What percentage uplift do vaccines provide economies and housing markets?

Faced with severe economic downturns in 2020 (estimated at minus 3.5 percent) and still in the midst of exceptional uncertainty, the global economy is projected to grow 5.5 percent in 2021 and 4.2 percent in 2022.

Vaccines have given a fillip of 0.3 percentage point relative to the previous forecast, reflecting increased economic confidence. The strength of the recovery is projected to vary significantly across countries, depending on access to medical interventions, the effectiveness of policy support, exposure to cross-country viral spreading and the state of individual economies on entering the crisis e.g. low-income developing economies, entered the crisis with high debt that is set to rise further during the pandemic.

Property markets have surprised, particularly in the UK..

There was uncertainty with the housing market during the twelve week National Lockdown from 23rd March 2020. Initially it went into hibernation – as buyers, sellers, renters and landlords were told to delay home moves if possible, not to initiate new viewings and follow through pipeline transactions virtually.

It is estimated there were 450,000 buyers and renters with plans on hold, of which 373,000 were property sales with a total value of £82bn (Zoopla estimates). Sales were running at a 10th of the normal level for the time of year, similar to usual sales volumes of a December.

By the 2nd Lockdown on 5th November the housing market remained open for Estate Agents, removal firms and conveyancers abiding by Covid-safety measures in England, but with greater levels of restrictions in Wales, Scotland and Northern Ireland.

City-Scaffolded-Building-UK

At the same time the Pandemic caused transaction delays in England, prolonging Contract Exchange times from 96 to 124 days, a 29 per cent increase (Movewise).

This was followed by a mini housing boom, as a result of pent-up demand and the Chancellor’s stamp duty holiday. The extent to which government Bounce Back Loans (BBLs) were used for deposits on properties is unclear, but anecdotally it was happening and may have contributed in some way.

All of this combined to push prices up and create a property frenzy in some areas towards the end of 2020.

Fears are that the end of the stamp duty holiday, at the end of March 2021, will cause a sharp drop in transaction levels, which can typically lead to price falls. Already house price growth in the year to the end of January 2021 was 5.4 per cent, down from 6.0 per cent in December (Halifax) and new instructions to sell have decreased noticeably.

We are also now entering the 4th and final year of ‘Section 24’ changes to the way landlords calculate their buy-to-let mortgage interest tax relief, which will be fully implemented and reported in 2020/21 Tax Year in Tax Returns filed by January 2022. This tax-relief withdrawal had already had a dampening effect on the property investment market but will be fully felt in this final year.

London, UK, housing market

Whilst London has been harder hit than most of the rest of England, with a number of homeowners and renters migrating outwards, it may not continue a downward trajectory.

Kearney’s 2020 Global Cities Report ranks London as the No. 2 City, after New York, but London tops the rankings when it comes to the outlook based on long-term investments in governance and economics.

Whilst the rankings have been produced without fully taking into account the effects of the pandemic and prior to seeing any visible signs of the Brexit fallout, it provides a reference point. It also means London starts out in a really strong position, particularly rated for the cultural experience offered, the strength of Medical Universities, global service firms, its news agencies and the overall international travel experience.

Conclusion: property market uplift?

Whilst vaccines may have given a 0.3% upward fillip to world economies, how much might vaccines boost the housing market or otherwise?

It is difficult to strip out the myriad of interwoven drivers of house prices in the UK property market. Drivers such as: rising unemployment, – deteriorating after government support to industry is withdrawn, affordability levels, liquidity of the housing market as less stock comes to market post SDLT holiday is scheduled to end. These all hint at prices lowering. There are also more unknowns, such as the level and shape of the tax burden to be announced in the Chancellor’s March budget.

Yet house building rates still fall short of government targets, exacerbated by Covid, thus constricting supply of newer stock on the market.

The vaccine programmes boost morale and confidence, which can only help the country and economy get back on its feet – and this will have a positive knock-on effect on the housing market.

If you would like help finding the right property at the right price for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say

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Suburbs or city-centre property investing – in a post-Covid world?

In the past we have tended to want to invest as close to city-centres as we could afford as it meant bagging a convenient location that would be desirable for would-be tenants.

UK Property Investment

Now we need to look at investment locations with renewed eyes. Office workers are reluctant to return to working in city-centres, for a whole host of reasons.

Continental Europeans have gone back to work quicker than we have in the UK: with over 80% of office staff back at their desks in France, over 70% in Spain, yet less than 40% in the UK, although some city-centres are suffering more than others.

Perhaps it is about manageability?

•  Continental city sizes do not mirror those of the UK. In France, Paris has just over 2 m inhabitants and its second city Marseille c. 900k Yet London has a population of 10m and Birmingham 2.5m.

UK property in Cities and towns

Some regional UK cities are also proving to be rental hotspots. Central postcodes in Cities like Bradford and Liverpool offer average yields close to 10%, whereas the suburbs in places like London can still work for rentals, like Enfield or Croydon.

London and other big UK city centre economies are suffering with office workers reluctant to return to offices. Yet London and some other UK cities are quite unique, characterised more as networks of ‘villages’, think Blackheath, Barnes, Wimbledon, so some areas are suffering less.

Suburbs and less-populated areas are holding up, given the work-at-home culture with people more comfortable shopping and socialising locally. A trend being dubbed the ‘hyper-local economy’.

I know when I commuted daily from Surrey to work in central London, it was years’ before I really had time to get to know my neighbours. When I did, I realised what a great bunch they are. They have since become friends and a support network. During Covid there is some good to emerge – the time to linger more in my neighbourhood, in the suburbs, outside of London where we have the best of both worlds, access to one of the best cities in the world and the sense of community and countryside on our doorstep.

Stamp Duty ‘Holiday’ in England and Wales

If you are looking to take advantage of the SDLT ‘holiday’ it is best to not leave it too late as there may be delays in the conveyancing process as many investors rush to beat the deadline. For expats this is more important, given the SDLT holiday ends end of March 2021. At the same time a 2% SDLT surcharge is introduced for overseas property investors in April 2021, meaning paying 5% above the standard rate.

If you would like help finding the right buy-to-let properties for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the targeted amount of properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say

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