Your midweek Update

Tracking the recovery

Britain has entered recession for the first time since the 2008 Global Financial Crisis. The ONS this morning estimated the economy shrank 20.4% between April and June, after falling 2.2% in the first three months of 2020. Crucially on a monthly basis, the economy grew 8.7% in June following May's rather disappointing 1.8% monthly rise, indicating the recovery is gathering pace.

It's worth noting this is backward looking data and things have moved on markedly since June. More recent leading indicators point to a recovery to differing degrees. Meanwhile, the Bank of England last week said it expects the downturn to be less severe than it first feared, though the economy likely won't return to its pre-pandemic size until the end of 2021, slightly later than its previous estimate.

No ordinary recession

It's pretty clear this will be no ordinary recession, at least in the property market, as noted by Tom Bill last month. Sentiment remains strong and the surge in activity post-lockdown looks likely to continue, at least until the autumn wind-down of some government support schemes, at which point the resilience of the jobs market will come into sharp focus.

Chris Druce this morning reports that buyers are acting more decisively due to stiffer competition and the growing use of virtual viewings since the market re-opened. The average number of viewings before an offer is made fell 31% versus the five-year average in the UK between the market reopening in mid-May and 5 August.

In a new agent's diary, Chris travels to Oxford and checks in on lettings in Richmond, both of which are benefiting from a desire for more indoor and outdoor space. New prospective buyers registering with Knight Frank’s Oxford office were up 133% versus the five-year average in the week ending 8 August, while prospective tenants across the lettings business increased 37% in the same period.

Virus whack-a-mole

The ebb and flow of new cases continues as the UK reported its highest number since June 21, Australia suffered its worst day, and the virus appears to have returned to New Zealand, possibly via freight. This follows spikes in Spain and France. 

Oscillating localised lockdowns and temporary border closures are likely to be with us until vaccines are approved and widely-distributed, with each nation opting for differing measures. Belgium has responded to its latest surge in infections by reintroducing tight restrictions on social gatherings but the Netherlands has taken a less stringent approach, echoing the light-touch curbs of Sweden. 

About that vaccine

Russian President Vladimir Putin said a locally developed vaccine for Covid-19 has been given regulatory approval after less than two months of testing on humans, with large-scale vaccinations planned for October. The vaccine is not among the World Health Organization's list of six vaccines that have reached phase three clinical trials, which involve more widespread testing in humans.

Goldman said yesterday it expects at least one of those vaccines to be approved by this autumn and widely distributed by mid-2021. It raised its outlook for the US economy as a result and share prices rose, led by travel firms.

What do global homebuyers want?

As part of our Global Buyer Survey we took the views of over 700 clients across 44 countries and anecdotal reports of desires for more outdoor space, home offices and lower density living is now borne out by the data.

Kate Everett-Allen reports some 45% of respondents say they are more likely to buy a detached family home than they were prior to Covid-19, with waterfront homes (40%) and rural homes (37%) also in favour. Demand for apartments has remained largely static with 52% of respondents stating their attitude to apartment living has remained the same.

Kate also checks in on Palm Beach, which is outperforming as some markets in the US are hit hard by the pandemic. Pending sales and median prices continue to strengthen as inventory levels shrink.

In other news...

Gold sinks; Japan's road to recovery; Sunak mulls delaying the autumn budget; Bellway on encouraging demand; and finally the future of the office will be “long-life, loose-fit”.