Midweek property news update - 30 June
The taper arrives, a new Dubai and European investors seek sun in Australia
4 minutes to read
The pandemic has profoundly changed how we work and live. Our new Global Buyer Survey will take a deep dive into how the pandemic will impact housing markets, second home demand and developer prospects around the world.
In return for taking the 10-minute survey, we'll share the results and our analysis with you.
Tracking the taper
As the tapering of the stamp duty holiday begins, housing market data published yesterday reveals activity at long-term highs with little slowdown in sight.
Firstly, UK house prices climbed 13.4% during the year to June, the fastest rate of growth since November 2004, according to Nationwide. Secondly banks issued 87,500 loans for the purchase of homes during May, according to new Bank of England data. That’s up just 1% on the previous month but remains about a third above the long term average.
The stamp duty holiday has meant transactions have been squeezed into an artificially short period of time, with rising use of sealed bids, reports of over-loaded conveyancing solicitors and a shortage of removals vans have deterred sellers – exacerbating already low levels of supply and putting upwards pressure on prices.
All that and more is why today's move towards normality is a good move, writes Tom Bill this morning.
The US housing surge
US house prices climbed 14.6% in April compared to a year earlier, the fastest rate of growth in more than 30 years.
It's a familiar story. The pandemic has accelerated demand for suburban homes, mortgage rates are at record lows. Meanwhile analysts believe sales that would have taken place anyway are being squeezed into a short period, cutting into supply and exacerbating rising prices.
There are early signs the demand and supply imbalance might be beginning to right itself. The US commerce department last week said the supply of new homes for sale rose by 15,000 in May to 330,000, up 5.8% from a year ago (see FT link above). That represented 5.1 months’ supply at the current sales pace, up from 3.6 months in January.
The proportion of borrowers more than four months behind on their mortgage payments has risen to three percent, prompting the Fed to introduce new protections in an attempt to slow foreclosures. On this point the US and UK markets diverge. Bank of England research published this week reveals the financial impact of the pandemic has largely been felt by renters.
A new Dubai
An ultra-fast vaccine roll out and the reopening of borders to overseas tourists is driving a "spectacular" rebound in luxury home sales in Dubai, Fasial Durrani tells Bloomberg. There were 22 sales of homes worth more than $10 million between January and May, compared to a total of 19 during the entirety of 2020.
Luxury home sales are now rising across key cities as sentiment improves and buyers seek to make lifestyle changes in the wake of the pandemic. Our data suggests purchasers with a combined budget of £36.8 billion are now actively searching for super-prime homes in London—a jump of 54% compared to the five-year average.
Dubai is seeing success from efforts to lure affluent workers - see this FT piece from last week on a new generation of wealthy people basing themselves in Dubai, including tech workers and "crypto enthusiasts".
The UAE has launched a raft of new residential visa options throughout the pandemic, aimed at attracting and retaining talent in its quest to become a knowledge based economy. There are signs it's working, and technology, media and telecoms (TMT) is the sector currently seeing the fastest rate of job creation.
Australia
Seven Australian cities are now in lockdown as the government scrambles to curb the spread of the Delta variant of Covid-19.
The government has so far been successful. For the past year, Australia has enjoyed near-zero transmission rates, recording just one Covid-related death this year. That success has attracted a wave of investors - particularly from Europe - seeking long-term, stable returns, writes Chris Naughtin.
Investment in commercial real estate from Europe, the Middle East, and Africa (EMEA) accounted for a record 42% of total cross-border investment in the year to Q1 2021, compared with only 9% a year earlier. Most of that has been driven by major global asset managers domiciled in the largest European economies – Germany, France, the UK, and the Netherlands.
The case for more rental homes
New research from Nottingham Building Society reveals almost a million UK landlords - more than a third of the total - will review their property portfolios in the next year and the number planning to sell homes outnumbers those planning to buy new ones.
With house prices climbing at their fastest pace in 16 years and rates of home ownership declining, the data provides a clear illustration of the opportunity for developers of purpose built rental homes. Back in November we surveyed 40 leading investors who said they had earmarked £42 billion over the coming five years, about a 68% increase on current capital committed.
In other news...
How NYC office landlords are luring tenants, business travellers from big multinationals get English quarantine waiver, working from home leads to fewer staff calling in sick, no IWG takeover, a sharp rise in European sentiment, US consumer confidence hits a 16-month high, UK staff shortages, and finally 'pandexit' is the next challenge as the recovery takes hold.
Photo by Blake Wheeler on Unsplash