Very active capital, stagflation, the US housing boom and more
Making sense of the latest trends in property and economics from around the globe.
3 minutes to read
Active Capital
We will see record levels of global cross border real estate investment during 2022 and the US, the UK, Germany, France, and the Netherlands will top the list of most popular destinations, according to Knight Frank's annual Active Capital Report, out this morning.
Now in its sixth year, the report utilises the latest machine learning techniques and unique datasets to predict where real estate capital will flow in 2022 and beyond. There is a lot to unpack, so the team behind the report will be hosting a webinar to walk you through it all in London this morning. Click here to sign up for the live session or to watch on-demand.
Interestingly, 2022 is shaping up to demonstrate that the office investment market is still very much alive, with more than half of all cross-border investment headed into the sector. UK offices, in particular, are expected to be a top destination for US capital, driven by private equity as they invest into new markets and ride the recovery.
Stagflation, continued
Fears of "stagflation" rattled markets overnight. The S&P 500 capped its worst day since May, meanwhile the pound fell and sovereign borrowing costs rose as investors weighed the prospect of rising prices with slowing economic growth.
Both the Federal Reserve and the Bank of England signalled last week that interest rate hikes may come sooner than they had anticipated due to rising inflation. Roll into that more bickering in the US over the debt ceiling, rising energy prices and the unresolved Evergrande mess and there is plenty going on to spoil the mood.
Indeed, various measures of consumer sentiment are on the downward trend. In the UK, the Scottish Widows household finances index - a barometer of how consumers view their financial outlook for the year ahead - recorded its first fall since the second quarter of last year.
US housing
US house price growth continues to accelerate, with annual price growth across 20 cities measured in the S&P CoreLogic Case-Shiller US National Home Price index climbing to an eye-watering 20% in July.
The reading caps 14 consecutive months of accelerating prices. Prices in 19 of the 20 cities now stand at all-time highs, with the sole outlier (Chicago) only 0.3% below its 2006 peak.
As in the UK, consumer sentiment is on the downward trend. Indeed, that reading of house prices is for July and September's measure of consumer sentiment fell to a seven-month low. That release indicates that consumers are less interested in buying a house or other big-ticket items such as cars and major household appliances over the next six months.
Europe
In various ways, Europe stands apart. European consumers appear to be shrugging off the various pieces of worsening economic news and economic indicators tallied by the FT shows Europeans are leaving their houses to go shopping, eat out, travel and visit cinemas as much as they did before the pandemic.
Christine Lagarde also stands apart from her US and UK peers. In a speech yesterday - Reuters write up here - the European Central Bank president said it was important not to "overreact to transitory supply shocks that have no bearing on the medium term."
The ECB's official view that inflation will ease back below 2% next year.
In other news...
Jennifer Townsend explores the growth of the healthtech sector in the West Midlands.
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