COP26, a phantom tax hike and will the Bank of England raise rates this week?
Making sense of the latest trends in property and economics from around the globe.
3 minutes to read
COP26
Humanity has "long since run down the clock on climate change" and if we don't get serious today, "it will be too late for our children to do so tomorrow".
That's an excerpt from Boris Johnson’s rallying call to world leaders, due to be delivered at COP26 later today. Residential and commercial real estate accounts for an awful lot of global carbon emissions, so it has to be at the centre of plans to decarbonise. To coincide with the opening of the conference, we asked our analysts for a snapshot of the state of play in their corner of the real estate world.
Cost remains among the biggest obstacles to progress. Some 84% of 900 global homebuyers in our recent survey said the energy efficiency of a future home was either important or very important to them, yet when push comes to shove, they said it was monetary incentives that would move the needle when it comes to investing.
Among corporate office occupiers, the last time we emerged from a global financial crisis, cost concerns served to terminate mounting occupier interest in sustainable real estate. As we emerge from the pandemic, the growing body of net zero pledges suggest this time might be different. More than 40% of the global businesses we surveyed as part of our recent (Y)OUR SPACE research already have a net zero carbon target in place and more than three quarters have target dates of before 2030 – or to put it in real estate terms, one market cycle.
Mortgages
Mortgage approvals for house purchase, a good barometer of future lending, dipped to 72,600 in September, down from 74,200 a month earlier.
The data, released by the Bank of England on Friday, shows lending remains above pre-pandemic norms, though is approaching what we would consider more typical conditions. Approvals for house purchase averaged 65,673 a month during 2019.
All eyes are now on the Bank of England's Monetary Policy Committee (MPC), which is due to publish its latest interest rate decision on Thursday. Financial markets have now priced in a hike, though the MPC is split and really it could go either way.
Speaking to the Telegraph, Knight Frank Finance Managing Partner Simon Gammon said the best mortgage products "are now on borrowed time" and that "changes in rates now may be small, but it is indicative of a wholesale tide change coming down the track."
Tax
A little intrigue uncovered by the Telegraph in the wake of last week's Budget: the government had planned to increase the surcharge on additional property purchases from 3% to 4%, according to the Office for Budget Responsibility documents published to coincide with the chancellor's speech.
The policy change was in the documents, but not in the speech, suggesting it had been pulled at the last minute. The OBR said the move had made its way into its analysis "in error".
Sentiment
Despite pressures on supply chains and the recent uptick in Covid-19 infections, business sentiment is holding firm and there are some early signs that pressures on staffing may be easing.
A new business barometer from Lloyds Bank puts business confidence at its second highest reading since the onset of the pandemic. Some 90% of businesses plan to bring back more than half of furloughed workers. Meanwhile, almost half of respondents found that it had become easier to hire people with the right skills or experience.
A separate survey of 850 property investors, lenders, developers, fund managers and advisers conducted by the Urban Land Institute and PWC puts London as the top European city for property investment, followed by Paris and Berlin.
In other news...
Kate Everett-Allen reveals which ski resort commands the highest rental rate.
Elsewhere - climate change could bring near-unliveable conditions for 3bn people (FT), first-class air travel recovers slowly (FT) and finally, China's economic slump deepens (Times).
Photo by veeterzy on Unsplash