Your Morning Market Update - Knight Frank Research 26 March
Good Morning,
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Economic headlines
Volatility in global financial markets has eased but has not ceased, as investors around the world balance the US government’s historic $2 trillion rescue plan with the continued rise in the number of Covid-19 cases.
European shares climbed yesterday, with sectors that have been hardest hit in the meltdown leading the rally, with travel and leisure up 6% and oil and gas up 7%. Traders say European markets have now reached their low.
In the UK, a home test for the coronavirus is likely to be offered to millions of people and delivered by Amazon if checks this week show that it works. The hope is that those who have been tested will be allowed back to work if they have recovered and the test confirms immunity, offering a gradual way out of the lock down.
Meanwhile the Chancellor will today outline a rescue package for the self-employed that will supplement provisions for tax breaks, loans and hardship grants that are already available.
Housing market implications
We noted earlier in the week that house builders have started to act with more caution in the land market, their appetite to invest is directly reflective of site visitor numbers and reservations in their sales outlets. In recent days growing numbers of developers have closed construction sites amid the complexity of movement controls.
While the above moves point to a slowdown in market activity, Oliver Knight writes in his latest update that new-build sales continue to be agreed at all levels of the market, from Help to Buy-backed transactions all the way through to £5m prime deals.
Virtual viewings have replaced physical ones in a number of developments and provide a touchpoint for potential purchasers impacted by travel restrictions. New homes market data for the first three months of 2020 in London is due next month and will allow us to draw firmer conclusions on market volumes.
The 'dash for cash' as investors sought the relative safety of dollars has become a feature of the crisis. This trend has led to savings of up to 45% for US dollar-denominated buyers in the prime London residential market, compared to peak market pricing.
It is not only dollar buyers seeing significant discounts in global markets. International investors are looking at Australian property with renewed interest, for example. Kate Everett-Allen is on hand to break down the currency play for ten different buyer groups across eight prime residential property markets.
In tomorrow’s note we will be taking a deep dive into current housing market trends in Australia and China and looking at lessons for markets here and globally. We will also investigate the ongoing shifts in mortgage rates and point to opportunities to existing home-owners.
The research team will continue to update you as the current situation develops.