COVID-19

Global Residential Outlook – 20 November 2020

Key takeaway: With much of Europe in a second lockdown and cases rising in North America, Asia Pacific is emerging as a key bright spot with cities in the region accounting for five of the top ten rankings in our latest Prime Global Cities Index. Hong Kong and Singapore are due to open a travel corridor on 22 November, the first indication that borders and travel restrictions are starting to ease across the region.
Written By:
Kate Everett-Allen, Knight Frank
4 minutes to read
Categories: Covid-19 Economics Global

Need to Know:

  • The number of new daily cases in parts of Europe is starting to decline in key countries, and according to high-frequency data indicators the second wave of infections has not hit Europe’s economy as hard as the first wave.

  • Two economies that were heralded as having dealt with the pandemic well, South Korea and Sweden, have unveiled tougher restrictions due to rising cases.
  • Italy’s flat tax applicant numbers saw a 56% increase in 2019 year-on-year, according to Withers numbers increased from 264 in 2018 to 412 in 2019.
  • All eyes are on Brexit with just 42 days remaining until the UK leaves the European Union with rumours that a deal may be announced in the next week which could see the pound strengthen.
  • In New South Wales, stamp duty looks set to be abolished and replaced with a new annual property tax. The proposal would allow purchasers to choose between paying stamp duty upfront or converting to the property tax system. Consultation on the proposal is open until 15 March 2021 with the scheme not slated to come into force until late 2021 at the earliest.
  • Greece is looking to lure workers from abroad with a new tax incentive. In addition to its flat tax ruling, Greece has this week announced that anyone moving to the country – will receive half their income tax-free, including Greek expats that return home.
  • The UK Government is considering an overhaul of the Capital Gains Tax regime, including proposals to align rates with Income Tax, and to double the levy on profits from the sale of second homes.

Residential digest

Europe

  • The Knight Frank Ski Property Report 2021 highlights the latest results from our annual Ski Property Index, which tracks the movement in prime prices across 19 resorts located across the French and Swiss Alps. This year, the French resort of Saint-Martin-de-Belleville leads the Index with annual prices up 3.4%, pushing last year's front runner Val d'Isère into second place.
  • Despite most European countries entering a second lockdown, housing markets are still functioning with viewings, completions and house moves all achievable. We present a roundup of the latest rules and regulations across the region.
  • At 3.78% Spanish rental yields ended Q3 2020 significantly higher than 10-year bonds which stand at 0.2% according to our new Spain PRS Report.


Asia Pacific

  • ANZ Bank has revised its Australian house price forecast on the back of stronger than anticipated consumer sentiment due to low interest rates and stimulus measures. ANZ Bank has changed its -10% price forecast for 2020 and now expects some markets to register small price increases with Sydney’s prices expected to rise 8.8% in 2021.
  • Singapore’s residential sales fell 51% in October as the government looked to tighten rules around a market practice known as option-to-purchase which has been inflating sales. Under the previous rule buyers were given time to sell their existing home, but the system has led to situations where some buyers agree to purchase units only to backtrack, thus inflating sales figures.
  • Residential sales hit an eight-year high in Mumbai after the Government of Maharashtra announced a reduction of the city’s stamp duty rate - from 5% to 2% from 1st September until 31st December 2020, followed by a rate of 3% until the end of March 2021. The announcement saw residential sales reach almost 8,000 sales in October, a rise of 36% year-on-year.

US and Canada

  • In Manhattan, 22 contracts were signed above $4 million last week - the highest weekly number since March 2020.
  • In the US, despite the 30-year mortgage rate falling below 3% last week, there are signs demand in the mainstream market is starting to wane - mortgage applications for home purchases fell to a 5½-month low last week, and new home sales dropped back in September according to Capital Economics.
  • In Vancouver rising Covid-19 cases has seen the market switch from in-person to virtual viewings but sales continue to trend upwards. Some 1,505 homes were sold in the first half of November, broadly in line with sales rates in October and 20% up year-on-year. The expectation is that it will likely be the highest number of sales for the month of November since 2015.

Middle East

  • Dubai saw residential sales rebound by 50% in Q3 2020 compared to Q2 2020 but remain 16.5% below their level a year ago according to the new UAE Residential Market Review. The resale market has outperformed off-plan saes during the pandemic

For further information on any of the datasets or research reports highlighted please contact Kate Everett-Allen