Friday property news update - 6 August
Low interest rates, record building and luxury sales surging
4 minutes to read
Steady stimulus
The Bank of England set out how it would ease the economy off the huge support provided during the pandemic and said a “modest” tightening of policy lay ahead, but it kept its stimulus at full speed despite a jump in inflation.
The BoE said its Monetary Policy Committee voted 7-1 to keep its government bond-buying programme at 875 billion pounds ($1.22 trillion).
The vote to hold its benchmark interest rate at a historic low of 0.1% on was unanimous, as expected.
This is good news for mortgage borrowing with competition between lenders is intensifying as confidence grows in the UK economy and housing market. Last month, the UK’s lowest ever five-year fixed rate mortgage launched, with an interest rate under one 1% – the lowest of its kind.
Sky News reported yesterday that The BoE expects the economy to grow by 6% in 2022, compared to a previous 5.75% forecast.
It has warned of a “more pronounced period of above-target inflation" than previously expected, amid differences over dealing with the increase.
Record revenues
Despite some challenging circumstances during the pandemic, two large housebuilders are reporting profitable periods with Taylor Wimpey and Lovell posting impressive revenue increases.
Housebuilder is reporting Taylor Wimpey has seen a “record” first half performance with a robust operating profit margin.
During the half year to July 4th 2021, the volume housebuilder completed 7,303 homes against the 2,771 of H1 2020 which covered the Covid-induced market shutdown. The company said the marked increase was partly due to completions that had been delayed in Q4 2020.
Lovell made “an important contribution” to parent company Morgan Sindall’s half year results, with the partnership housebuilder’s revenue up 53% against the comparable period in 2020.
Lettings levelling, sales settling
Both the Prime London Sales index and Prime London Lettings index show a step back to normality as the respective markets cool off, in the latest set of reports from Tom Bill, this morning.
After a record month for the prime London property market in June, it was no surprise that transaction volumes dipped in July as the stamp duty holiday began to wind down.
The number of sales in London was 20% below the five-year average in July (excluding 2020) but this decline was skewed towards lower price brackets.
Below £1 million, the drop was 39%, underlining the proportionately larger impact of the maximum £15,000 stamp duty saving. Above £2 million, the number of transactions was 3% higher than the five-year average in July.
Similarly, the lettings market in London and the Home Counties continued its journey back towards normality in July.
Rental values rose month-on-month for the first time since the start of the pandemic, as the steep declines experienced over the last 17 months begin to reverse.
There was an increase of 0.2% in prime central London, meaning the annual decline narrowed to -10.5%. In prime outer London, the same monthly rise meant the annual fall was 7.6%, the lowest it has been since September 2020.
Dubai luxury surge
Residential prime and super-prime transaction volumes continue to grow in property hotspots in Dubai such as the Palm Jumeirah, as the luxury home sales increase mirrors emerging trends seen in global cities, such as London.
Research from Faisal Durrani shows a strong surge in demand for super-prime homes valued at over AED 20 million, with both enquiries and transactions steadily rising.
The number of AED 20 million plus home sales recorded in May across the emirate is the third highest monthly total ever recorded – the record is 78 home sales in this price bracket, set during the summer of 2009. March 24th and May 22nd 2021 have set the highest and second highest record for the number of AED 20 million plus home sales on the Palm Jumeirah, highlighting the appeal of the location to wealthy global buyers.
Planning concerns
In the Intelligence Talks podcast released today, Anna Ward asks: Will Boris Johnson water down his planning reforms to head off backbench rebellion?
This week, the podcast look at the UK government’s plan to overhaul the planning system. How realistic are these plans and why are residents and backbench Tory MPs increasingly concerned? Anna is joined by David Cooper, planning specialist and lawyer, best known for his involvement with Arsenal FC's move from Highbury to Holloway, and Knight Frank co-head of residential development, Justin Gaze.
Listen here, or wherever you get your podcasts.
In other news…
Kate Everett-Allen examines Marbella’s property market recovery which has seen a 22% jump in sales.
Hammerson to repurpose urban shopping centres, Council tax ‘scandal’, majority of public expect two year recovery, Biden sets 50% EV target for 2030, 4% inflation rate, shipping costs still surging, EV sales outpace diesel and travel green list expands.