Your mid-week update
The pandemic's impact on global property markets laid bare
3 minutes to read
The pandemic and global prime property
Kate Everett-Allen has second quarter pricing data from across 45 global cities. This is the first opportunity we have had to take the pulse of residential markets globally since the pandemic hit. The data reveals pricing has reached its lowest rate of annual growth since the world was in the grip of the global financial crisis in Q4 2009. Of the 20 cities that saw prime prices decline in the second quarter, nine were in Europe, seven in Asia, two in Australasia, one in the Middle East and one in Africa.
It is unlikely we will see a large volume of distressed prime sales as in 2008. Lending criteria is tighter, new supply is constrained in several cities, interest rates are low (negative in some markets), plus furloughing schemes and mortgage holidays are cushioning incomes and repayments in many hard hit markets.
Virus whack-a-mole
As travellers to Belgium, Luxembourg and Croatia face quarantine measures on their return to England, Boris Johnson said the Continent was beginning to suffer a second wave, though the Times issues a sceptical take on that. Britain is now looking at setting quarantine rules for different regions within countries overseas, rather than for the countries themselves. Meanwhile, global airlines yesterday said it would take until 2024 - a year longer than previously expected - for passenger traffic to return to pre-crisis levels.
Vaccine developments
Moderna said its experimental Covid-19 vaccine induced a robust immune response and protected against infection in a study on monkeys. The results appear to be an improvement on results of the Oxford University/AstraZeneca vaccine in a similar study, and Moderna has already begun testing it in humans. Success there will pave the way for regulatory approval and widespread use by the end of the year. The chair of the UK government’s vaccine task force said it's more likely any vaccine will provide immunity for a year, rather than for life.
The busiest mortgage market in years
Mortgage applications at Knight Frank Finance climbed 75% in June compared to a month earlier and July is on course to be the busiest month on record for prime lending. This points to a notable recovery in the latest Bank of England mortgage approvals data, due to be published at 09:30 this morning. It's worth noting that the biggest banks are once again beginning to struggle under the weight of new applications, and are taking measures to control the flow of business. It’s clear borrowers see now as a good time to reassess their finances due to successive cuts to interest rates, currency fluctuations and tax changes.
More on that retail recovery
We talked on Monday about retail's tentative steps towards recovery, following Stephen Springham's robust analysis of the latest retail sales figures. Yesterday, the CBI monthly retail sales balance rose to +4 from -37 in June, its highest since April 2019 but still signalled only modest year-on-year growth in volumes. Meanwhile retailers began to scale back discounting in July. The data reveals clear signs of recovery, but also vast differences in the performance by sub-sector.
In other news...
In a new agent's diary, Chris Druce finds the country market is booming as people look to relocate, while the continuing absence of international students is proving a challenge for some London landlords.
The Land Registry has said it will accept witnessed electronic signatures in a move it hopes will speed up the conveyancing process when buying a home.
We may be about to see an extension to Help to Buy.
Knight Frank is seeing surge in online viewings and enquiries after the Barbados government introduced a new 12-month welcome visa.
Four out of five global investors are continuing to put money into or are planning new moves in London after the pandemic has subsided, according to a poll of 506 investors with combined assets under management of $1 trillion.
Any questions, please contact me, or the team.