Monday property news update - 8th March
The return of confidence, economies are running hot and what next for UK property
3 minutes to read
The outlook improves
Our current UK house price forecast is flat for 2021, but the extension of the stamp duty holiday and furlough scheme means we'll be revisiting our outlook over the coming days.
Data unearthed by Tom Bill reveals the market was already strengthening in February. The number of exchanges more than doubled compared to the same month last year as deals agreed earlier came to fruition. The number of offers accepted were in line with the previous year and the number of new prospective buyers registering climbed 8%.
The beginning of the year was characterised by low levels of supply as both home schooling and question marks over new Covid variants had caused sellers to hesitate, but there are now signs of change on this front. In the last week of February, the number of market appraisals was 57% higher than the first week of the year.
An uptick in supply would keep a lid on house price growth for now, but the data is pointing to a busier year than we had anticipated just two months ago.
The return of confidence, continued
With the picture changing so rapidly, we're once again relying heavily on real-time data and sentiment surveys for clues as to what happens next - last summer I remember linking to a Philip Aldrick column suggesting six-week old GDP data was about as useful as cave paintings as a tool for understanding the world.
Two closely-watched gauges of sentiment suggest household and business confidence have rebounded to levels not seen since the start of the pandemic: Consumer confidence hit 105.4 last month, according to an index compiled by the Centre for Economics and Business Research and YouGov - the highest since February last year.
Meanwhile, a separate survey by the auditor BDO showed that confidence in the services sector also hit a 12-month high. This renewed confidence was echoed in the Chancellor’s Budget speech last Wednesday, in which Rishi Sunak hailed “light at the end of the tunnel” for a post-pandemic recovery.
Economies run hot
US employers added 379,000 jobs in February, the strongest showing since October. This was driven by unexpectedly large gains at the nation’s restaurants and bars, one of the weakest spots of the US recovery to date.
This triggered another round of volatility in financial markets, which is a theme we're likely to keep returning to as the sheer scale of positive economic data, plus record levels of stimulus being injected to global economies, increases the prospects of inflation. There is a fine balance between optimism for a recovery and fears economies will overheat, leading to sooner-than-expected rate hikes.
“You are getting the first benefit of some states loosening up a little bit,” Stephen Stanley, chief economist at Amherst Pierpont, tells the FT. “February is really just a downpayment on what should be much larger gains in the subsequent quarters.”
Switzerland's lure
With taxes around the world set to rise sooner rather than later, ultra-high-net-worth individuals (UHNWIs) - those with assets of US$30 million or more - are expected to look more favourably on Switzerland and its lump sum taxation regime.
That lump sum form of taxation offers UHNWIs some degree of certainty. According to the OECD, Switzerland is one of only four countries to adopt a recurring annual wealth tax, down from 12 in 1990.
Kate Everett-Allen analyses the big draws for international buyers, and unpicks what it's all likely to mean for the property market.
In other news...
In a new Rural Market Update, Andrew Shirley revisits the Budget and Justin Eng analyses the property market headlines from across Asia.
Plus, Homes England faces a rebuilding job, BP staff to work two days a week from home, and finally, the ECB confronts shifting markets as the economy stays frozen.