Global Residential Outlook – 4 September 2020
Key takeaway:
Despite travel restrictions, the second home market has been surprisingly buoyant in countries such as France, the US, Australia and New Zealand as domestic buyers filled the gap left by international purchasers.
4 minutes to read
When borders start to reopen government’s may find their response to the pandemic has repercussions on the volume of overseas demand in their markets. Based on the results of our recent Global Buyer Survey 61% of respondents say the government’s reaction would be an influencing factor on where they buy a second home.
Need to Know:
- Although the number of Covid-19 cases worldwide is nudging 26 million, the proportion of deaths is falling due to more testing, better treatment and different age groups being affected. India is now the epicentre of the pandemic.
- A recent study by Our World in Data dismisses the theory that the countries with the longest and more stringent lockdowns saw the lowest Covid-19 death rates.
- France has announced an economic stimulus plan worth €100bn or 4% of its GDP over two years, it is the first to be announced by a big economy since EU leaders agreed a €750bn recovery fund at a summit in July.
- Switzerland, Jamaica and the Czech Republic were added to England’s quarantine list this week with suggestions that Greece (already on Scotland and Wales’s quarantine list) and Portugal could be added imminently.
- Apple and Google have announced a new contact-tracing tool that will be embedded into the operating system of smartphones.
Residential digest
Europe
- In Paris (Ile de France), new data shows the growing preference for houses over apartments since the start of the pandemic, despite houses accounting for a small proportion of stock in the city. The chart below also highlights the overall uptick in sales activity in Paris since 2014, with residential sales rising from around 21,000 to over 40,000 in 2019.
- Prices in Lisbon have slipped 5% from a high of €3,176 per sq m in April to €3,005 in July but still sit 2% higher than in July 2019 and 97% higher than five years ago. Nationally, median prices are still rising but have not mirrored Lisbon’s price growth over the long term. With tourist arrivals in the capital down 64% in the first half of 2020, landlords in Lisbon are changing from holiday to long term lets reducing yields but helping to avoid lengthy void periods.
- Barcelona City Council has announced that it will stop granting licences for short-term holiday lets or building permits for shared housing for one year. Under previous rules, some owners used room-share rules to rent out entire flats illegally. The one-year moratorium is intended to give the city authorities time to develop new regulations and comply with regional regulations.
Asia Pacific
- Singapore’s outbound investment sales in Q2 2020 amounted to $3 billion, down 30.2% year-on-year from $4.3 billion in Q2 2019 according to our latest Singapore Investment Market Update
Despite Singapore emerging as an alternative regional base to Hong Kong, authorities in Singapore last week tightened criteria for hiring expatriates, raising the minimum salary needed by foreigners to qualify for an Employment Pass or work permit by 15% to S$4,500 ($3,293) a month.
- In Australia, residential prices declined by just 0.4% in August month-on-month, with five of the eight state capitals recording steady or rising values over the same period according to CoreLogic. In Sydney, dwelling prices are down 0.5% on a monthly basis but are still 9.8% higher than a year ago.
All eyes are on March 2021 when support measures such as JobKeeper and mortgage holidays come to an end.
US and Canada
- US housing market indicators continue to surprise on the upside. Following a surge in May, mortgage applications for home purchases have since stabilised at a level 27% higher than last year according to Capital Economics.
Pent-up demand, record low mortgage rates and some evidence of increased demand for larger homes in the suburbs have outweighed the impact of high unemployment, tight credit conditions and record low inventory.
- In Manhattan, a resale apartment with outdoor space now commands a 5.4% premium compared with the period prior to lockdown (15 March) according to our colleague Jonathan Miller, author of Douglas Elliman’s US market reports. The premium varies depending on the number of bedrooms with a four-bedroom resale apartment generating the largest uplift of 10%.
This week’s recommended listening – How is the UK mortgage market faring?
In our Intelligence Talks global podcast this week, the focus is on the UK mortgage market. Knight Frank Finance provide an update on mortgage holiday adoption rates and look at how lenders are responding to the new landscape. Plus, the team explore equity release and lifetime mortgages and provide their outlook for the sector.
Listen on Apple, Spotify or Acast