Weekly Briefing: Climate tech VC investing booms, house prices rise for second month & UK investors return to equities

This week, we look into Halifax’s latest House Price Index – which indicates the UK housing market is once again defying predictions – the data surrounding climate tech VC investment in 2023, and more. 

Investing

UK Investors Return to Equities

• UK investors returned to equities after a six-month hiatus, as asset managers looked to adjust their portfolios to account for a “brighter sentiment on inflation and interest rates”, according to the Financial Times.
• Data from funds network Calstone revealed a net addition of £449 million to equity funds by UK retail investors last month.
• Equally, data from Hargreaves Lansdown has shown that investors are once again buying ‘risk assets’, such as US equity funds.
• Calstone’s Head of Global Markets, Edward Glyn, said: “November saw good news on inflation in the US, the UK and in Europe, which investors increasingly hope will stay the hand of policymakers deciding on the next move for rates. Equity prices duly rebounded during the month [...] which has tempted investors back into equity funds, favouring those parts of the world with better growth characteristics, like the US, and those that benefit when US interest rates start to fall, like emerging markets.”
  
  

Fine Wine Continues to be a Popular Alternative Investment

• Fine wine is consistently a top-performing alternative asset class within the Knight Frank Luxury Investment Index.
• Over the last decade, fine wine prices increased by 149%, marking it as the second-highest performing alternative investment after whiskey, which saw a 322% rise.
• During this period, fine wine outperformed other collectibles such as cars, coins, and jewellery in terms of returns.
• However, investing in fine wine takes time and resilience.
• The Liv-ex Fine Wine 100 benchmark, monitoring the 100 most traded fine wines on the secondary market, reported a decline of 11.3% in prices over the year to October, following a surge induced by Covid.
  
  

Venture Capital and Impact Investing

Climate Tech Investing Dominates Built World VC Investment

• A report from sustainability investor A/O has found that climate tech accounted for approximately 70% of total built world venture capital investment in 2023.
• UK VC firms invested $1.1 billion (£872 million) into early-stage built world climate tech this year, the third highest level of investment into the sector in the world.
• The US and Germany invested $5.6 billion and $1.4 billion respectively.
• According to A/O’s State of Built World Climate Tech report, over two thirds of built world tech investment is allocated to climate themes, up from less than a fifth five years ago.
  
  

Property

UK House Prices Rise for Second Consecutive Month

• House prices rose for the third consecutive month in November according to Halifax’s latest House Price Index.
• Prices rose 0.5% month-on-month in November – or £1,394 in cash terms – after a 1.2% increase in October.
• The Financial Times reported that economists polled by Reuters had forecast a 0.4% fall in prices, with the UK’s housing market outperforming expectations once again.
• Annual growth remains subdued at -1%, but this fall is better than expected and prices remain some £40,000 above pre-pandemic levels.
• Kim Kinnaird, Director at Halifax Mortgages, said: “Over the last year, despite the wider economic headwinds, property prices have held up better than expected. [...] Recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely as a result of an improving picture on affordability for homebuyers. With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases.”
  
  

A Final Note

It’s positive to have more promising news regarding the UK’s clearly resilient housing market, and it’s interesting to take a look into 2023s investment trends, with the data on climate tech VC investment particularly assuring.

At GCV, we remain committed to providing the latest insights into the investment and wider economic landscape in order to support investors in making well-informed decision when choosing where to allocate their capital.

If you would like to find out more about a number of tax-efficient investment strategies available to UK investors, discover our range of downloadable resources here.