Monday property news update - 24 May
Blackrock targets senior living, the reopening draws nearer and we tally the nation's housing spend
4 minutes to read
The reopening is on track
Ministers and senior officials have signalled the 21st June lifting of Covid-19 restrictions is on track following the release of data showing the Indian variant causes a minimal reduction in the efficacy of vaccines.
The data suggests that two doses of the BioNTech/Pfizer jab provides an 88% protection against the variant found in India, compared with 60% for the Oxford/AstraZeneca vaccine.
The UK has given first doses to almost 40 million people, or about 72% of the population. More than half a million people received their second jab on Saturday, bringing the total that have received both doses to more than 22 million, or 43% of the population.
Tallying housing spend
More money was spent in the housing market in England and Wales in the year to March than any 12-month period since the global financial crisis, an analysis of residential transactions shows.
The increase underlines the extent to which the UK property market has bounced back from the pandemic, culminating in a record month for transactions in March 2021 ahead of a stamp duty holiday deadline that was deferred until June.
Some £274.8 billion was spent over the 12-month period, which was 8.1% higher than the £254.1 billion spent in the year to March 2020, the month of the first UK national lockdown. The last time total spend over a 12-month period was higher was in November 2007.
As we've outlined previously, we expect activity to normalise later this year with prices rising 5% over the course of 2021. That matches a new tally of economists conducted by Reuters.
The everything rally
The scale of activity in the housing market will feature when Bank of England governor Andrew Bailey is questioned by MPs later today. Mr Bailey will be joined by his deputy Sir Jon Cunliffe and the Bank's chief economist Andy Haldane.
When and how the Bank will dial back support for the economy will likely form the bulk of the questions, however. We talked on Friday about signs of inflation showing up in various economic data points. The consumer price index rose by 1.5% in April, the highest reading since March 2020.
This morning’s papers provide more examples, whether it's hospitality companies offering cash bonuses to fill positions to the soaring prices of used cars.
Though Mr Bailey maintains all this will normalise later this year, Mr Haldane recently issued a warning the economy may overheat. We'll be publishing more analysis of how rising interest rates are likely to impact the housing market over the weeks.
Senior living
Blackrock, the world's largest asset manager, is investing £100m for a 75% stake in a joint venture with senior living developer Audley Group, according to the FT.
Gauges of supply relative to potential demand make it easy to see why. There are currently 78,383 homes in the UK Housing with Care market, for example, yet the population of over 65s stands at 12.4 million, according to Knight Frank Research. Based on a household size of 1.3 adults, this gives the UK a penetration rate of just 0.8%, compared to penetration rates of between 5% and 6% in Australia, New Zealand and the United States.
The investment with Audley Group will fund the development of about 1,000 homes and Blackrock is now one of several institutions investing heavily in the sector. The market currently accounts for about 658,000 units and we expect that to hit more than 800,000 units by 2024.
Even so, delivery is still dwarfed by the UK’s ageing population. The number of units per 1,000 individuals aged 75+ is expected to drop from 129 today to 120 by 2024, despite the substantial increases in new supply. That gauge stood at 137 back in 2010.
In other news...
Stephen Springham unpicks retail's consumer bounce back and in a new Rural Update, Andrew Shirley covers consultations spanning trees, species reintroduction, and even an early retirement scheme for farmers.
Elsewhere - Barratt breaks new ground buying back flats after cladding issues, the hiring struggle playing out in the US, member countries push back against IEA’s net zero road map, banks cut rates on multimillion pound mortgages, and finally, US home sales fall as supply tightens further.