Knight Frank Daily Update Tuesday 7th July
Beijing contains the latest outbreak, London house prices and stamp duty
3 minutes to read
Good morning,
Need to know
Chinese shares extended their rally overnight, taking gains over the past week to more than 13%.
Though growth in prices has been inflated by an influx of retail traders encouraged by state media, investors are increasingly bullish following releases of positive economic data and signs China is able to control pockets of a resurgent virus when it appears.
Beijing reported zero new coronavirus cases for the first time in 26 days following a flare-up that infected 335 people. Bloomberg has an interesting breakdown of measures taken to quell that outbreak, including unprecedented levels of testing and lockdowns targeted in areas as small as single apartment blocks.
Gains in markets in China helped push global stocks to their highest since early June. Yesterday, that rally included UK developers and estate agents following reports the chancellor Rishi Sunak will lift the threshold at which people start paying stamp duty from £125,000 to as much as £500,000.
The report in yesterday's Times suggested the measure intended to boost the housing market following lockdown would be implemented in the autumn budget, which could have the opposite effect as prospective buyers put plans on ice to wait for the change.
Trailing an announcement in that way would run contrary to previous changes to SDLT, and we hope ITV's Robert Peston is right when he suggests the holiday could start this week.
It looks like we may have to wait for Wednesday's announcement to find out, which is set to include £3bn of spending, a third of which will go on reducing greenhouse gas emissions from public-sector buildings, such as schools, hospitals, and social housing.
Finally, growth returned to British construction companies in June for the first time since the coronavirus lockdown began, driven mostly by housebuilders.
The property market
June provided further evidence that price declines are bottoming out in prime London property markets, as quarterly declines narrowed across the capital.
In prime central London, prices fell 3.6% in the three months to June, which was down from a figure of -4.4% registered in May. The monthly fall was 0.2%, taking the average annual decline to 5% in June.
The strength of the recovery will become clearer as the economic consequences of the pandemic materialise but the property market has shaken off the initial effect of the lockdown, says Tom Bill.
In the prime London lettings market, throughout April and May - and despite the lockdown - the number of instructions to let was consistently ahead of the same period last year as owners hedged their bets during the pandemic and opted to let rather than sell.
In the week before the property market re-opened on 13 May, the number of new instructions to let was 4% above the five-year average.
While supply is catching up with demand in the London sales market, the trend is reversed in the rental market, which has put downwards pressure on rental values.
The annual decline in average rental values in prime central London widened to -4.6% in June, after a monthly fall of 0.8%. In prime outer London, the annual decline in June was -4.9%, the largest such decrease in more than three years.
In the latest diary of an agent, Chris Druce continues to receive reports of growing demand for home offices, gardens, balconies and homes in the country. Luke Johnson from Knight Frank's Canary Wharf office says a number of sellers are skipping the typical step of buying something larger in London and opting to leave the capital instead.
I’ve posted a short note over on LinkedIn which questions whether the pandemic will impact on city living.
You can find an overview of key economic and financial metrics, compiled by Will Matthews, here.
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