Spring is here and it is the end of our first quarter of 2021 which has proved to be a very busy one. The general property market has remained buoyant and we foresee this carrying over into the next quarter as well.
Restrictions have begun their first phase of easing and the vaccine continues to rollout positively so hopes of going back to some form of normality remain strong.
We would really appreciate it if you could subscribe and leave feedback for our Podcast on Apple.
- Demand for rentals grows as number of prospective tenants continues to rise – Demand from prospective new tenants rose in February for the second month in a row, according to new figures from ARLA Propertymark. On top of this, half of lettings agents saw landlords increasing rent in February. Regionally, the West Midlands had the highest number of new tenants per branch with an average of 126, with the East Midlands having the second highest at 123 new tenants. Contrastingly, the number of properties managed per letting agent branch fell for the third month in a row from 196 in January to 195 in February. Mark Hayward, chief policy advisor at ARLA Propertymark, said: “Today’s report demonstrates that the rental market continues to show no sign of slowing down, as demand for rental properties rose yet again in February”. This clearly demonstrates that the problem of high demand and low rental supply remains unchanged and there is still a huge need for more private landlords to provide more quality rental properties.
- Stamp duty surcharge won’t hurt foreign buyer market – This month saw the introduction of the new 2% stamp duty surcharge being imposed on most overseas buyers and a prominent London agency says that it will not dampen their enthusiasm for investment. Ludlowthompson has made the prediction after reporting that the number of overseas landlords owning property in the UK has hit a five-year high – despite Brexit, the pandemic and earlier tax changes. They have reported a 19% increase in foreign landlords in the UK over the last 5 years. They note the rise in Hong Kong buyers and they say a key attraction is education, noting that many overseas landlords who have purchased property have done so to provide accommodation for their children who were studying in the UK. The new surcharge applies to buyers of residential property in England and Northern Ireland who are not UK residents.
- What 175 years of data tell us about house price affordability in the UK – This is a really interesting article from Duncan Lamont, head of research and analytics at Schroders, where they have dug into nearly 200 years of housing data from the Bank of England’s Millennium of data resource to analyse the history of house prices. They found that the average house in the UK currently costs more than eight times average earnings, based on data as of 31 December 2020 and the eight-times-earnings level has only been breached twice previously in the past 120 years – once just prior to the start of the financial crisis and once around the start of the 20th century. Interestingly, house prices were even more expensive in the latter half of the nineteenth century. They then went on a multi-decade downtrend relative to earnings. This only bottomed out after World War I. There are three important drivers of this: more houses, smaller houses, and rising incomes. It concludes that in order to improve affordability, a period of stronger pay growth could be very helpful. There is a lot of interesting data in this article and it would be impossible for me to sum it all up here so, if you are a property nerd like me, I highly recommend checking the full article out.
- Real estate is key to the UK’s recovery from COVID-19 – We have had a turbulent year with the coronavirus pandemic and we have light at the end of the tunnel with the success of the UK vaccine rollout the road map to normality that the government has set out and started. We still need to be vigilant with concerns Europe might be about to experience a 3rd wave of coronavirus cases and on top of this, the UK’s transition out of lockdown could be delayed if the relaxing of certain restrictions leads to a spike in new infections. With all of this in mind, the main focus is to get the country’s economy back on track with the property market looking to be a key part of this. With the government introducing the stamp duty holiday and 95% mortgages shows that they understand just how important the real estate sector will be in bringing about the post-pandemic recovery of the economy. All this encouragement for buyers will in turn encourage investment activity which will drive national productivity and ultimately contribute to GDP growth.
That is all we have for you this week. If you have any comments or questions on this week’s news summary then please feel free to send us an email at [email protected] – if not, see you next week.