Friday property news update - 5th February 2021
The property Six Nations, the impending consumer splurge and the investment case for London's offices
3 minutes to read
The investment case for London's offices
Back in January we talked about an influx of investment into London's office market that took place late last year, despite the ongoing debate over the future of work and the office's role in it.
The dynamics underpinning that investment were laid out this week in Knight Frank's flagship London Report, which gives a clearer picture as to the sheer scale of the space shortage the market has faced for several years.
Even if take-up levels for new and refurbished space were to remain at 2020 levels for the next two years, the capital would face a shortfall of 1.6 million sq ft, writes Faisal Durrani. By comparison, if take-up were to fall to the levels recorded during the global financial crisis for the next two years, the development shortfall would be nearer 2.3 million sq ft through to the end of 2022. There is a lot to digest and we'll share more key insights over the coming weeks.
Dry powder
The Bank of England said yesterday the economy could return to its pre-pandemic size early next year as consumers begin spending some £125 billion in extra lockdown savings.
Officials are anticipating consumers will spend about 5% of that, based on historic recoveries, but it noted the current conditions were unprecedented and the recovery could well be speedier if consumers dip into their savings even further.
Indeed, the report suggests people expected life to return to normal within a year due to the arrival of vaccines that had “boosted confidence that the pandemic will be brought under control.” Holiday bookings have surged for the second half of 2021. You can read the full report here and the Times write up here.
Chaos at the ports, continued
The BOE report also picked up on shortages of materials impacting housebuilding, adding that "supplies of timber, insulation and bricks were scarce and were likely to remain so" as suppliers navigate chaos at the ports - a theme we talked about last week. Official figures have brick stocks hitting a 13-year low in December, with supplies down more than a quarter on the same time a year earlier.
This is a theme we'll be returning to, the latest RICS construction monitor expects private housebuilding to remain resilient through 2021, despite the withdrawal of stimuli including Help to Buy and the stamp duty holiday.
Barratt this week said it had made improvements to some standard house types that reduce the amount of brickwork required and optimise internal floor plans. David Thomas, the group's chief executive, also tells the Times the company "would support a prospective levy on the wider industry" as a measure to help solve cladding problems.
The real six nations
For a bit of light relief ahead of the Six Nations, Kate Everett-Allen looks at how the property market in each host city has performed in recent years.
Not only did England claim victory in 2020 but London’s mainstream market led the annual house price rankings, with average prices up 9.6% year-on-year according to the Land Registry. Paris comes next with prices up 6.1% in 2020, followed by Cardiff (4.8%) and Edinburgh (3.1%).
A reminder that defending champions England are the favourites to win this year’s competition, which kicks off tomorrow. View the full list of fixtures.
In other news...
For the latest data on London's sales and rental markets, see the new London Review.
Plus, SDLT receipts dip, vaccine milestone as global Covid jabs pass number of confirmed cases, US yield curve steepest since 2015, home working at high as businesses adapt, government plans Covid vaccine passports to allow foreign holidays, Britain's Covid-19 hotel quarantine policy to start February 15.