HONG KONG SAR – Media OutReach – 22 June 2021 – With the UK experiencing the worst health crisis in a century and the greatest economic contraction in 300 years, it was astounding to many that the Office for National Statistics (ONS) reported that national house prices climbed 7.8% by the end of 2020. Heading into 2021, other factors have come to stir the market, including the Stamp Duty Land Tax (SDLT) holiday, the impact of a third lockdown, and the after-effects of Brexit. With so many points of uncertainty and conflicting forces affecting the UK Housing market, UK Holmes provides a London mid-year market review for an overview of the price action.
London Growth Lags National Indices: A Tale of Two Cities
In March, London was identified as the UK region with the lowest annual growth – for the fourth consecutive month. The year-on-year data reveals UK growth on a firm upward trajectory whilst the price curve for London is trending in the opposite direction.
Annual house price growth for UK and London:
| Region | Jan 2021 | Feb 2021 | March 2021 |
| UK | 8.0% | 9.2% | 10.2% |
| London | 5.6% | 4.4% | 3.7% |
The London market is essentially running at two speeds; Inner London boroughs which have a high concentration of flats have been languishing as buyers push further out in search of greater space and better value for money, while the outer London boroughs which feature a higher proportion of detached housing with gardens have experienced stronger growth.
The ONS data for London revealed that in the year to March 2021, the price growth for flats was just 1%, lagging well behind terraced properties (7.2%), semi-detached (6.2%) and detached (5.3%).
Government Stimulus Programs: Will the Boom turn into a Bust?
One of strongest triggers which sent sales activity into a frenzy was the SDLT holiday, providing up to £15,000 tax relief on a property purchase of £500,000. With the UK having experienced three lockdowns due to the pandemic, the government had no choice but to extend the furlough program and other initiatives supporting businesses and the self-employed. Despite the SDLT holiday due to expire at the end of March 2021, the housing industry successfully lobbied the government to extend this deadline to September on the grounds that the long delays in buyers reaching completion would result in thousands missing out on the tax saving.
As history has shown, government intervention in the housing market has often led to distortions in the balance between supply and demand leadings to booms and then busts. The valid concern is whether this time will be any different.
A Sharp Rebound in Economic Performance
Whilst the 2020 real-estate bull market gave every impression of being unhinged from the broader economy due to government stimulus efforts, this state of affairs is unlikely to prevail over the longer term. The UK economy is highly dependent upon consumer spending and, with the easing of lockdown restrictions, high frequency indicators of economic activity including motor vehicle traffic, retail footfall and restaurant bookings have increased.[1]
The reason for this sharp rebound in economic activity and consumer confidence is down to one key factor: the success of the UK government’s vaccination program. By early June more than 75% of the national population had received at least their first jab. This encouraged the BoE to upgrade its 2021 GDP forecast to 7.25% in early May, a substantive increase on the 5% it had forecast just three months earlier. With the economy performing better than expected, GDP in April was 3.7% below the pre-pandemic level in February 2020, the smallest gap since Covid-19 reached the UK.
Consumer Sentiment and Market Shifts
The first quarter saw annual house price growth surge to a seven year high. Knight Frank established that in the month of March a string of decade-long records were broken, including the highest number of new prospective buyers registering, the highest number of offers accepted, and the fourth highest month for property viewings.
Aside from the government stimulus, the reasons for the market hitting these 10-year highs can be traced back to consumers’ changing preferences. Out of the lockdown experience emerged the key home-buyer preferences for size, space and mobility – larger homes, outdoor space, and increased mobility as the daily office commute became redundant. The experience of home becoming a place of work, home-schooling, and exercise prompted residents in central London to migrate to outer boroughs or the home counties in search of an enhanced lifestyle and better value for money.
Market Direction and Best Buying Opportunities
With optimism that the worst of the pandemic in the UK is behind, UK Holmes reports that the economy is on track to rebound sharply. A survey of leading economists by Bloomberg forecast that the UK will lead the recovery amongst major European nations with its fastest growth in almost half a century.
One of the biggest issues influencing the direction of the London property market is the tapering and withdrawal of the SDLT Holiday, which up to this point has driven demand as buyers rushed to beat the deadline. Should this demand collapse at the point where increased supply is coming onto the market, there is the very real risk that prices will fall.
UK Holmes believes that the next 6-12 months will offer astute investors in London property excellent buying opportunities. The inner-city areas are being reinvigorated by strong growth in the retail and hospitality sectors and offices are reopening. The market for flats, heavily depressed over the past 12 months, won’t remain in the doldrums permanently. However, UK Holmes is also firmly of the opinion market volatility will remain for some time. This will cause buyer’s remorse for those who fail to fully understand the fast-evolving market dynamics.
[1] Bank of England, Monetary Policy Report, May 2021
About UK Holmes
UK Holmes is a London-based residential property buying agent providing offshore buyers with strategic advice based upon a thorough understanding of their real-estate requirements. UK Holmes employs London’s House Detective, a property professional with 12 years’ experience. His in-depth knowledge of how to successfully navigate the complexities and pitfalls of the London market to find customers their ideal home provides true peace of mind. To learn more, please visit www.ukholmes.com.
#UKHolmes
Services
Stakeholder mapping, analysis, engagement and communication needs to be detailed to avoid business losses or even worse, a crisis. How can you do this effectively to prevent failure? ...
Data-driven business decisions have never been as crucial, especially in this era. MGBF leverages off, technology, experience and market presence to aid businesses in making accurate decisions. ...
MGBF provides comprehensive strategic advice and results-focused solutions to solve clients' problems in business-government relations so they can focus on their core business. ...
A critical business challenge is meeting the right decision-makers and potential buyers through the best channel and platform. How will you improve your business competency? ...
Upcoming Events
MGBF founding chairman Nordin Abdullah and UMW Toyota president Datuk Ravindran K. will delve into the convergence of automotive innovation and environmental sustainability in Penang, Sarawak, Johor and Pahang.
Hosted by menumiz™ – an end-to-end restaurant management system – this roundtable will feature a case study presentation and a panel session to discuss the latest digital trends, challenges, and opportunities within the food and beverage sector.
In this episode of 'A Working Lunch with Nordin', MGBF's founding chairman, Nordin Abdullah, will host this discussion focusing on the biggest threats and opportunities for businesses as we look to manage change in the South China Sea.
This MGBF Roundtable will focus on regional food security issues and trends in the regional supply chain, and trade regulations and policies, including a new geopolitical tool i.e., weaponisation of supply chains.
MGBF In The News
Planet QEOS, KIS BlOCNG San Bhd, and the Sarawak Land Consolidation and Rehabilitation Authority (SALCRA) have officially signed a tripartite memorandum of understanding (MoU) to establish a collaborative framework aimed at producing bio-hydrogen via the Steam Biomethane Reforming (SBMR) Process. The MoU was signed by Planet QEOS executive chairman Dino […]
Planet QEOS and China Machinery Engineering Corporation (CMEC) are interested in investing RM10 billion to co-develop advanced Megawatt peak (MWp) agrovoltaic in Baram, to further boost Sarawak’s green energy initiative and food security. Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg was briefed on Friday by both the […]
Last week SPM results came out, 373,974 aspirants who have been waiting patiently over the last few months would now know their fate. Some 10,109 have received all A’s, the golden standard of academic success and the ticket to those looking to study the “more advanced” subjects in university. Proudly, […]
The classic knee-jerk reaction is to say, fire the coach, change the leadership of associations, and reduce the funding till they start performing better. This kind of negative reinforcement may work for kindergarten children, but we are dealing with high-performance adults – individuals much further along in their psychological and […]
Since its earliest tea plantations in 1929, Cameron Highlands has grown to become a key player in the agricultural landscape of Malaysia, producing 40 per cent of all vegetables grown. Despite Malaysia shifting its economic focus away from agriculture, the industry remains imperative for food security and the livelihoods of […]
Although at first glance the travel industry and the agricultural sector appear to have nothing in common, they actually share more than meets the eye. The economic benefits of tourism to the agricultural sector can be multiplied several times over. “Tourism brings the end consumers closer to the source, which […]
The Malaysia Global Business Forum (MGBF) recently held a high-level roundtable themed ‘Designing the Future of the Digital Economy’, attended by industry leaders and business associations. The guest of honour was Yang Berhormat Syerleena Abdul Rashid, the Member of Parliament (MP) for Bukit Bendera in Penang. The MP’s Special Session […]
The Malaysia Global Business Forum (MGBF) will be hosting a roundtable on ‘Designing the Future of the Digital Economy’ on 23 February 2023. It is the culmination of the first three MGBF Exclusive Roundtable Series titled ‘The Evolving Threat Matrix in the Digital Economy’ held throughout 2022. According to the […]
The Founding Chairman of the Malaysia Global Business Forum (MGBF), Nordin Abdullah, today spoke on Bernama TV’s leading English talk show, The Brief, hosted by Jessy Chahal, on the topic of a stable political reality and what that means for the Malaysian economy. Nordin said, “The first thing that it […]
More than 1,100 years ago, Muhammad ibn Musa al-Khwarizmi was developing the mathematical formulas that we know today as algorithms which now have become so intertwined with the business fortunes of global media giants and the very fabric of geopolitics. A series of recent high level international reports have revealed […]
KSK Land has been recognised by the Malaysia Global Business Forum (MGBF) for its role in attracting high net-worth individuals to Malaysia post-pandemic. The first challenge in investor attraction is “selling” the country. In the context of Asia, Malaysia is competing with some very established investment destinations. The second […]
Malaysia, in particular Kuala Lumpur, continues to position itself as a regional centre to do business, educate a family and enjoy a global lifestyle. One company, KSK Land, has taken the lead in positioning itself and the city of Kuala Lumpur as a property investment destination for the global citizen […]
The upcoming budget represents an opportunity to build resilience in the critical sectors that will form the backbone of the country’s future-facing economic ambitions. This however needs to be achieved in the context of managing the community sectors most impacted by COVID-19 over the past two years. The Keluarga Malaysia (Malaysian Family) […]
Malaysia Global Business Forum (MGBF) has moved to support the creative economy as the overall economy moves into a recovery phase following the COVID19 pandemic. As a step in the direction of normalcy, the MGBF has agreed to host the art exhibition “I Know You’re Somewhere So Far” by one […]
Congratulations to Datuk Seri Ismail Sabri Yaakob for taking up the mantle of the ninth prime minister of Malaysia. There is nothing normal about the situation; it could not have been scripted but it has kept the spectrum of media, mainstream and social, gripped. The first order of business for […]
In a stirring speech to the nation, President Joseph R. Biden, Jr. stamped his brand of leadership on the presidency, in his first act as the 46th president of the United State of America, it signaled several shifts. Perhaps the weather was foreboding with snow falling before the ceremony that […]
KUALA LUMPUR, 6 July 2022 – As the global economy continues to deal with unprecedented levels of disruption caused by the pandemic and the conflict between Russia and Ukraine, the convergence of energy security and food security issues has become a front-of-mind issue faced by policy makers and consumers alike. […]
KUALA LUMPUR, 23 June 2022 — Malaysia Global Business Forum (MGBF) ties up with scoutAsia to ensure that businesses are equipped with deeper regional insights. The past two years has seen a massive shift in the way businesses are conducted with digitisation, digitalisation and automation continuously being adopted to improve […]
KUALA LUMPUR, 25 May 2022 – The Malaysia Global Business Forum (MGBF)’s exclusive roundtable on ‘Security Concerns in Critical Value Chains’ was held in a hybrid setting yesterday at the Eastin Hotel Kuala Lumpur. The guest of honour was Yang Berbahagia Tan Sri Dato’ Seri Rafidah Aziz, former minister of […]
