Friday property news update - 19th February 2021
The return of confidence, the US housing boom and some big discounts for overseas homes
3 minutes to read
The return of confidence
British consumers are now the most confident they've been since the onset of the pandemic as the vaccine roll-out gathers pace.
The closely-watched measure from GfK rose to -23, due mostly to a 14-point improvement in the outlook for the economy over the next 12 months. The index was at -9 last March, before the onset of the pandemic. It then crashed to -34 amid the first lockdown.
Data for positive tests, fatalities and hospital admittances continue to tumble as studies emerge supporting the UK's current vaccine strategy. A new Israeli study found the BioNTech/Pfizer vaccine is 85% effective after the first jab, a positive sign following the government's decision to space out doses.
The strength of sterling
We talked on Wednesday about the impact this economic data and the vaccine roll-out is having on sterling, which rose to a fresh three-year high against the dollar yesterday. Kate Everett-Allen spells out what that means for GBP-denominated buyers looking to buy a home overseas:
For a GBP-denominated buyer looking to purchase a €1 million home in France, Italy or Spain this means the property would currently cost around £868,600 compared to £936,600 in late March 2020. Add in the decline in property prices over that period in some local markets, including Madrid and Marbella and the saving increases further from 7% to 12%.
In the US, the saving for a GBP buyer is even greater, with a $1 million property now around £718,000, down from £870,300 at the start of the pandemic when the GBP/USD exchange rate slumped to a low of $1.15.
The outlook for employment
The good news extends to the prospect of summer holidays, and the Times carries a report this morning suggesting ministers and officials are "increasingly optimistic" that Britons will be able to go on foreign holidays this summer.
Tempering all this are the prospects of rising Inflation and unemployment. A new survey from the British Chambers of Commerce reveals one in four firms plan to lay off staff if the furlough scheme isn't extended beyond the end of April, 20% of private sector employees are currently supported by the scheme.
We'll learn more about the prospects for further jobs support in the budget next month. That's when we're also likely to see an extension of the year-long business rates holiday for retail, hospitality and leisure. Incidentally, the FT this morning reports that a major review of business rates - set to level the playing field between the high street and online retailers - has been delayed until the autumn.
The US housing boom
Mirroring conditions in the UK mortgage market, Americans took out a record $1.2tn worth of mortgages in the final three months of 2020, according to the Federal Reserve Bank of New York.
Rock-bottom rates and the boom in remote working is driving housing markets globally, with the theme appearing in our own research in the UK, Kenya and Singapore. US borrowers with high credit scores fuelled growth, accounting for more than two-thirds of total originations for the quarter, as those in secure employment reassessed their housing needs.
US mortgage volumes could top $3tn this year, the FT reported in January. That barrier has only been broken in 2020 and 2003.
In other news...
Stephen Wong on the outlook for prime offices in Asia, and the big themes driving capital markets in the region.
Plus, UK house prices climbed 8.5% in 2020, London landlords feel the burden of buy-to-lets and finally, in locked down London, Hong Kongers seek a new life.