Midweek property news update - 11 August
Pay cuts for remote workers, the UK mortgage war heats up and which city is leading the global house price boom?
4 minutes to read
The prime surge
Global prime residential prices are now outpacing mainstream markets for the first time since the onset of the pandemic.
Across the 46 cities we track, prices increased at an average rate of 8.2% in the year to June 2021, up from 4.6% in March. That compares to a 7.3% gain in mainstream markets across 150 cities. Interestingly, the proportion of cities registering prime price growth has increased only marginally, instead it’s the scale of growth amongst the top-performing cities that is behind the index’s acceleration.
Toronto leads this quarter’s results, recording annual prime price growth of 27%, driven by strong buyer appetite and low inventory levels. Despite a recent raft of cooling measures, the next three rankings are occupied by key Asian cities - Shanghai (21%), Guangzhou (20%) and Seoul (20%). Miami (19%) completes the top five this quarter. See the full piece from Kate Everrett-Allen for more.
Staying with the theme, Faisal Durrani takes a closer look at the boom in sales in Dubai's Palm Jumeirah, which in Q2 logged the highest number of villa sales since 2014. Sales are being driven by familiar themes; both resident expats and international investors are seeking larger and more luxurious homes as hybrid working models take hold.
Remote work
As Lee Elliott outlined in the 2021 edition of (Y)our Space, the tech sector has in many ways set the tone for the global workplace over the past decade, whether that's via the software they've developed, the workspaces they've designed and delivered, or the workplace culture they've implemented - see widespread coverage of their evolving work from home (WFH) policies throughout the pandemic.
New iterations of those policies draw considerable amounts of attention, and the latest move from Google to effectively cut the pay of workers that choose to work remotely on a permanent basis, thereby living in locations with a lower cost of living, is no different. Google is by no means an outlier, as Reuters notes, Facebook and Twitter also cut pay for remote employees who move to cheaper areas. Others, like Reddit and Zillow have shifted to location-agnostic pay models, citing advantages when it comes to hiring, retention and diversity.
Meanwhile, Derwent's interim results released yesterday included upgrades to its rental value guidance. Chief executive Paul Williams tells the Times that a war for talent is underway and "good businesses are going to need good space to attract that talent."
Mortgage wars
Halifax this week launched a two-year fixed deal at a rate of 0.83%. That's now the cheapest deal on the high street and is the latest move in a price war emerging among some of the biggest lenders.
As outlined by Hina Bhudia at Knight Frank Finance last month, consumers tucked away record amounts of savings over the course of the pandemic, leaving the banks with huge amounts of funds available for lending. Lenders have been steadily increasing their operational capacity in order to avoid a repeat of the chaos that took place in late 2020 and are building market share as the outlook brightens.
This competitive market has further to run. Though 0.83% is likely to be at or close to the bottom, after speaking with Hina yesterday we expect more movement to take place at higher LTVs over the coming months – that will be a boon for buyers that were overlooked during the pandemic, particularly first-time buyers.
Hotels
Intercontinental Hotels Group this week reported a "significant improvement" in its first half results, suggesting the lifting of travel restrictions in a few markets and the global roll out of vaccinations is stirring business demand.
It's clear a tentative recovery is underway. In a series of short reports, Philippa Goldstein has been analysing the trends likely to make the difference. In part 2, Philippa outlines why collaboration, connectivity and community make up three of our "seven C's" at the heart of the industry's great reset.
In other news
An interesting piece in Prospect probes whether Boris Johnson’s Conservatives are losing touch with the public, particularly in their approach to the recovery and the shape of our post-Covid economy. We covered similar themes in this week's Intelligence Talks podcast, featuring an in-depth look at the government’s plan to overhaul the planning system and why it's increasingly dividing backbench Tory MPs.
In a new Rural Update, Andrew Shirley takes a closer look at the UN IPCC’s latest report on climate change, and outlines why it will continue to be the defining issue driving food and farming policy in the UK.
Stephen Springham's latest take on the retail market includes a mid term review of all of the key data, and suggests that - for the first time in months - the positives are starting to outweigh the negatives.
Finally, Chris Druce has a new monthly update on the UK residential market, including the first signs of the journey back to normality.
Elsewhere - beware fairy tales about inflation, landmark Infrastructure Bill passes the US senate, Bellway's order book hits £2 billion, the ultra-rich drive a property buying frenzy in Singapore, real time data suggests the Delta variant is hitting Asia's economy, and finally will America's Pandemic Productivity Boom last?
Photo by Dylan Carr on Unsplash