Midweek property news update
The wealthy population grows, house prices rebound and what next for Brexodus?
4 minutes to read
The wealthy population grows
With lower interest rates and more fiscal stimulus, asset prices have surged, driving the world’s ultra high net worth (UHNWI) population 2.4% higher over the past 12 months to more than 520,000. The process was seen across North America and Europe, but it was Asia, with 12% growth, that saw the real upswing, according to The Wealth Report, published yesterday.
The US is, and will remain, the world’s dominant wealth hub over the next five years, but Asia will see the fastest growth in UHNWIs - those with assets of at least US$30 million - at 39% compared with the 27% global average.
By 2025, Asia will host 24% of all UHNWIs, up from 17% a decade earlier. The region is already home to more billionaires than any other (36% of the global total). The Chinese Mainland is the key to this phenomenon, with 246% forecast growth in very wealthy residents in the decade to 2025. For more, you can see the key findings at a glance here, or our 30 minute key findings film here.
UK house prices rebound
Annual UK house price growth rebounded to 6.9% in February, from 6.4% a month earlier. That amounted to growth of 0.7% month-on-month, after taking account of seasonal effects, more than reversing the 0.2% monthly decline recorded in January.
There are a few things going on here. Property market activity continues to be supported by the Stamp Duty Holiday and a mass reassessment of housing needs triggered by the first lockdown a year ago. The chancellor has now extended jobs support through September and we expect an extension of the SDLT holiday and a new mortgage guarantee scheme to be announced in the Budget shortly, all of which will extend the market's resilience.
But there's also the fact the economy appears to be emerging from the crisis in a better state than the forecasters had expected - particularly from a jobs perspective. Last July, the OBR predicted a peak in Covid-related joblessness of 12% — worse than the highest total in the 1980s downturn - before cutting that in November to forecast a spring peak of 7.5%.
According to the FT, the OBR is likely to cut its prediction for joblessness again later today. Our latest forecasts for house prices predict a slowing of house price growth later this year to end 2021 broadly flat.
The savings glut
What consumers decide to do with all their lockdown savings will play a big part in the recovery. We talked last month about the Bank of England's suggestion the economy could return to its pre-pandemic size early next year as consumers begin spending some £125 billion in extra lockdown savings.
UK banks have been reporting annual earnings this week and in the last 12 months the biggest four lenders amassed £200 billion in deposits between them, far outstripping just £50 billion in net lending growth, according to a Reuters tally. The banks have signalled they expect consumer spending over the coming months to start eating in that cash pile.
We've talked before about the global crisis initiating global trends, from the flight to the country to remote work and savings gluts is one of them. By way of example, the Australian economy has now expanded more than 3% for two consecutive quarters as households have unleashed large sums of savings, cutting the savings ratio from 18.7% to 12%.
For a measured counter to my optimism, the FT's Chris Giles has an interesting piece on how relatively thin diversions from predictions can spell very different fortunes for the UK's public finances.
Tracking the Brexodus
With the lack of a financial services agreement in the EU-UK trade deal that came into effect on January 1st, it's been tricky to quantify the real-world effects of Brexit on the outlook for the City of London.
One reliable metric is the movement of jobs from the City to the EU, which has slowed to total just 100 since October, according to a tracker from EY. Since the 2016 referendum, job moves have totalled almost 7,600, while the number of new hires in Europe has remained flat for some time at around 2,850 new jobs, far below initial forecasts.
Meanwhile Trustpilot has selected the capital for its IPO, making the first large company from the European Union to tap the London stock market this year.
In other news...
British grocery sales soar 15% on lockdown boost, weak jobs and retail data point to double-dip eurozone recession, Biden says US will have enough jabs to vaccinate all adults by end of May, tempers fray over France’s vaccine strategy, Taylor Wimpey sets aside £125m to fix cladding, shake-up in the City to woo more tech listings, China's services sector grows at slowest rate in 10 months, and finally, a Hong Kong house costs a record $2 million a year to rent.