The Knight Frank Daily Update Wednesday 13th May
Housing market restart, genome sequencing and our revised forecasts
3 minutes to read
Good morning,
Need to know
The government last night announced measures to restart activity in the housing market, enabling more than 450,000 buyers and renters to progress plans to move. From this morning, estate agents, removal firms and conveyancers in England will begin reopening, making physical viewings and valuations possible under social distancing guidelines.
The move is one of the UK's first, tentative steps out of lockdown. Yesterday, Chancellor of the Exchequer Rishi Sunak extended the furlough scheme until at least October, adding an extra £35 billion to the cost of the program.
Across Europe, the virus has now been slowing since early April, according to Johns Hopkins. Africa, Asia, and South America now represent an increasing proportion of the global COVID-19 cases—currently about 4.5%, 20%, and 16%, respectively, the research organisation said last night.
Research to stem the outbreak continues with a study of 35,000 UK coronavirus patients who will have their genomes sequenced in an attempt to establish who is most vulnerable and why. Meanwhile, at least 20 pharma and biotech companies in Europe, Asia and North America are committing substantial resources to antibody therapy.
Stocks across Asia Pacific dipped overnight, amid signs of rising US-China tension and concerns over the timeline for reopening the US economy. America’s strategic bomber squadrons have been engaged in a co-ordinated show of force over the Indo-Pacific region and Europe.
The property market
With the housing market now open for business, we expect more sector specific guidance on how agents will be able to undertake viewings and market appraisals while complying with social distancing regulations.
RICS said yesterday that, after engagement with the government, it will publish practical guidance to support property professionals over the coming days, "specifically on physical inspections for mortgage valuations and home surveys".
This morning we update our forecasts for house prices and transactions. Our previous forecast, published 6th of April – assumed that a full lifting of the UK’s Covid-19 lockdown would be achieved by the end of May. Despite today’s moves to unlock the market, the lifting of the full UK lockdown will now run in stages through to at least July.
Our view is that as the market reopens a 5% fall in values we have seen since late March will be revealed in achieved pricing – and while there could be some further downward pressure through to the summer it is likely to be limited – and in prime London there is the potential for an uptick in the final two quarters of the year to offset some of the losses in the first half.
Our revised forecast for pricing during 2020 in the light of the longer lockdown is -7% for the UK and -5% for prime London, with much of this decline already in place.
Buyers and sellers are already planning for life after the lockdown in greater numbers, according to Tom Bill's analysis of data collected from property portals, social media and the internet.
During the week ending 10 May, the level of enquiries to Knight Frank from these combined sources was higher than in either of the two weeks before lockdown measures were introduced. The figure was also 10% below that recorded in the last week of February, as recent stock market increases also spurred on decision-making.
Finally, Flora Harley's view from New Zealand reveals property markets there are likely to remain resilient throughout the pandemic, at least in part due to the fact the market is less dependent on foreign buyers, meaning it is better insulated.
If you have any questions, please contact me, or the team.