This week has brought us some positive COVID-19 related news as we had the announcement of a vaccine where preliminary findings show a 90% success rate. It is reported that the UK should get 10 million doses by the end of 2020, with a further 30 million doses already ordered. Fingers crossed, these are encouraging steps to help fight this virus and get people back to some sort of normality in the near future.
We have also had the release of Hometracks quarterly UK rental market report which shows a ‘two-speed market’ between London and the rest of the UK. They reported a 1.7% increase in rental prices excluding London and a 5.2% decrease in London’s. It seems that a supply/demand imbalance is supporting positive rental growth across most regions and the majority of cities outside London. However, London is experiencing a further decline from Q2 as supply continues to overtake demand due to changing working practices, commuting patterns and weaker tourism.
Now, let’s take a look at the property headlines that caught our attention this week, I always try to summarise the links to save you having to click through.
Property news this week
- So Far, So Good, for Housing in the Lockdown – This article would suggest that looking at current data available, it would seem the property market holds itself in good stead and suggests that the market has plenty of momentum. The latest RICS (Royal Institution of Chartered Surveyors) survey released on 12th November showed that buyers are still keen to buy and sellers are keen to sell. RICS have eased their expectations for house-price inflation from 22% to 13%, which is still very promising. The survey was carried before the second lockdown announcement. But unlike the spring lockdown, the housing market is staying open and from my own current purchasing experience, is remaining very buoyant
- Capital Gains Tax hike risks mass exodus from buy to let – Would the Chancellor targeting the PRS, which is the second largest provider of homes in the UK, be the smartest idea? In short, no. The Chancellor has been told that he could raise more revenue by doubling CGT and this is very alarming as it would risk forcing yet more investors to quit the buy to let sector. Can you imagine if this happened and landlords upped and left the market, flooding it with homes which would ultimately push prices downward at a time when the property sector is in desperate need of support. Ultimately, this would not be good news and as David Alexander says in the article, CGT increases would “stifle growth, discourage investment, and depress the housing market”. We await the Chancellor’s Budget announcement in March 2021 on tenterhooks.
- Arrears and possessions low amid continued Covid-19 support – YourMoney reports that figures from UK Finance show homeowner mortgage arrears remained at historically low levels in Q3, while buy-to-let arrears rose slightly from a low base. It seems the payment holiday granted to borrowers due to the pandemic helped those in early arrears – falling less than 5% behind payments – to catch up with commitments resulting in a 5% decline in the number of borrowers in debt. Once financial support starts to phase out we may see these numbers creep up and potentially more repossessions that would lead to a bit more housing stock on the market which would then keep excessive rising prices in check.
- Property investors plan to invest an additional £42bn by 2025 – In this piece from Property Industry Eye, they look over new research published by Knight Frank which reports that investors plan to invest an additional £42bn in the residential investment industry, including student, senior living and PRS, over the next five years, having already committed a combined investment value of £62bn across the sectors. It would seem that the appetite from investors is showing no signs of slowing and the current crisis is expected to be a catalyst for this growth. The research highlights that the residential investment sector will outperform all other real estate sectors in 2021 with 44% of survey respondents saying it will. Oliver Knight, head of residential development research at Knight Frank, commented: “The survey results echo our expectations for increased diversification within the residential investment market, with investors spreading their exposure across age groups”. Out of the respondents surveyed, only 13% currently invest across all three residential investment asset classes – student, senior living and PRS and this is set to rise to 38% by 2024 which shows that a lot of investors see diversification as key.
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