Your morning market update from Knight Frank Research
Friday 20 March
2 minutes to read
Economic headlines
Global Covid-19 cases climbed to 244,523 as of 6am Friday. There are now 2,716 cases in the UK. There are some tentative signs of normality returning to China, where the number of new Covid-19 cases peaked on the 12th of February.
Government interventions went some way to calming markets overnight. Asian stocks rose, US stock futures came off earlier lows and the dollar halted an eight-day rally.
Yesterday afternoon, in another surprise move, the Bank of England cut the base rate to 0.1%, an all-time low. Today, the chancellor Rishi Sunak will launch a £200bn rescue package to help companies retain staff through the crisis.
The official response to the economic shock from Covid-19 is being replicated in the private sector with some commercial landlords announcing they will waive rents for tenants in the near term.
Housing market implications
The Bank of England's second rate cut in a little more than a week is another indicator that borrowing costs will remain close to record lows for the foreseeable future.
Lenders are also offering mortgage payment holidays for those in financial distress, though the details as to how they will be implemented remains unclear.
The UK residential market continues to adjust to the rapidly changing circumstances, as Tom Bill explains in his latest prime market commentary. As Tom notes, strong fundamentals suggest the market response to any relaxation of government guidance on “social distancing” could well be rapid.
The new record low for the UK base rate has helped to drive Sterling lower reaching $1.15 overnight, meaning prime London property in dollar terms is now priced 42% below the level seen in mid-2014.
China’s residential markets offer a unique view of market performance in the aftermath of peak infections. Yesterday, for the first time, Wuhan and the wider Hubei province recorded no new cases. Kate Everett-Allen's analysis of China's residential market, two and a half months on from the first recorded case of Covid-19, reveals early signs of recovery, albeit from a low base.
In Hong Kong, where travel restrictions were implemented rapidly, resales actually increased by 5% in February compared to a year earlier, according to Flora Harley’s investigation. New build sales are down, largely due to lack of stock, rather than Covid-19, and recent product launches indicate continued strength of presales. This resilience in the off-plan sales market is something we’ve seen through the Knight Frank new-build sales teams in recent days in both London and Birmingham – a topic we will look at in more detail in Monday’s update.