Midweek property news update - February 10th 2021
Cautious consumers, the two camps of Covid and the outlook for the great urban exodus
3 minutes to read
We are eager to hear your thoughts on how lockdown 3 has affected your thinking when it comes to buying and selling a home this year. Short survey here.
Progress
UK Covid-19 data continues to head in the right direction, with infections and hospital admissions both down by about a quarter in the past seven days. Hospital admissions are down by a fifth.
Early findings from the UK's vaccination program, due to be published in the coming weeks, will show that the first shot of the Pfizer jab cuts transmission by about 65%, rising to about 80% for the second shot. Those numbers are conducive to the reopening of schools in March, according to Paul Hunter, professor of medicine at the University of East Anglia.
Though new variants may impact those numbers, the vaccines are still likely to have a huge effect on transmission and may turn Covid into "the sniffles", Professor Andrew Pollard, head of the Oxford Vaccine Group, tells the all-party parliamentary group on the coronavirus. Early trails from locations in which the new variants are emerging are not seeing a shift in which vaccinated individuals are requiring hospital treatment, he said.
Cautious consumers
Spending by British consumers plunged at the fastest rate in seven months in January as the country went back into a tight lockdown. The data, from Barclaycard, shows a 73% annual increase in online retail spending and record demand for takeaway food failed to compensate for the wider shut down of the economy - total spending was down 16.9% compared to a year earlier.
Caution from UK consumers during lockdowns has become a feature of this crisis. Between March and November last year, households stashed away over £125bn more than they usually would, according to data from the Bank of England.
While GDP is expected to shrink 4% in the first quarter, the economy is projected to recover rapidly towards pre-pandemic levels over the course of 2021 - the speed of which is likely to be dictated by how quickly consumers decide to splash out once restrictions are lifted.
The two camps of Covid, continued
Back in mid-January we talked about the emergence of "the two camps of Covid" - as the world broadly divides between "eliminators" - nations pushing for total eradication of the virus - and "suppressors" - those grappling with opening economies once a tolerable level of immunity has been reached.
Each strategy presents economic challenges, one of which was highlighted this week by new OECD data showing sharp falls in global migration. The annual drop in inward flows to rich countries last year ranged from about 30% to up to 70% or 80% in countries such as Australia and New Zealand that shut borders almost completely, according to the FT write up.
In those nations, even if net migration returns to pre-pandemic levels by 2024, their respective working age populations will be 2% and 2.8% smaller in the medium term, according to IMF estimates — equivalent to a loss of potential output of between 1.2 and 1.7%. A reminder that Britain faces its own challenges on this front.
The urban exodus
The pandemic-induced search for more space among urban homeowners is now a well documented trend, however we are starting to see data that gives us a better idea of the size and scope of the flight to the country.
Data gathered by Chris Druce reveals the number of London-based buyers that purchased a second home outside the capital increased by 309% in 2020 versus 2019. The number of London-based buyers as a proportion of all second-home sales outside the capital also increased to 34.6%, from 13.4% a year earlier.
This is a global trend spanning from Texas to Tokyo, and we'll be monitoring how it progresses. US data gathered by Bloomberg shows the beginning of a reversal of this trend, with house prices in urban locations already outpacing those in the suburbs. In some regions, urban areas are now substantially outperforming.
In other news...
Billions pledged to replace unsafe cladding, Bellway builds quickly, Norman Foster on reshaping cities, online's share of Britain's grocery market hits record 16%, and finally, Putin’s hopes for economic revival threatened by worker shortage.