Knight Frank Daily Update Tuesday 19th May
The Moderna vaccine, air bridges and our residential market outlook
4 minutes to read
Good morning,
Need to know
Asian markets climbed overnight following yesterday's surge in shares on Wall St. Both rises were prompted by promising results of a US trial for a coronavirus vaccine and the prospects of major economies reopening.
This performance helped push oil to a two-month high amid the first indications of demand recovering.
There are early signs the vaccine from US biotechnology company Moderna can create an immune-system response to fend off the virus. The human test results reportedly showed no major safety concerns.
Pressure on the pound has returned amid renewed concerns of a disorderly Brexit and talk of negative interest rates. Sterling's loss of almost 4% of its value against the dollar in May is likely to further spur interest in real estate from overseas investors.
Many countries with the highest per capita infection rates have now passed their peak, including those in Western Europe, Johns Hopkins said last night. Countries in the Eastern Mediterranean and Middle East, including Qatar and the UAE, plus those in South America, have accelerating trends.
Meanwhile, governments across Europe continue to support unprecedented levels of stimulus in attempts to minimise the economic scars of the crisis.
German Chancellor Angela Merkel and French President Emmanuel Macron agreed to support a 500 billion-euro aid package to help the European Union recover from the pandemic.
In the UK, a study for the Institute for Public Policy Research found that even a doubling of the UK’s debt would still leave the Treasury paying less to service its debt, as a share of tax receipts, than at almost any time since 1950.
That study comes as the IHS Markit UK Household Finance Index (HFI) – which measures households’ overall perceptions of financial wellbeing –recorded 37.8 in May, up slightly from April's eight-and-a-half year low of 34.9. Though the headline number rose, the results indicate significant concern among households for the outlook of their finances.
Finally, the prospect of a summer holiday abroad improved slightly yesterday after the transport secretary announced plans for “air bridges” between countries with low coronavirus infection rates – we will take a deeper look at this issue in the next few days.
The property market
You can find our updated outlook for the UK residential market, including prices, transactions, rents, residential development and the mortgage market here. London data points to narrowing declines in the number of new prospective buyers and exchanges over the period of the lockdown. Now that viewings are permitted, this trend should accelerate markedly.
We flesh out more details as to what the opening of the UK property market looks like in the latest edition of our Intelligence Talks podcast (listen on: Spotify, Apple or Acast), as Anna Ward speaks to three Knight Frank insiders. Clients can find practical advice on moving home here.
We would love your opinions on what Covid-19 means for you post-lockdown, where you may want to live and your thoughts on how house prices will be affected. We've launched this survey - take part now and we'll be sharing the insights along with our own later.
Stephen Springham continues his series of weekly notes analysing the state of the UK retail market in the light of the pandemic. There is a sense of relief that that enforced shop closures may soon be coming to end and cashflows can re-commence, but this is overshadowed by concerns of how to adapt stores to make them compliant to social-distancing and near complete uncertainty over potential trading volumes in both the short and medium term.
Flora Harley's analysis of real time indicators from key global cities reveals increases in visits and time spent at places of work across all 18 markets we're monitoring, with 15 cities recording double digit increases over the past month.
From New Zealand, Victoria Garrett, Head of Residential, Asia Pacific for Knight Frank interviews Johnny Sinclair, National Director of Residential, Bayleys Real Estate on the recent easing on lockdown measures, opportunities for investors during adversity and how sustainable practices will evolve post-pandemic.
Finally, yesterday we shared an incorrect link to Tom Scaife's piece on what the future looks like for Senior Housing. You can find the piece here.
If you have any questions, please contact me, or the team.