Friday property news update
Rising mortgage rates, a bullish play for offices and the Brexit impact on second home owners
3 minutes to read
What is behind rising mortgage rates?
The Bank of England Monetary Policy Committee yesterday opted to hold the base rate at 0.1%, which in any normal market would mean low mortgage rates for longer.
This is no normal market, however, and although the committee suggested rates peaked in November, they are once again creeping upwards, according to Knight Frank Finance.
The committee noted this widened spread between the base rate and the interest rates lenders are charging on fixed rate products in its meeting minutes, see point 18, and concluded that "very strong" demand, operational issues and higher borrower credit risk were to blame. We talked about those operational issues back in October.
The confidence rally
The committee's minutes make for interesting reading. Household consumption and in-store retail spending both surprised on the upside during November.
Though the Bank's panel of almost 3,000 chief financial officers expect the consequences of Covid to weigh on the economy during the first half of 2021, they have revised up sales and employment expectations for the period (see point 27).
Meanwhile, December's sentiment data is improving further. Confidence among British consumers jumped by the most in eight years following the early stages of vaccine roll outs. That included a six-point improvement in a measure of consumers’ willingness to make major purchases.
Brexit for second home owners in France
As Bexit negotiators return to frosty rhetoric following breakthroughs earlier this week, Kate Everett-Allen takes a moment to lay out what the UK’s departure from the European Union will mean for British owned second homes in France.
Kate reports on some impending changes to social levy charges, plus non-residents selling a second home in France will be required to appoint a fiscal representative.
Knight Frank's head of international sales Mark Harvey tells Kate that we may see UK vendors with second homes in France push for completion prior to the end of the year, however he's bullish on the second homes market due to its position as a long-term investment play.
Fewer but fitter
Less, but better floorspace. Fewer, but fitter operators - that's part of Stephen Springham's comprehensive take on what lies ahead for the retail market in 2021.
Against a more benign backdrop generally, occupier markets will stage a slow recovery as the year unfolds. Levels of retail trade are likely to have returned to something like “normalised” levels by the end of 2021.
Chiming with what we're seeing in consumer sentiment data, the UK consumer will spend relatively freely in 2021, Stephen writes. Free from the constraint of lockdowns and with considerable pent up demand, retail sales are forecast to grow by ca. 5% in 2021. You can track his weekly notes on the changing fortunes of the retail market here.
More on the future of the office
As Tishman Speyer ploughs more than €750m into Paris office buildings, the company's chief executive Rob Speyer tells the FT why he's bullish on the outlook for offices, including a desire among CEOs to have people back and isolation felt by individuals working from home.
Mr Speyer says these are long-term investments and he expects vacancy rates in Paris to climb to 4.6% by 2021, from 2.2% last year. You can read our latest take on the Paris office market here.
Bloomberg Businessweek has this long read on the WFH theme. Some US employers are already experimenting with trade offs for employees who want to move further from company HQs, offering localised salaries in exchange for long-term roles working from home.
In other news...
Some key metrics here we're monitoring on the London economy and European logistics.
Plus, the English Housing Survey, the EU will start vaccinations two days after Christmas, Macron tests positive, and finally, New Zealand’s ‘go hard and early’ Covid policy reaps economic rewards.