Last week I was hoping we would get the latest Hometrack house price index report released this week and we did. I also said I had a feeling it would be another positive one and it is, house price inflation is at +4.1% which marks the fourth consecutive month price growth has been above 4%, matching levels last seen in summer 2017. The recent Budget stimulated an +80% spike in buyer demand for property compared to the four-year average while supply still lags.
Looking at this data, it looks like we will continue to see upwards pressure on property prices.
Now, let’s take a look at the headlines that caught our attention this week, I always try to summarise the links to save you having to click through.
- Private Equity Thinks Student Property Is a Post-Covid Winner – The UK student accommodation market is getting increased demand from private equity firms as they increase their investments pumping hundreds of millions of pounds into the resilient sector with their view being on high rental returns post-Brexit and post-Covid. More than one-third of deals for student property in 2021 so far have been financed by private equity, compared to about 15% in total between 2016 and 2019, according to data compiled by real estate advisers JLL. Student application numbers are forecast to rise by 8.5% this year and with purpose-built accommodation oversubscribed private equity firms find these investments very attractive. In the 12 months to September 2020 student property returns totalled 4.9%, outperformed over 5 and 10 years only by industrial property, according to Tim Pankhust, a senior director at CBRE, who oversees student accommodation services. The sector still requires a further 310,000 beds to cater to all first-year and international university students, who typically live in purpose-built accommodation, according to student accommodation provider Unite Group and construction is currently failing to make a significant dent in that gap.
- London flex office sector poised to recover from Covid slump – Colliers, leading professional services and investment management company, has predicted that London’s flexible office space providers will bounce back this year after the massive downturn they experienced last year. In 2020, London saw approximately 217,000 sq ft of office take-up by flex providers which is a stark contrast when compared to 2019 which saw a take-up of more than 1.7m sq ft as Covid-19 put the brakes on demand for space. Mark Bott, head of serviced offices at Colliers, says that the flex market is poised to take off again “but in two slightly different ways”. He says the sector can expect to see more “localised suburban hubs that reduce the commute time but provide a more professional and social environment for staff than a home office” as well as “a reduction of operators within city centre locations as landlords adapt and become involved in designing, delivering and, in some instances, managing offices that are hospitality-led”. This is positive news for this sector and it will be good to see workers start to return to the capital as they have been missed.
- Everton’s £550m stadium gets green light – More positive news for Liverpool as further regeneration and development has been confirmed. Construction of Everton Football Club’s new stadium can finally proceed after communities secretary Robert Jenrick gave the project the go-ahead. The application that has been approved is to build a 52,888-seater stadium at Bramley-Moore Dock and the £82.5m redevelopment of Everton’s current home, Goodison Park, for a mixed-use project including residential, commercial and community facilities, has also been approved.
- Going Up! House price forecast for 2021 revised upwards by agency – Ok, so this article slipped my radar the previous week and only came to my attention this week but it made it to my list this week as it is another example of a well-known property company changing their house price forecast to be more positive. We have recently seen Savills increase their forecast, along with Halifax and Nationwide giving a more positive outlook and now Knight Frank have followed suit. They have increased their UK house price forecast to 5% which is up from their forecast of zero at the start of this year. Their forecast for Greater London has increased to 4% from 1% and their Prime Outer London and Prime Regional markets forecasts remain unchanged. It will be interesting to see where we actually end up at the end of this year, Nick and I are looking forward to looking back at the original forecasts we made in December to see who is the closest to being right (hopefully me!).
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.