Friday property news update - 19th March
Rapid-fire recovery, workers go back to the office, and the how (but not why) of buying virtual property
4 minutes to read
A rapid-fire recovery
The Bank of England yesterday confirmed what the data had been hinting at for a fortnight: the UK economy is recovering ahead of schedule and employment is likely to peak below its 7.75% February forecast. A separate measure of consumer confidence hit its highest level since the onset of the pandemic.
The Monetary Policy Committee meeting minutes suggest that members still see significant uncertainties over the outlook, however speaking at an event yesterday afternoon the Bank's chief economist and voice of optimism Andy Haldane said it is clear the nation is on the verge of "a rapid-fire recovery. That is coming, and I think that is coming soon."
The Bank tried to assuage concerns over inflation - the committee needs to see evidence that inflation will be sustained at the target rate of 2% before tightening policy. Economists at EY forecast the base rate will be held at a record low 0.1% throughout 2021, with the possibility it tightens monetary policy in 2022, although at the moment, early-2023 seems more likely. Here's Knight Frank Finance on the outlook for the mortgage market.
Biden turns to tax rises
Similar conversations are playing out over at the Federal Reserve in New York. Officials this week signalled that they expect to keep interest rates close to zero until at least 2024 despite hiking their growth forecasts.
The new 2021 growth forecast of 6.5%, up from December's forecast of 4.2% would amount to the fastest economic expansion since 1984. It's hard to overstate the impact of Joe Biden's $1.9 trillion Covid-19 stimulus act in all of this, which according to the Bank of England will provide "significant additional support to global activity."
It is, however, only the beginning. The president is formulating a long-term economic program designed as a follow-up to the pandemic-relief bill that won’t rely just on government debt as a funding source. Bloomberg reporting suggests that means increases in the corporate tax rate and the individual rate for high earners.
We’ll be exploring this further with Stephen Kotler, CEO of the Western Region for our US partners Douglas Elliman, as part of the Wealth Report webinar series. Register now to watch live on Tuesday 23rd March at 9am GMT or on demand.
The challenge in Europe, continued
Europe's woes continued yesterday as the French government announced new lockdowns in several regions, including Paris.
The Telegraph's Ambrose Evans-Pritchard reports on HSBC data showing capital outflows from the eurozone reached half a trillion euros in the fourth quarter, an annualised pace of 20pc of GDP. It quickened to €250bn in the month of December, a pace HSBC says it hasn't seen for 20 years.
This is partly due to the continued spread of the virus on the mainland, but also due to the EU's response. While the US is spending $2.8 trillion or 13% of GDP in fast fiscal relief – two thirds of which will come this year, the EU's Recovery Fund expects to allocate €87bn later this year in grants and loans, just 0.7% of GDP.
People are going back to the office
New data published yesterday indicates more than half of the country’s employees travelled to work last week for the first time since the ONS began recording the figures in June.
That follows comments from Bank of England governor Andrew Bailey suggesting a more flexible hybrid model is likely to prevail - the Bank expects 34% of the workforce will continue working one day a week from home. A continuum is emerging: tech companies like Spotify are at one end, adopting permanent 'work from anywhere' approaches, and at the other is Goldman Sachs, which has told all its global workforce it wants them back in the office by the end of the summer.
For a new episode of the Intelligence Talks podcast, Anna Ward gets the latest from Lee Elliott, the man who knows what the world's largest office occupiers are thinking. The discussion covers a divergence in how Millennials and Gen X are approaching homeworking, and unpicks whether London's suburbs and commuter towns will continue to benefit from housing more office workers. Available to listen on Apple, Spotify or Acast.
Digital property
Knight Frank has long tracked the flow of capital into luxury investments, from Hermès handbags (prices up 17% in the past year), to fine wine, art and classic cars.
A new generation of ultra-high-net-worth individuals are redefining what we consider to be luxury assets - last week on the podcast Andrew Shirley discussed the rise of the $10,000 dollar Pokémon card.
It seems only right then that we touch the sale of the world’s first Non-Fungible Token house, which you can buy at auction. For the uninitiated, NFTs are digital assets verified by blockchain technology. Last weekend they made global headlines when a buyer spent $69 million on a digital piece of art.
Bidding for the Mars House is currently up to 33 Ethereum coins, or the equivalent of $59,343.
In other news...
Canadian home prices gains accelerate in February, US homebuilding takes a step back, health chiefs confirm Oxford-AstraZeneca Covid jab safe to use, and finally, US-China talks quickly descend into bickering.
Photo by John McArthur on Unsplash