Aurelia Butler

What is the total value for all the homes in the UK? Estimates can vary by the odd trillion or so, depending on who is doing the calculations, but this summer property portal Zoopla put the figure at a whopping £10tn.It’s my guess that thanks to rising interest rates and the deepening cost of living crisis, this will turn out to be a record high — at least when adjusted for inflation.But forgetting the latest headline figure — which assumes all homes find a buyer at current prices in what is a very illiquid market — what is more telling is that housing wealth is not distributed equally. Using English Housing Survey data — which posits a much lower total amount and removes all outstanding mortgage lending — some colleagues and I calculate that homeowners aged over 65 collectively own 47 per cent of total housing equity. The under-45s own just 12 per cent. No wonder the Bank of Mum and Dad has been so popular.Property wealth might be one of the most eye-catching of the generational inequalities in housing, but it’s not the only one: housing space has risen to the fore since the pandemic hit. At an aggregate level, there are enough bedrooms for every resident in England to have one to themselves with nearly 10mn spare — and that’s before we include the 1.1mn vacant homes.The vast majority of these “extra” bedrooms are in homes occupied by older households (over-65s have 7.4mn of them). Many will be the bedrooms of children who have now left home, though in some cases they may be transformed into home offices or some other use that appeals to those in retirement — probably more gyms than model railways these days.It has been regularly suggested that all these extra bedrooms could be used to ease the housing crisis — and the country would definitely benefit from a more liquid housing market with homes that are better distributed. But this is a morally and politically difficult challenge to solve. Older people are understandably less willing and less likely to move home than younger cohorts.And this trend is true even for renters. More than a third of over-65 households have lived in their current residence for 30 or more years, irrespective of tenure. Even incentivising people to move out of their family home is fraught with difficulties and that’s before any potential inheritance beneficiaries — or children, if you prefer — get involved in the discussion.

The economics of downsizing are also challenging. While older people hold the vast bulk of housing wealth, this partly reflects the size of their generation. Most older people actually live in average-priced homes. Despite owning nearly half the total housing equity, the average figure among older homeowners is £322,000 a household.With an average flat selling for £295,000 in 2021 and a bungalow for £337,000, there has been little financial incentive for people to downsize — even before accounting for moving costs.However, that may be about to change, thanks to the cost of living crisis.The country’s ageing housing stock and a lack of investment has left the UK underprepared for soaring energy prices. Around one in five dwellings in England was built more than 100 years ago, and period homes typically have much lower energy-efficiency ratings than newer homes. More than 80 per cent of homes built prior to 1919 had a low rating (D grade or below) on their Energy Performance Certificate, according to the latest English Housing Survey. Homes built between the wars — another 15 per cent of total dwellings — are not much better, with nearly three-quarters having a low rating.It’s not just older homes that are associated with lower energy efficiency, but older households. Some 48 per cent of those headed by someone aged between 16 and 29 had an energy efficiency rating of D or lower; for the over-65s, the proportion rose to 62 per cent. While low-income and younger households might be most exposed to the cost of living crisis given less budget capacity to cut back on essentials, older households are far from immune given the poor energy efficiency of their housing.Though energy price rises will be frozen this autumn, those in homes with the worst energy efficiency ratings will still have to pay the most. Next month, the average monthly gas bill in homes with a D-rating will be 28 per cent more expensive than an average C-rated home, according to analysis by the Resolution Foundation — a nice period home with original features and spare bedrooms could easily become a real burden to equity-rich, income-poor retirees. Whether it is enough to trigger a flood of downsizing is unclear but, even if government support eases the pressure, the challenges faced by households irrespective of income, wealth, or age might just be big enough to change people’s behaviour.One of the challenges with modernising and improving the energy efficiency of UK homes is the investment required. More analysis in the English Housing Survey shows the majority (95 per cent) of D-rated homes lived in by older people could be improved to a C rating. However, the average cost to improve their home to this standard is estimated at £8,332. And that’s just the average: 22 per cent of households would need to spend between £10,000 and £15,000, while a further 12 per cent would need to spend £15,000 or more.Given the costs involved, perhaps it’s time to use some of that housing equity that older households have been lucky enough to accrue and reinvest it back into their homes.Neal Hudson is a housing market analyst and founder of the consultancy BuiltPlaceFind out about our latest stories first — follow @FTProperty on Twitter or @ft_houseandhome on Instagram More

Global shares rose on Friday, while the euro and the pound advanced against a softer dollar, as investors assessed how far major central banks would tighten monetary policy to curb inflation.A FTSE gauge of worldwide equities added 0.7 per cent, with Europe’s regional Stoxx 600 gauge rising 1.4 per cent and Hong Kong’s Hang Seng jumping 2.7 per cent, snapping six days of losses. The FTSE 100 rose 1.5 per cent.Futures contracts tracking Wall Street’s S&P 500 rose 0.7 per cent and those tracking the technology-heavy Nasdaq 100 gained 1 per cent.Friday’s moves came a day after the European Central Bank raised interest rates by 0.75 percentage points to 0.75 per cent, having lifted borrowing costs in July for the first time in over a decade by half a percentage point to zero. The ECB’s rate rise and comments about further increases sparked a sharp sell-off in German government bonds on Thursday, sending Bund yields higher.The new UK government also on Thursday announced an estimated £150bn package to shield Britain from soaring energy prices.In currencies, the euro bounced by about 1 per cent on Friday to trade just above parity with the dollar. The common currency has fallen more than 11 per cent this year, as economic uncertainty and inflationary pressures — stoked by Russia’s invasion of Ukraine and a squeeze on gas supplies — have driven people towards the perceived safety of the dollar. The pound also gained about 1 per cent to $1.162, having earlier this week slipped to its lowest level since 1985, according to Bloomberg data. Japan’s yen rose as much as 1.6 per cent to ¥141.72, having on Wednesday touched ¥144.98 — its weakest level against the dollar in 24 years.Those gains were set against a softer greenback, which lost 0.9 per cent on Friday against a basket of six peers. US Federal Reserve chair Jay Powell had on Thursday reiterated hawkish messaging that the central bank needed to “act forthrightly” on inflation and “keep at it until the job is done”, with markets pricing in a probable 0.75 percentage point interest rate rise for the world’s largest economy when the central bank announces its next monetary policy decision in late September. This would mark the third consecutive increase of such a size.Meanwhile, the ECB’s hawkish rhetoric this week has led some analysts to expect another large increase at its next meeting in October, with Deutsche Bank now anticipating another 0.75 percentage point rise. Eurozone bond markets were steadier on Friday, with the yield on Germany’s two-year Bund broadly flat at 1.31 per cent after surging to its highest level since 2011 in the previous session. Bond yields rise as their prices fall.On Friday, European energy ministers will meet to discuss price caps for Russian oil and gas. Despite the common currency’s early bounce on Friday, Chris Turner, a currency analyst at ING, said the meeting “may prove bearish for the euro”, citing the risk of a failure to reach an agreement, of Russia retaliating by suspending fuel shipments to the EU, or of social unrest from mandatory cuts to electricity use. More

India imposed controls on exports of several varieties of rice on Friday, in a move likely to affect the global market for one of the most commonly eaten staple foods as commodity prices surge following Russia’s invasion of Ukraine. The country — the world’s leading exporter of rice, accounting for about 40 per cent of the global trade — imposed a 20 per cent duty on unmilled white rice, husked brown rice and semi-milled or wholly-milled rice. The restrictions do not apply to basmati rice, India’s best-known variety of the grain. The finance ministry announced the move late on Thursday, saying that “circumstances exist which render it necessary to take immediate action”.Prime Minister Narendra Modi’s government has taken steps to shore up food security and constrain inflation caused by the supply disruptions of the Covid-19 pandemic and the war in Ukraine. Ashok Gulati, a professor at the Indian Council for Research on International Economic Relations, said the export curbs would “help tame the domestic inflation in cereals”. “India has been exporting almost 40 per cent of the global trade, and that brought down global prices,” he said. “Part of this competitiveness comes from huge subsidies on fertiliser and power, and this is an effort to recover part of those subsidies.” India’s monsoon rains have been uneven this year, raising concerns about a drop in rice production and higher food prices at a time when the costs of imported foodstuffs are rising. Inflation is running at about 7 per cent, above the 4-6 per cent target band set by the Reserve Bank of India, which has increased lending rates three times this year in a bid to contain prices.

India imposed restrictions on exports of wheat and sugar this year, but had held off doing the same for rice, for which prices have not risen as quickly as some other foods. India exported $8.8bn worth of rice in the 2020-21 financial year, the latest full year for which statistics are available. Its biggest markets for non-basmati rice included Nepal and Bangladesh, the United Arab Emirates, Iraq, Malaysia and west Africa. Vietnam and Thailand are the next largest exporters of rice and are expected to step up their own exports of the grain. The Thai government mooted the idea of developing a cartel with Vietnam and other south-east Asian producers this year that would have boosted their pricing power, but the plan has not materialised.

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Online fashion retailer Asos has warned that sales slowed in August and that its full-year profits will be at the bottom of its previous forecast, as squeezed UK consumers put the brake on spending.The UK group, whose shares have fallen more than 70 per cent this year, said that profits for the 12 months that ended on August 31 would be “around the bottom end of company guidance” of between £20mn and £60mn. Many analysts had already shifted their own forecasts to the lower end of this range as evidence of a UK economic slowdown mounted.Asos was among the first UK retailers to link surging inflation to a pullback in consumer spending. In its last update to the market in June, the group blamed inflation for an increased rate of product returns and slashed its annual profit forecast. UK inflation has since picked up to a double-digit rate, the highest level in more than 40 years.In meetings with City analysts last week, Asos executives disclosed that a slowdown in spending in August had delayed the seasonal pick-up in spending for the autumn and winter. The retailer did not make a statement to the market as the sales and profits numbers discussed were within the range of market expectations for the year to August 31 and its own guidance. Asos is scheduled to report results for its most recent financial year on October 12.On Friday Asos disclosed that sales growth for the financial year just ended would be about 2 per cent at constant exchange rates, well below the 4-7 per cent range it forecast in June. As a result, net debt will be £150mn, above the £75mn-£125mn range previously forecast. “The new guidance implies that the fourth period [of the financial year] was flat year-on-year,” said Guido Lucarelli at Citi, who added that he was now “cautious” on sales growth forecasts for the current year. Tony Shiret at Panmure Gordon suggested in a note to clients this week that the market consensus of 10 to 11 per cent sales growth for its current financial year, which ends in August 2023, looked “too punchy”.Asos said it had not given any guidance for the current financial year and that its own consensus of analysts’ forecasts showed an average projection of growth of 9.8 per cent.

Shares in Asos were up slightly in morning trade on Friday.The intensifying pressure on UK consumers is the latest challenge for ecommerce retailers such as Asos and its rival Boohoo, which boomed at the height of the pandemic as locked-down shoppers flocked online but have struggled since as people return to stores.Customers have begun to return clothes in greater numbers, diluting profit margins. Boohoo has responded by imposing a charge for returns while German rival Zalando has increased the minimum order value required to secure free delivery and returns. There has been speculation that Asos will take similar measures, though in the past it has ruled out charging for returns.Value fashion chain Primark has already warned that the rapid appreciation of the dollar, in which most wholesale garment purchasing is denominated, against both the euro and sterling, will squeeze its profit margins next year. More

Republican lawmakers have warned Apple that it will face intense scrutiny from Congress if the California company procures memory chips from a controversial Chinese semiconductor manufacturer for the new iPhone 14.Marco Rubio, Republican vice-chair of the Senate intelligence committee, and Michael McCaul, the top Republican on the House foreign affairs committee, said they were alarmed following a media report that Apple would add Yangtze Memory Technologies Co to its list of suppliers for Nand flash memory chips that are used to store data on smartphones.“Apple is playing with fire,” Rubio told the Financial Times. “It knows the security risks posed by YMTC. If it moves forward, it will be subject to scrutiny like it has never seen from the federal government. We cannot allow Chinese companies beholden to the Communist party into our telecommunications networks and millions of Americans’ iPhones.”Asked about the congressional concerns, Apple told the FT it did not use YMTC chips in any products but said it was “evaluating sourcing from YMTC for Nand chips to be used in some iPhones sold in China”.Apple said it was not considering using YMTC chips in phones for sale outside China. It added that all user data stored on Nand chips used by the company were “fully encrypted”.The FT reported in April that the White House and commerce department were investigating claims that YMTC was violating US export control rules by supplying chips to Huawei, the Chinese telecoms equipment group.“YMTC has extensive ties to the Chinese Communist party and military. There is credible evidence that YMTC is breaking export control laws by selling goods to Huawei,” McCaul told the FT. “Apple will effectively be transferring knowledge and knowhow to YMTC that will supercharge its capabilities and help the CCP achieve its national goals.”Chuck Schumer, the Democratic Senate majority leader, has also privately raised concerns with commerce secretary Gina Raimondo about YMTC, according to a person familiar with the situation.YMTC did not respond to a request for comment about its relationship with Apple.In July, a bipartisan group of senators — including Schumer and Mark Warner, the Democratic chair of the Senate intelligence committee — urged the Biden administration to put YMTC on a commerce department blacklist that would effectively bar US companies from providing technology to the Chinese group.The senators, who included James Risch, the top Republican on the foreign relations committee, said YMTC should be put on the “entity list” as it was violating export control rules by selling memory chips to Huawei.The lawmakers also accused Beijing of subsidising YMTC in ways that would help put the “national champion” on track to dominate the sector by selling chips below cost, as China has done in other areas such as the solar industry.

“YMTC is an immediate threat,” they wrote to Raimondo.One person familiar with the commerce department’s stance said it was aware of the concerns and was preparing a response to the senators. A spokesperson said the department’s Bureau of Industry and Security was conducting a review of China-related policies that would “potentially seek to employ a variety of legal, regulatory, and, when relevant, enforcement tools to keep advanced technologies out of the wrong hands”.McCaul, who is set to become head of the House foreign affairs committee if the Republicans win control of the lower chamber of Congress in November’s midterm elections, said the Chinese subsidies to YMTC posed a threat.“Massive CCP subsidies to YMTC mean the company will undercut the market. This could very likely devastate the memory chip market and give China even more control of this critical national security technology,” he said. “How can the world’s data be secure if it’s stored on a chip made by a CCP national champion?”Several people familiar with the situation said lawmakers had asked Apple in recent months about YMTC-related speculation but got no response. Apple did not comment on the congressional inquiries.

The criticism of Apple comes as the Biden administration steps up efforts to make it harder for China to secure cutting-edge technology. US officials recently told Nvidia and Advanced Micro Devices — two US chipmakers — that they would have to obtain special licences to sell advanced processors used for artificial intelligence applications to Chinese companies.Congress passed legislation in July that would provide US semiconductor manufacturers with a pool of $52bn to support development of the domestic chip industry and reduce reliance on foreign companies.Underscoring the importance of YMTC for China, President Xi Jinping visited the company in 2018 after Washington slapped tough restrictions on Huawei and ZTE, another Chinese telecoms equipment maker.“It’s pretty shocking that Apple is partnering with a Chinese technology company . . . which is in exactly the same industry as the other banned companies and has the direct support of the top CCP leadership,” said Zach Edwards, an independent tech expert.Additional reporting by Eleanor Olcott in Hong KongFollow Demetri Sevastopulo, Patrick McGee and Eleanor Olcott on Twitter

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Frank Gaymond and his wife are comfortably well off: they are in well-paid jobs, have money saved in the bank and plan next year to renovate their home in a leafy corner of Buckinghamshire, one of Britain’s wealthiest counties. And yet the rising cost of living has prompted the 32-year-old chartered surveyor to check the impact of soaring inflation on the household budget. He is among the first FT readers to use a new tool we have launched to help people calculate the impact of soaring inflation on their budgets.

The Gaymond inflation rate turns out to be a bit higher than the average, largely because their household bills are a bigger share of their overall budget. “I’m not surprised,” says Gaymond, who adds that their bungalow needs a lot of heating. “But I wanted to see how we compare with other demographics and now I can do that.” The Gaymonds don’t plan any drastic changes in their spending but Frank has taken the precaution of replacing light bulbs with new low-energy alternatives and fitting smart plugs around the home – the sort that can be switched on and off remotely. He says: “I’m conscious that the economic conditions might get worse next year.”The energy support package announced this week by prime minister Liz Truss will come as a huge relief to millions of Britons: as well as capping the average annual household energy bill at roughly the current level it will prevent the sharp hikes in general inflation that had been expected for the coming months. Instead of rising towards 15 per cent in the New Year, as some economists had forecast, it is now likely to remain around the current level of 10 per cent or so.However, as the Bank of England has warned, the predicted increases in government borrowing needed to finance the support could feed inflation over a longer period. So UK householders will need to keep an eye on bills for a long time to come.Our inflation counter is available to all readers, for free, at FT.com/personal-inflation-calculator. Divide your spending between the different categories — such as food, energy and holidays — and the specially designed FT calculator will work out your personal inflation rate. If you can bear it, you can enter your expenditure every month, as we will update the figures to take account of price changes. In general, people who spend more of their money than the average on food, energy, cars and flying are now suffering the highest increases in personal inflation rates. Those who spend more than the average on housing costs have seen less of a jump — but this could well change as mortgage rates rise.There is nothing new about personal inflation calculators, which were widely launched in the early days of the internet. But while inflation was low, householders had understandably little interest. When FT Money wrote about inflation counters last November, as energy bills first started to leap ahead, we could find only one in service — at Rathbones, the wealth adviser. Now they are multiplying: starting at the Office for National Statistics, the government data office, which has relaunched its service. Like the ONS, we are not using the CPI, headline-making main consumer prices index, in our calculator, but the CPIH — the consumer price index including housing — which we think is more appropriate because it includes the housing costs of owner occupiers. Right now, the CPIH is running below CPI because these housing costs respond only slowly to general inflation. In July, the latest month for which detailed ONS price data is available, CPIH was 8.8 per cent versus CPI at 10.1 per cent.

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These are the national averages. So why bother to work out a personal score? Because inflation rates differ between households — and by much more than you might think. These differences did not appear large when the average CPIH inflation rate was 1.0 per cent, as it was in 2020, or even 2.5 per cent, as last year. But now that the average CPIH rate is closing on 10 per cent, the differences in rates between different types of household become startlingly significant.For Frank Gaymond, with his larger-than-average household bills, the figure is 9.3 per cent. Another FT reader, living with his wife in retirement in the West Country, is on 11.9 per cent, mostly due to taking plenty of holidays, which have seen prices rise rapidly due to fuel costs and labour shortages. But for students, who typically spend less on energy and don’t drive cars, the figure is only 6.7 per cent.

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The poorest householders — who spend more of their money on food and energy than the average — have seen the largest increases of any income group. Our chart below shows that, based on family spending data and the CPIH index, the poorest 10 per cent of the UK population saw inflation running at 10.2 per cent in July, compared with 8.3 per cent for the richest 10 per cent — a rich-poor gap of 1.9 percentage points. Or to put it more starkly, prices were going up by nearly a quarter faster for the poor than the rich.Jack Leslie, a senior economist at the Resolution Foundation, a think-tank focusing on low-income households, says: “These are the biggest differences we have seen [since data collection began in 2006].”There are many ways of highlighting the differences between households. By age, the over-75s are likely to be experiencing the highest inflation rates (including housing costs) — 11.5 per cent in July, because they are likely to spend the most on heating. By contrast, the under-30s saw inflation of 8.7 per cent.This is a sharp shift from early 2021 when, before energy prices took off, pensioners saw lower inflation than students — a change which highlights how much personal inflation rates matter.

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Where you live also matters. Londoners saw the lowest July inflation rate of any region — 8.1 per cent — compared with 11.2 per cent in Scotland and Wales, which saw the highest levels. Northern Ireland on 11.1 per cent was just behind followed by the north east of England on 9.3 per cent. The London rate is low because Londoners are less likely to use cars than other Britons and are less exposed to higher petrol prices. Plus, London residents tend to have smaller-than-average homes that are better insulated than most and therefore smaller-than-average heating bills. Also, the south is significantly warmer than the north. At the Resolution Foundation, Leslie says: “People living in rural areas in Scotland often have poorly-insulated homes and they have to commute long distances. There are huge regional disparities in the UK.”Consumer champion Martin Lewis has provoked controversy by calling the impact of rising energy prices on the cost of living “a catastrophe”. This week’s government package will protect people from future increases by capping domestic fuel costs at around current levels.But the burden on poorer households remains severe: the Joseph Rowntree Foundation estimates that in the year to April 2022 those in the lowest 10 per cent by income were already spending around 10 per cent of their budget (after housing costs) on electricity and gas.Wealthier households are insulated from the worst effects of the energy price rises because they typically spend a much smaller share of their budget on electricity and gas: 3 per cent for most such families, according to FT calculations. Moreover, richer households often have a savings cushion, which was bolstered during the pandemic, even as poorer families ran down their funds and often had to take on more debt.However, these generalisations don’t cover everybody. Among wealthier households, people with multiple homes are seeing energy spending taking a much larger chunk of their budgets. So are those whose routine involves a lot of long-distance car travel — Londoners with weekend homes in Cornwall or the Lake District, for example.At Rathbones, Edward Smith, co-chief investment officer, says he sees little sign of the firm’s affluent clients changing their spending habits. But they are concerned about limiting the damage done to the real, inflation-adjusted, value of their portfolios. Smith says there is little that can be done in the short term — the answer is to invest in assets that offer longer-term inflation-protection, such as companies with strong market positions that can maintain their margins by passing on costs to customers.However, as Gaymond’s example shows, even the comfortably well-off can benefit from paying more attention to their budgets. He says it’s very important to keep saving, if you possibly can, just in case there is more bad news around the corner. “If I’m made redundant, I want to know there is something for a rainy day.” To keep saving, you need to have a close eye on the price of the goods and services you are buying. That’s why we have launched the FT inflation calculator. Anybody can use it, and keep using it as we work our way through what is likely to be — in economic terms — the toughest winter in decades. More