Your mid-week update Wednesday 19th August
House price expectations turn positive
3 minutes to read
The UK housing outlook brightens
Household expectations for future house prices bounced back into positive territory in August after four months of negative expectations. The recovery reflects the unexpectedly rapid resurgence in housing market activity since the easing of lockdown restrictions, partly as a result of pent-up demand being released into the market and the cut to stamp duty, but also behavioural shifts, as people reassess their housing needs and preferences as a result of life in lockdown, writes Oliver Knight.
Meanwhile, Persimmon yesterday reported its half year results. Since July, average private home sales rates have been 49% higher than the same period a year ago, and its order book is now a fifth larger than it was this time last year. The company said risks to demand associated with Covid-19, rising unemployment and Brexit remain, but long-term housing market fundamentals are strong.
Checking in on the UK economy
We continue to look for clues as to the health of the economy as the government prepares to withdraw some support over the autumn. Almost 40% of UK companies are now reporting rising revenues from domestic customers, according to a British Chambers of Commerce survey. That's up from 34% in the previous tracker and is up significantly from the series low of 3% recorded during the second quarter.
However, the survey indicates many firms are relying on government support schemes and more than 1 in 3 of businesses say they have three months or less worth of cash in reserve.
Corporate America surges to new highs
The S&P 500, the index regarded as being the most representative of corporate America, closed at a record high last night, surpassing February's pre-pandemic record. Unprecedented levels of fiscal and monetary stimulus have made investors flush with cash, which has funnelled more money into shares.
That stimulus has put pressure on the dollar, which has fallen approximately 10% against a basket of other currencies since the Federal Reserve began providing dollar liquidity to global markets. The pound has now erased this year's losses against the dollar, climbing to $1.33. That marks a turnaround after sterling hit a three-decade low against the dollar as recently as March.
Dissecting the Chinese recovery
Chinese households are putting more of their savings into property but still holding back on discretionary spending, as the economy leads the global recovery. The housing market has seen a big uptick in activity and prices in recent months, though price growth is beginning to slow.
Momentum in housing markets across the Asia-Pacific region remains on track as lockdown restrictions have been gradually eased. This has led to a firmer recovery in transaction activity in July compared to the previous two months, according to our international sentiment survey. We maintain our cautiously optimistic outlook for the Asia-Pacific residential sector with prices likely to decline around 5% this year, writes Mengjie Shi.
In other news...
Commercial Conversations – Season 1; Britain to introduce legally binding environmental targets; Norway’s $1.2 Trillion Fund says don’t bet on a V-shaped rebound just yet; Germany records the highest number of new coronavirus cases in nearly four months; South Korea records the highest daily rise in cases since early March; and finally Australia's outbreak eases.