Friday property news update
A mortgage surge, a new high for house price growth and some record-breaking GDP results
3 minutes to read
The clamour for mortgages
Lenders approved 91,500 mortgages for house purchase in September, the highest number since September 2007, the Bank of England said yesterday.
Approvals are now almost 25% higher than they were in February, before the effects of the pandemic were being felt in the property market, and about ten times higher than the 9,300 approvals in May, during the depths of the crisis. Monthly borrowing dropped to a low of just £0.2 billion during the initial Covid lockdown, and now stands well above £4 billion.
The figures provide a remarkable window into the size and scope of the surge in property market activity that has taken place since the UK’s lockdown in March. Knight Frank Finance has more.
Annual house price growth reaches a five-year high in October
The Nationwide will today confirm that their UK housing market tracker saw annual price growth hit 5.8% in October, the highest rate since Jan 2015. Prices were up 0.8% month-on-month, after taking account of seasonal factors.
The strengthening of the housing market takes place, as we have noted previously, against a weaker economic backdrop, with slower economic growth and rising joblessness across the UK.
Record growth in the US
America’s economy rebounded at a record pace in the third quarter, gross domestic product rose by 7.4% over the period.
The latest rise leaves the economy around 3.5% smaller than at the end of 2019. By comparison, GDP shrank 4% over the entire year and a half of the Global Financial Crisis a decade ago, according to the NYT.
US housing construction expanded 12.3% during the quarter, the biggest gain on record, and is now one of the few sectors doing better than before the pandemic.
Backstopping borrowing from Rome to Berlin
The eurozone is likely to follow the US by breaking all records when it reports GDP figures later today.
Despite this rebound, the recovery is beginning to lose momentum and the European Central Bank signalled yesterday that it is likely to provide more stimulus before the end of the year amid a surge in Covid-19 infections. That unequivocal pledge to “recalibrate” monetary support in effect told leaders from Rome to Berlin that borrowing to battle the virus will be backstopped by the ECB, according to Bloomberg.
In September, the ECB estimated a contraction of 8% in euro zone GDP this year, followed by a rebound of 5% in 2021. The Bank will update those forecasts in December.
Tracking the spread
This data is being published against a backdrop of surging Covid-19 infections across much of the northern hemisphere.
Global coronavirus cases rose by more than 500,000 for the first time on Wednesday, a record one-day increase. The US also saw a new daily record of 91,000 infections.
The dollar is gaining as investors seek safe havens. Oil is heading in the other direction.
In other news...
Many of the real estate sectors quickly returning to normality in the wake of the pandemic have long-term demographic shifts underpinning them - equity release is one of them.
Plus: a global economic recovery tracker, a housing mini-boom drives Lloyds Bank into profit, PWC puts faith in the future of the office, spend, spend, spend to protect the economy says IMF, the EU agrees to a fair distribution of vaccines, Merkel says EU should have acted sooner, and finally, the bright side of Brexit.