Wednesday property news update
A festive economic health check, house prices in central London and the enduring resilience of BTR
3 minutes to read
A festive economic health check
A selection of economic data points published in the past 48 hours provide a health check for the UK economy as we head into the festive break.
The ONS estimated GDP increased 16% in Q3, more than three times the previous record quarterly increase. It also revised Q2's drop to 18.8% - a remarkable contraction, though well short of its warnings of a potential 35% drop back in April.
The savings ratio dropped to 16.9% from Q2's all time high of 27.4%, which is still extremely high compared to the long term average and hints at a significant well of pent up spending for the economy. Meanwhile, the CBI this morning said the balance of firms reporting growth slipped during the three months to December, though the reading remains well above the crisis lows.
Differing outlooks
The impending economic rebound in Europe could be slower than previously expected due to renewed restrictions on movement to combat the spread of the virus, according to the IMF. The organisation maintained its forecast of an 8.3% economic contraction this year and a 5.2% rebound during 2021, though it said the euro area may need more stimulus if the recovery is to remain on track.
Sentiment is markedly different across Asia, where companies are now the most optimistic they've been all year.
Across the board, economic forecasts are dependent on the successful roll out of vaccines. Drugmakers have spent the first half of the week attempting to reassure the public that their vaccines are highly likely to be just as effective against the new strain. Results of tests confirming as much are likely to arrive in the coming fortnight.
Pricing in prime central London
The difference between annual price change in prime central and prime outer London widened in December as Brexit-related uncertainty increased in the run-up to the end of the transition period, writes Tom Bill.
Average prices in PCL fell 4.3% during 2020, while the annual decline narrowed to 3.2% in POL after monthly growth of 0.1%.
Any impact of Brexit-related uncertainty in PCL may be short-lived as both the UK and EU work their way towards a deal, and Knight Frank forecasts that price growth will outperform mainstream UK and prime outer London markets in 2021 as a wave of pent-up overseas demand is released. You can read Tom's analysis of prime lettings markets here.
The enduring resilience of Build-to-Rent
Both occupancy levels and rent collection in the purpose built rental sector have remained high throughout the crisis.
Our final rent collection survey of the year - which tracks the performance of some of the largest investors in the sector with more than 22,500 built and let units - reveals monthly collections have averaged 95.8% since March.
This stability in the face of pandemic disruption has reinforced BTR’s appeal to investors with Legal & General, Aberdeen Standard Investments and Grainger all active, writes Oliver Knight. There have also been new entrants into the market, such as AXA with its recent purchase of Dolphin Square.
In other news...
HMRC yesterday estimated the number of UK properties transacted in November 2020 stood at 115,190, 19.3% higher than November 2019 and 8.6% higher than October 2020. You can find Tom Bill's outlook for what to look out for in the UK property market during 2021, here.
Plus, the factory by a Tuscan beach and the future of ESG investing, EU medicines regulator approves Pfizer/BioNTech Covid vaccine, what we know about the new strain, retailers on the brink, and finally, more fighting about fish.