Friday property news update - 16 July
Runaway inflation, 15-minute cities and playing golf with one club
5 minutes to read
Jobs
Official figures released yesterday reveal a booming jobs market in the UK, with mounting inflationary pressure from rising wages.
The number of employees on the payroll lept by 356,000, the most since the onset of the pandemic. Average weekly earnings in the three months to the end of May rose by 7.3%, the most since records began.
It's clear the jobs market is struggling to keep up with the pace of reopening. Suren Thiru, head of economics at the British Chambers of Commerce, tells the Telegraph that "recruitment difficulties faced by firms go well beyond temporary bottlenecks and, with many facing an increasing skills gap, staff shortages may drag on any recovery."
Those in work face a broad spread when it comes to the adoption of new working habits. This week Tui, the UK's largest travel company, told its workers they will only need to be in the office for one day a month, putting it firmly at the more flexible end of the spectrum. The FT helpfully confirmed that work from home rules wouldn't apply to pilots and cabin crew.
Golf with one club
With data showing UK inflation now running at 2.5%, the highest since August 2018, and US consumer prices rising at 5.4%, the most since the Global Financial Crisis, the debate over whether and how to rein in rising prices is reaching fever pitch.
Two Bank of England officials have in recent days suggested they may vote to dial down stimulus earlier than the Bank has been signalling following a sharp rise in inflation. A damning new report from the House of Lords said the BOE has demonstrated an "addiction" to quantitative easing and likened its strategy "to playing a round of golf with only one club. They reach for it whatever the economic problem."
This is the economic issue of the moment, so for the latest episode of the Intelligence Talks podcast we put David Bailin, chief investment officer at Citi Global Wealth, and Flora Harley, Knight Frank's global wealth and economics specialist, in the hot seat with Anna Ward. They tackle the impact of rising inflation on property markets and whether or not it should be a major concern to investors. Listen here, or wherever you get your podcasts.
San Francisco
Rents are proving to be a reliable leading indicator of new working habits. We've talked in recent notes about the US rental market and particularly the turn underway in Manhattan - see here and here.
The New York Times has an interesting piece on San Francisco's tech workers, many of whom are returning to the Bay Area after an exodus through the pandemic. In an area near San Francisco’s Financial District, where tech workers cluster, average apartment rental prices dropped more than 20% in 2020, according to census and Zillow data quoted in the piece. The same area witnessed the biggest price rises at the beginning of the year.
In the bayside ZIP code surrounding the San Francisco Giants’ Oracle Park, where nearly 15% of residents worked in tech, average monthly rental prices dropped from $3,956 in February 2020 to about $3,000 a year later. They rose to $3,312 in May.
We'll have more on how similar themes are impacting rents in London and the commuter zone on Monday.
15-minute cities
The pandemic provided urban planners with an opportunity to rethink city planning, and few ideas have generated more buzz than the 15-minute city.
The concept makes sense. Building communities in which everything you need – groceries, leisure, work – is within a 15-minute walk would generate huge health and wellbeing benefits.
Whether or not you believe in a genuine 15-minute city will likely depend on your views regarding post-pandemic working habits. If you’re in the 100% remote work club or can walk to your office, 15-minute cities might work. But if you believe that workers still need – and, crucially, may want – to attend an office that requires a commute the concept in its purest sense falls down.
Oliver Knight takes a closer look at how and where 15-minute cities might be implemented successfully - particularly in secondary towns and villages: those that once thrived, but aren’t quite thriving anymore. Here, Oliver argues, we can solve a raft of property’s problems in one hit, including revitalising tired high streets and shopping centres, boosting housing supply and building sustainable, varied and walkable communities.
Waterfront property
There's little doubt the pandemic has permanently altered the value homeseekers place on proximity to nature's wide open spaces. It's hard to quantify by exactly how much, but Chris Druce and the team have found a way.
This week, to coincide with the launch of Knight Frank's latest Waterfront View, we reveal the premium buyers pay to live with a view of the water. The research reveals waterfront properties are worth an average of 49% more than equivalent homes located further away. For a more granular breakdown, including premiums for estuaries, harbours and lakes, see the full piece.
In other news...
China's economic growth slows and its curbs on house prices appear to be working, UK lenders are expecting a record increase in the availability of unsecured credit to households, America's "insane" car market, Barratt on house price inflation, Blackstone doubles down on the US housing market, the EU plan to reshape its economy in an attempt to battle climate change, Biden's team is weighing lifting the travel ban, and finally, Sun Hung Kai makes rare criticism of Hong Kong's land policy.
Photo by Maarten van den Heuvel on Unsplash