Knight Frank Daily Update Monday 4th May

Good morning,

Economic headlines

The global stock market rally, that in April saw US equities experience their best month since 1987, looks to be drawing to a close as stocks in Asia dipped overnight along with US and European futures. 

The FT quotes research from Goldman Sachs suggesting that the recent rally in equity markets showed investors were treating the 2020 downturn akin to a natural disaster, with the assumption GDP growth rates will be higher, not lower than normal in 2021.

Respondents in a quarterly survey of 104 chief financial officers carried out by Deloitte said demand is likely to begin recovering later this year, with business activity returning to pre-pandemic levels after the second quarter of 2021.  

Details as to the UK's journey out of lockdown remain sparse, though measures are likely to include staggered working hours, increased commuting by bicycle and hand sanitiser at transport hubs. 

The UK government's detailed "roadmap" out of lockdown is now likely to be published on Sunday as ministers wait for data from the ONS detailing how the virus is spreading. 

Property market headlines

The Bank of England on Friday said mortgage approvals for house purchase fell to 56,200 in March, their lowest level since 2013, in an early indication of the scale of the drop off in activity at the onset of the lockdown.

In anticipation of restrictions easing, lenders are now seeking to re-establish their pipeline of business, according Simon Gammon of Knight Frank Finance.

Pricing in mortgage markets remains extremely low following two successive Bank of England rate cuts, though borrowing costs with some lenders have crept up as they set aside provisions for bad loans. We'll bring you more analysis on this later this week.

This morning we published our detailed Residential Market Outlook covering prices, transactions, rents, residential development and mortgage markets. 

Country house prices experienced their strongest rate of growth since the second quarter of 2018 in the opening months of this year, ahead of the UK entering lockdown. Edinburgh also experienced its strongest rate of growth since Autumn 2018, writes Chris Druce. 

Rural businesses affected by Covid-19 who are struggling with the cumbersome Coronavirus Business Interruption Loan Scheme, may find it easier to qualify for the new Bounce Back Loan Scheme for small and medium-sized businesses, according to Andrew Shirley.

Stephen Springham continues his probe into the effects of the outbreak on retail markets with an analysis of Amazon's results, and updates from Next and Sainsbury's. 

This morning we also publish the latest episode of our Intelligence Talks podcast. Anna Ward provides details on the challenges housebuilders face as they get back to work and explores the future of the office with comments from global head of occupier research Lee Elliott.

If you have any questions, please contact me, or the team.