Black Friday, future gazing and crunch time for TfL's budget shortfall
Making sense of the latest trends in property and economics from around the globe.
3 minutes to read
Future gazing
The emergence of Omicron has added a heavy dose of uncertainty to the future gazing that usually dominates December. Boris Johnson won't make a decision on further Covid-19 restrictions until the end of next week and ministers will only start receiving the scientific information to underpin that decision from December 13th, according to the Sunday Times.
Still, Tom Bill draws a few conclusions for the property market based on some leading indicators. Firstly, London is in for a busy start to 2022. Marylebone, Belgravia and Mayfair saw the biggest increases in new prospective buyers registering during the three months to November compared to a year earlier.
Secondly, the dearth of supply that has characterised the market for many months looks set to ease a little. There were more market valuations appraisals (when a prospective seller requests a property valuation for sale) conducted during November than any corresponding month for the past ten years.
Asia Pacific
The lack of stock in the mainstream residential markets across the Asia Pacific region will continue to exert upwards pressure on prices for at least the next twelve months, according to a new Knight Frank outlook for the region.
Pent-up demand for properties in key safe-haven markets will result in further price growth, particularly as travel restrictions are eased. Our team sees residential prices across the region climbing 3-5% next year. That puts several markets at risk of new cooling measures, particularly Australia and South Korea.
Meanwhile, conditions in the region’s office market continue to favour tenants and the vacancy rate is expected to rise from the current 13-14% to 14-16%. While the rental downcycle has bottomed out in some markets, the recovery remains uneven for now.
Black Friday
Stephen Springham has the latest on Black Friday. Footfall this year was down -24.2% on pre-pandemic levels. Taking a bigger picture view, footfall for the whole of November was down on the previous month and down -14.5% on the same month in 2019.
Online was also weak. Data from IMRG suggested a “notable dip” in Black Friday deals participation online compared to 2020, but noted the very obvious trend of campaigns being pulled forward. Week-on-week sales growth between the 2nd and 3rd week of November was far weaker than normal, rising +10% this year compared to more than +20% in previous years.
TFL
It's crunch time between City Hall and the government this week over TFL's budget shortfall. Eighty business and charity leaders released a letter over the weekend urging the chancellor to extend TFL's Covid-19 bail out.
The situation has become increasingly fraught ahead of this week's deadline - the current round of funding ends on Saturday. TFL has suggested it may need to shut one of the tube lines and the Mail says the Bakerloo Line could face the chop, despite a much mooted £3 billion plan to extend it.
The Telegraph suggests the Treasury is preparing to offer £500 million - the minimum required to keep everything on track - and the deadline will be rolled on once again. This isn't just a UK issue, we've talked before about the eye-watering funding shortfalls faced by public transport operators across Europe.
Affordability
Officials at the Bank of England are working on a plan to loosen restrictions on mortgage lending in an attempt to help first time buyers, according to a report in the Telegraph.
Lenders have to check homebuyers can afford repayments once any initial interest rate deal ends by testing their ability to pay the reversion rate. This is typically their bank’s standard variable rate (SVR), plus three percentage points. The paper says officials are looking at softening the affordability check, potentially reducing the additional interest rate charge from its current level of three percentage points.
In other news...
New Zealand central bank says low net migration could cool house prices (FT), London developers target older offices (FT), life at the top gets harder for chief executives (FT), and finally, the underwhelming progress of green mortgage lending (Bloomberg).
Photo by Pau Casals on Unsplash