Friday property news update
Brexit brinkmanship, a retail recovery and hope for buyers with small deposits
3 minutes to read
The dinner didn't go well
Following the much-trailed meal with European Commission president Ursula von der Leyen in Brussels, Boris Johnson said yesterday there was now “a strong possibility” Britain will leave the EU at the end of the year without a deal.
Both sides have given negotiators until Sunday to try to engineer a breakthrough.
The pound slipped 0.7% against the dollar to $1.33 by late afternoon yesterday, however that level "still implied a widespread assumption a deal would be struck," say analysts quoted in the FT.
Retail buoys a slowing recovery
The UK economic recovery was beginning to slow in October, before the November lockdown, with GDP climbing 0.4% during the month, the sixth consecutive increase.
GDP remains 7.9% below the levels seen in February 2020, before the full impact of the pandemic.
Taking a break from the trend, retail has been a bright spot. Sales data for November indicates the sector did not suffer nearly as badly during the 2nd lockdown as it did during the 1st. Here's Stephen Springham with a full analysis of the data, plus more on the implications of Arcadia’s and Debenhams’ administrations.
Hope for buyers with small deposits
The withdrawal of mortgage products for buyers with smaller deposits was one unfortunate side-effect of the pandemic, however new data suggests a change is underway.
Lenders introduced 52 new products at 85% loan-to-value (LTV) and 32 options at 90% LTV during November. Both tiers now have the highest number of mortgage products available since March and June respectively, according to Moneyfacts.
Average two-year fixed rates continued to edge up during the past month, however the reintroduction of products could be the first phase in a wider recovery in high LTV lending, according to Knight Frank Finance. With more products comes more competition among lenders, which should result in lower rates.
The global residential outlook
December's Global House Price Index suggests the impact of the pandemic on house prices has been mixed with three broad groups emerging.
Firstly, markets that registered a sharp uptick in sales and prices in Q3 2020 (New Zealand, the US and UK), secondly, those that have seen only a marginal impact on pricing (China, France, Germany), and finally, those countries and territories that have seen annual price growth move into negative territory (Hong Kong, Singapore, Spain).
Overall, the index continues to post annual growth of between 4% and 5.5% as it has done since early 2017 but the percentage of markets registering a fall in prices year-on-year is climbing. For more on the global residential outlook, see this update from Kate Everett-Allen.
People are suing pension funds over climate risks
We've been covering the money flowing into ESG investments and the pressure regulators are putting on global funds to be more transparent over how they disclose and measure the risks and benefits of their investments.
In another shot across the bow of the investor community - this time from the other direction - a 25-year-old Australian who sued his A$57 bn ($42 bn) pension fund over its failure to provide adequate information about climate change business risks has settled out of court.
There is a proliferation of cases – with this case in Australia being just one – of investors using litigation to hold corporates and financial institutions to account for how they manage climate risk, Holly Stebbing, a partner at law firm Norton Rose Fulbright tells IR magazine.
In other news...
Wealth Tax report gives ‘political cover’ for raising existing taxes, Macfarlanes frisks the Wealth Tax report, US unemployment claims jump, first US approval of a Covid-19 vaccine is likely within days, Joseph Safra dies aged 82, ECB gives eurozone new shot in the arm to fight pandemic, and finally, the oil price rally builds steam as coronavirus vaccine rollouts begin.
Listen up:
Podcast: Faisal Durrani, head of London commercial research, on the future of the office, the importance of ESG, why London remains a magnet for investors - link.
Webinar: Escape to the Country with Chris Druce - what is really happening in the UK property market - link.