Monday property news update 12 July
Businesses prepare to spend, a £900bn surge in household wealth and slowing growth in China
3 minutes to read
Investing
A surge in business investment is set to take place over the coming months as companies shift away from defensive strategies, according to a Deloitte survey of finance leaders at 107 of the UK's biggest companies.
Hiring and investment is set to hit levels not seen for seven years and expansion by acquisition is now a bigger priority than at any time in the past eleven years. A separate index by BDO revealed business confidence jumped to its highest point since 2005 last month.
Headwinds remain, however. The same Deloitte survey found materials costs, staff shortages and supply chain disruptions have been holding back companies' ability to respond to demand. Meanwhile, data from the ONS released Friday revealed GDP expanded by 0.8% in May. That's faster than the growth rate at the outset of the pandemic, but down sharply from the 2% growth the previous month - a Reuters poll of economists had expected growth of 1.5%.
China
Signs of slowing growth aren't isolated to the UK. We talked on Friday about market jitters amid signs momentum is weakening in the world's largest economies.
Bloomberg picks up on Friday's move by the People's Bank of China to cut the amount of capital banks must hold in reserve in order in an attempt to increase lending. A Bloomberg poll of economists expects growth to ease to 8% in the second quarter when the data is released later this week, down from 18.3% in the second quarter.
Growth rates were certain to slow following the initial rebound caused by a coordinated reopening of the global economy, however economists are voicing concerns that momentum is weakening sooner than expected.
Regaining momentum
Momentum slowed in the UK housing market following a glut of deals as buyers sought to beat the deadline for the stamp duty holiday taper at the end of June. In the last week of June, exchanges were up 204% compared to the five-year average, before dropping to just over 40% of the five-year average the following week, according to analysis from Tom Bill.
A lack of supply has frustrated buyers. The ratio of new prospective buyers to new instructions to sell in the UK was 10.4 in June, which was 56% above the five-year average. The end of the stamp duty holiday will likely prompt more buyers to list their property, which will support a recovery in momentum. There are early signs that is already happening - the number of market valuation appraisals in the first week of July was 3% above the five-year average, for example.
"Stock is still low but building,” according to James Cleland, head of Knight Frank’s Country business. “There will be a gradual restocking over July and August and good houses will sell well over the summer. It actually feels like we’re moving towards a better place as a rebalancing of the market is underway.”
Wealth
A new study by the Resolution Foundation think tank found Britain’s household wealth surged £900 billion during the pandemic - well above the Bank of England's estimates.
The typical family is now almost £8,000 better off, according to the study. The richest 10% of families enjoyed the largest increase in wealth, to a tune of more than £50,000. The poorest 30% of adults are just £86 pounds better off.
Gains in property values had the most significant impact on household wealth during the period.
In other news...
In a new Rural Update, Andrew Shirley reveals an uptick in wealthy individuals and film stars hunting for rural land. Plus, see this link for the latest round up of all the latest property market data.
Elsewhere - Wall St braces for historic surge in corporate America’s earnings, Brussels targets aviation fuel tax in drive to reduce carbon emissions, finance firms burnish ESG credentials with hiring spree, banks tackle backlog of unsold homes post-Grenfell, and finally, the world's billionaire factory shudders as China cracks down.
Photo by Timon Studler on Unsplash