deal that would relinquish Israeli control over West Bank land to the Palestinian Authority.

“We won’t make any concessions to the Palestinians, it’s a fiction,” Israeli Finance Minister Bezalel Smotrich said in an interview earlier this week on Army Radio.

A Palestinian delegation is expected to head to Saudi Arabia next week for more discussions on the issues, the officials said.

An increasing number of houses are funding the renovation of historical sites, at the same time promoting arts and crafts

On Wednesday, Pomellato will gather some of its clients in Venice to unveil a project it has been working on for some time: a new, high-tech illumination system for the marble facade of the Ca’ d’Oro (pictured above), a palace first commissioned in the 15th century by Venetian merchant Marino Contarini and that now houses the Galleria Giorgio Franchetti art museum.

It is the third project the Milanese jeweller has undertaken with the non-profit Venetian Heritage to support conservation projects. In 2021, Pomellato funded the full cost of restoring the funerary monument of Doge Francesco Morosini in the Church of Santo Stefano in Venice, and last year financed the refurbishment of the Epistle Ambo, one of the pulpits of St Mark’s Basilica, which was damaged during the 2019 flood, the worst to hit the city in 50 years.

“It is not only about contributing to the safeguarding of the immense Venetian cultural legacy, it also means supporting the crafts and artistry involved in the restoration,” says Sabina Belli, Pomellato’s chief executive.

Pomellato is not the only luxury house committed to preserving monuments and other cultural sites. Indeed, brands’ participation in such projects is accelerating.

Last year, Cartier refurbished the former British embassy in Madrid, while Bulgari has stepped up its financial support for the city of Rome after donating €1.5mn for the renovation of the Spanish Steps, completed in 2016. Speaking about funding new lighting for the Ara Pacis monument in 2021, Bulgari chief executive Jean-Christophe Babin said it was “a way to give back something tangible to the Eternal City”, where the brand was founded in 1884.

Bulgari also financially supported the restoration of 92 of the 620 marble statues in the Torlonia collection, sponsoring an exhibition of them at Rome’s Musei Capitolini in 2020.

“Such initiatives are essentially charitable work, which projects the positive values of a brand, and makes it feel part of the society, especially as they are often perceived as ‘for rich only’,” says Danilo Venturi, director of the IED institute of design in Florence. But financing the restoration of public monuments goes beyond the familiar formula of associations with the arts — it also “helps the brand to be perceived as eternal, just as the monuments they are associated with”, says Venturi.

Moreover, this philanthropic work places brands in the fashionable arena of urban regeneration as they send out messages about the quality of life, time and spaces we are part of.

Luxury houses’ interest in conservation projects is undoubtedly a boon for culture. “Our government is not able to face all the never-ending campaigns of renovation, restoration and promotion of our endless artistic legacy,” says Toto Bergamo Rossi, director of Venetian Heritage.

Some brands prefer to keep a low profile when it comes to charitable work. Cartier does not actively promote the work of its Cartier Philanthropy initiative, which supports economic development in more than 40 countries. Paris-based jeweller Messika has yet to make any official announcements about the foundation it created in 2021, but diamond company De Beers quietly announced in the same year that it would invest an additional $3mn in its Accelerating Women-Owned Micro-Enterprise programme in southern Africa, aiming for 10,000 beneficiaries by 2030.

Cultural projects also serve as an inspiration for future collections and can be used as exclusive backdrops for promotional or selling events. Cartier exhibited its Beautés du Monde in Madrid in the building it refurbished, and a Torlonia marble statue is on display in the Bulgari hotel (which is located opposite the renovated Ara Pacis) that opened in Rome in June.

The facade of the Ca’ d’Oro, whose Venetian Gothic architecture is influenced by Byzantine aesthetics, inspired Pomellato creative director Vincenzo Castaldo to create the Venetian Dream necklace — a one-off creation mimicking the style of the Ca’ d’Oro, which will be available exclusively at the brand’s store in Venice.

In Brussels, the art deco Villa Empain, designed by Swiss-Belgian architect Michel Polak for Baron Louis Empain in the 1930s, was purchased and restored by the foundation of Geneva-based jeweller Boghossian in 2006. It has become an integral part of the Belgian artistic scene since it opened to the public in 2010, attracting 50,000 visitors a year to its exhibitions and events, which promote dialogue between east and west, and offering residencies to artists and scholarships.

Albert Boghossian, the brand’s chief executive, sees the villa as the embodiment of his family’s philanthropic efforts, which began in 1989 with projects in Lebanon, Armenia and Syria.

“Our family has witnessed untold natural tragedies and conflicts through six generations,” says Boghossian. “In 1976, my brother and I fled the unrest in Lebanon and sought refuge in Europe. At a time when east and west are often engaged in violent exchanges, we have chosen to promote a universal language: that of artistic expression.”

This month, Van Cleef & Arpels will unveil its own branded Rose Garden, found within the Queen Elizabeth Walled Garden, at Dumfries House in Ayrshire, Scotland, to mark the start of a long-term partnership with educational charity The Prince’s Foundation. The project sits well with a brand that has often sought inspiration in nature.

“In all societies, groups, companies, there are shared values, but very often they are implicit,” says Pomellato’s Belli. “Making them explicit creates a common language, as values bring people together and guide companies to work towards a higher purpose and, for us, the pride to give back and preserve.”

Short position worth $320mn disclosed following hefty share price decline

US hedge fund Millennium Management has amassed a $320mn bet against Mexican billionaire Carlos Slim’s telecoms empire amid a sharp fall in the company’s shares.

The sizeable short position pitches the firm led by founder Izzy Englander against one of the largest telecoms companies in the world, with operations across Latin America and in central and eastern Europe through its stake in Telekom Austria.

The company’s shares have fallen 18 per cent since May, giving it a market value of roughly $62bn. It is controlled by the family of 83-year-old Slim — once the world’s richest man — with roughly 53.2 per cent of the company’s shares according to its 2022 annual report.

Slim’s children and their spouses have long been in top positions at his companies, with some of his grandchildren now also involved. The family is currently worth about $93bn, making him the richest person in the world outside the US, according to Forbes.

Despite a 2013 constitutional reform designed to curb the company’s dominant position, América Móvil still has a market share of more than 60 per cent in Mexico’s mobile market. President Andrés Manuel López Obrador has done little to foment competition in the private sector and even said he wanted to abolish the independent telecommunications regulator, which he sees as a neoliberal waste of money.

Millennium, which manages $60bn in assets, has a short position worth 0.52 per cent of América Móvil’s stock, according to a filing with the Spanish markets regulator on Wednesday. The company’s main stock listing is in Mexico, but it also trades on a Spain-based venue for Latin American shares, putting it within the scope of the EU’s short selling disclosure regime.

Millennium and América Móvil declined to comment.

Analysts said the size of Millennium’s bet was striking, even for one of the world’s biggest hedge funds.

“The magnitude of the América Móvil short position is not only uncommon for Millennium but is also a rarity among other money managers,” said Ivan Ćosović, founder of data group Breakout Point.

Millennium is structured differently to many other hedge funds, and doesn’t take big bets based on the view of a few senior decision makers at the top of the fund. Instead, the hedge fund is split into many different teams and each is allocated capital to bet on different markets and strategies.

Analysts at Citi upgraded the stock to a “buy” rating two weeks ago after the initial price decline, which they said was sparked by concerns over higher capital spending, betting the company’s buyback program would speed up in the second half of the year.

The Belgian port grew rich trading salt and sugar. ‘Now, we’re dealing with another white powder’, says city official

An everyday family dinner in the Belgian city of Antwerp came to a sudden halt earlier this year when gunfire boomed outside. Four family members around the table were shot, including an 11-year-old girl who died from her injuries.

The deadly shooting in the quiet suburb lined with squat brick buildings shed light on the dark side of the port city’s most lucrative trade: cocaine trafficking.

The victim was the niece of two of Belgium’s most notorious fugitives, wanted internationally for drug trafficking and money laundering: Othman and Younes El Ballouti. The younger, Younes, manages his older brother’s cocaine business. In the same week as the shooting, he was sentenced in absentia to eight years in prison.

Authorities believe the two men from Antwerp have been hiding out in Dubai, from where they allegedly continue to run their narcotics operations. The US government in July placed the siblings on a sanctions list for drugs smuggling, limiting their ability to open bank accounts abroad.

“If you see the bombs and grenades on the streets of Antwerp, most of them are organised by people hiding in Dubai,” said Belgian justice minister Vincent Van Quickenborne, who is under police protection after criminal gangs last year attempted to kidnap him and his family.

Belgium signed an extradition agreement with the UAE in 2021, but it has so far failed to deliver key suspects like the El Ballouti brothers. The minister said diplomatic efforts to facilitate extraditions from those “safe havens” are ongoing.

According to the US authorities, the El Ballouti network extends from suppliers in Latin America to businesses in China. A lawyer representing Younes El Ballouti declined to comment for this story. A lawyer representing his brother could not be reached for comment.

No suspects have been arrested so far in connection with the girl’s death.

As cocaine shipments to Europe via Antwerp have gone up in recent years, so have the violent incidents: gangs have thrown grenades and Molotov cocktails at rivals’ houses and set cars on fire — often in relation to stolen drug shipments. Last year, Antwerp’s prosecutor’s office registered 81 such incidents, twice as many as in 2021.

Belgian police have seized record amounts of cocaine from Latin America in recent years, hidden in everything from banana crates to the lining of containers. In 2022, the total amount confiscated reached nearly 110 tonnes of the illegal drug and more than 43 tonnes have been seized in the first half of this year.

Law enforcement is no match for the highly sophisticated international drug trafficking networks using the sprawling Antwerp port to cater for a growing European customer base.

The port is the second-largest in Europe after Rotterdam in the Netherlands, and extends over both banks of the river Scheldt for more than 11,000 hectares — larger than the metropolitan area of Paris. About 240mn tonnes of freight volume pass through its quays every year.

Antwerp has been a trading hub for centuries. At city hall, spokesperson Johan Vermant gestured to a mural depicting early traders at the dockside. “The town grew rich with salt from the 13th century and sugar in the 16th. Now, we’re dealing with another white powder.”

But in recent years, Antwerp has become “the first port of call for goods that are interesting to use for drug trafficking, like exotic fruits” from Latin America, which must pass customs quickly, Vermant said.

The rise in shipments to Europe follows an increase in Colombian production, driven by innovations in coca processing and a 2016 peace deal between the government and the Revolutionary Armed Forces of Colombia (Farc) rebel group, according to authorities and researchers.

Only about 2 per cent of the goods coming through Antwerp are scanned, with containers selected on the basis of intelligence or risk-analysis.

“It’s very inefficient,” said Kristian Vanderwaeren, head of Belgian customs.

All containers coming from Latin America and deemed a high risk will be scanned by 2028 thanks to new equipment, he said. Currently, just about 5 per cent of those are controlled.

The measures are part of a new government plan announced in February, which also includes appointing a drugs commissioner, additional staff for police and customs and background checks on 16,000 port employees.

“Our defence line will be much, much better than it is today,” Vanderwaeren said.

Shipping companies are feeling the impact of anti-drug trafficking measures. “We suffer consequences when it comes to costs,” said Claudio Bozzo, chief operating officer of MSC. To make the containers available for customs inspection means shipping delays, as “we have a backlog related to that,” Bozzo said.

Still, leading providers including MSC, Maersk and Hapag-Lloyd signed a declaration in February to co-operate more with Antwerp’s port authorities.

Law enforcement has gained a better understanding of how criminal groups operate by decrypting their communications. A big breakthrough came in 2021, when they cracked Sky ECC, a Canadian-made messaging service considered infallible by criminal groups who used it. Once they identified leading smugglers, including from the El Ballouti network, “all the puzzle pieces came together,” said Europol spokesperson Jan Op Gen Oorth.

But the thousands of cases opened after Sky ECC was decrypted have hardly had an impact on cocaine smuggling. “I thought . . . now we’ve killed the beast,” said Vanderwaeren. “[But] we were not capable of breaking down the organisation.”

Capturing the kingpins would not necessarily disrupt drug trade in Antwerp, said Op Gen Oorth. “If you take number one out, there’s always number two waiting.”

In Europe, the retail price of cocaine has remained stable at about €50 per gramme for several years, while its purity has increased, according to the EU’s drugs monitoring agency (EMCDDA). Consumption has risen, with wastewater analysis showing cities in Belgium and the Netherlands among those with the highest concentrations.

Van Quickenborne, who has called for a greater European response to capture smugglers, warned that it would be difficult to stamp out the drug trade. “We think that in the end we will not win the war on drugs, because it’s not winnable. But we’ll contain it.”

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