Midweek property news update - 9 June
The office question, post-pandemic lifestyles and creative employment practices
3 minutes to read
Knight Frank has launched its latest housing sentiment survey to gauge what is in store for the residential property market in the second half of 2021. We'll be covering the results of the survey in depth in the coming weeks, so please do take part. It should take less than a couple of minutes. Click here to take part.
What to do with old offices?
We've talked in recent notes about the resilience of prime global office markets, particularly London, which is facing a shortage of the kind of grade A space occupiers want. Questions remain, however, as to what to do about the second hand, dated space that doesn't meet the sustainability and collaborative demands of multinationals.
Greater Paris is the most densely populated region in Europe. At 55 million sq meters, it also has the largest amount of office stock, 80% of which was built more than 20 years ago. Hundreds of thousands of square meters have been refurbished since these buildings were constructed, but 1.2 million square meters has now been empty for more than four years, representing a third of the available supply.
That makes Paris perfectly placed to act as a case study to see whether dated office space can be successfully repurposed or relet. David Bourla, our man in Paris, weighs up whether converting space into homes holds the key.
The best time to list your house?
UK house prices climbed 9.1% during the year to May, the strongest rate of growth in seven years according to Halifax.
Russell Galley, Halifax Managing Director, points to "long-lasting change as buyer preferences shift in anticipation of new, post-pandemic lifestyles – as greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing."
Growth to this degree is also being fuelled by low borrowing costs, the stamp duty holiday and a shortage of homes for sale. Data published by the Bank of England this week revealed average mortgage rates for borrowers with deposits of at least 40% dropped to the lowest on record in May. Average rates at 60% LTV on a two year fixed basis dropped to 1.2%.
It's clear there have been few better times to list a property for sale. In the US, where the housing market is being driven by almost identical themes, the lack of inventory is frustrating prospective buyers and leading to surging, according to a new survey by Fannie Mae.
The jobs conundrum
We can draw other economic parallels with the US. American employers had 9.3 million jobs available at the end of April, the most in the two decades that records have been kept, and more than two million more than before the pandemic.
The papers are full of stories of employers offering incentives to fill positions, from college subsidies to raffling off cars.
In the UK, the easing of Covid restrictions sent demand for workers rising at its fastest rate for more than 23 years, according to a KPMG survey published earlier this week. The number of staff available to fill those jobs declined at the quickest rate since 2017.
This will act as a threat to the trajectory of the recovery, but may have a particular impact in construction, where staff shortages are growing and supply chains are already under pressure. See Monday's note for more on that.
In other news...
We have updated our House View, which represents our latest thinking on the key trends which will impact on property markets. This monthly update provides a high-level assessment based on our own research.
Elsewhere - Apple employees push back against returning to the office, the European outlook brightens, UK consumer sentiment rises to 5-year high, UK retailers report strong sales in May, China moves to tame inflation, UK presses for City of London carve-out from G7 global tax plan, and finally, China wants its own Bordeaux wine region on the edge of the Gobi desert.
Photo by Clément Dellandrea on Unsplash