Wednesday property news update
Lockdown 3 and the property market, zero-interest mortgages and the impact of vaccinations on global growth
3 minutes to read
The property market during lockdown 3
One in 50 people in England had Covid-19 last week, according to government estimates published last night. That figure rises to one in 30 in London.
The housing market will remain open during the lastest lockdowns, according to new government guidance. Chris Druce has a summary with links to each set of guidance here and you can read a brief update on some of the safety measures implemented by Knight Frank here.
Housing market activity remains well above the long-term trend, which is likely to cushion an economic contraction in Q1 that early forecasts suggest will be about 3.5%, well below the 18.8% fall during Q2 2020. Our own research indicates every 100,000 resales transactions contribute about £1 billion to the economy.
Vaccinations and global growth
Some 1.3 million people in the UK have now been vaccinated, including almost a quarter of those over the age of 80, according to the figures published last night.
Success in the development of vaccines has set up a global race to roll out the jabs that will dictate economic growth during the year ahead.
A successful roll out will see the global economy rebound 4% this year, according to new World Bank estimates, leaving the economy about 5% smaller than it would have been had there been no outbreak of Covid-19. Widespread delays in roll-outs would cut that growth to about 1.6%.
The busiest mortgage market in 13 years
Banks issued more loans to homebuyers in November than any time since summer 2007, according to new Bank of England figures.
Banks are increasingly eager to lend and we have started to see major institutions be prepared to lend to buyers with small deposits, Hina Bhudia of Knight Frank Finance tells the BBC. The bad news is many banks still haven't worked through a backlog of applications that built up during the lockdown and subsequent surge in activity during 2020, which may result in delays if we see a further surge in activity.
Meanwhile, Danish bank Nordea is offering homeowners in Denmark 20-year mortgages at a fixed interest rate of zero. We're unlikely to see UK banks replicate the move, and you can read why here, but it is a reminder that central bank rates are likely to remain ultra-low for longer. No major western central bank is likely to raise rates this year, according to Bloomberg’s quarterly review of monetary policy.
Democrats creep towards control of the Senate
At the time of writing, US Democrats had moved a step closer to capturing control of the Senate after one of two run-offs taking place in Georgia was declared in their favour. They need to win both to win control of the chamber.
A Democrat win will give Joe Biden greater freedom to implement his policy platform, which is likely to exert pressure on the dollar and dollar-pegged currencies. Global shares dipped as of about 07:20 this morning as investors began betting on a Democratic sweep.
In other news...
Andrew Shirley's latest Rural Update covers the Brexit fall-out for agricultural land markets. Finally Chris Druce has a need-to-know on the UK’s residential cladding issue - which is one we will stay close to as this situation evolves through 2021.