Your Friday update
The resilience of global housing markets
2 minutes to read
Global housing markets continued to display a degree of resilience over the summer months with countries such as the US seeing sales reach a 13-year high, according to our latest Global Residential Outlook. Dublin is also standing out, and Knight Frank’s New Homes team has agreed more than €70 million in sales across 160 transactions since in-person viewings were permitted in Ireland on June 8th.
National lockdowns are likely to put the brakes on activity, should officials opt for that strategy, but most governments look to be considering national lockdowns as a measure of last resort. Low mortgage rates and shrinking inventory levels of good quality stock in key markets will continue to support prices in the short to medium term, writes Kate Everett-Allen.
The great inflation debate
The US central bank said it will allow inflation to overshoot its 2% target in a move that will likely see interest rates stay near zero for years. The attempt to support jobs and growth is a big move in the world of monetary policy that sets the Federal Reserve on a markedly different course to the previous financial crisis.
In a timely piece, Flora Harley outlines exactly how inflation impacts real estate, from rents to the cost of construction, to real returns and the price of debt. Though inflation in the UK ticked up in July, it's likely to ebb in August due to VAT cuts, a stronger currency and unemployment keeping a lid on wage growth.
The end of mortgage holidays?
The Financial Conduct Authority said it will likely drop its requirement for lenders to offer mortgage holidays at the end of October, and it will publish finalised guidance at the beginning of next month. More than 1.9 million people have taken payment deferrals since the scheme’s inception, covering about one in every six mortgages in the UK.
Payment holidays may seem attractive to concerned homeowners, but they can be taken into consideration next time you apply for a mortgage. It's likely you have better options, including negotiating a better rate, or extending the term of your loan, according to Hina Bhudia of Knight Frank Finance.
British business confidence climbs
Lloyds Bank's barometer of British business confidence posted its biggest monthly increase in three years in August, though it remained well below the historic average. Confidence in the South East increased significantly, recording the first net positive result across all regions since March. While other regions remain negative, nine of the 12 regions saw confidence edge up.
One in five businesses expected to increase employment over the next 12 months, a slight increase since July. Two in five expect to reduce headcount, down slightly on last month.
In other news...
Tom Heathcote, Knight Frank’s Head of Agri-Consultancy, shares his concerns about the government’s current and future environmental support schemes.