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Select Property Group has reviewed and collated some of the latest news and research published online by the UK property industry, including the latest investment forecasts and trends.
Here’s a selection of some key UK housing market news stories published in May 2020, with links to the original sources where you can read the full details.
On May 12th, Savills’ Director of Operational Capital Markets, James Snaith, analysed the potential impact the ongoing restrictions caused by COVID-19 could have on prices in sectors such as purpose-built student accommodation (PBSA) in the UK.
Unlike traditional housing sectors, whereby investors can easily research decades of pricing data, PBSA is a sector that’s only become established over the last 10 to 15 years. Snaith explained it’s therefore natural for investors to ask about its resistance to shocks such as the current global pandemic.
However, the article cites several high-profile PBSA deals being struck throughout Europe despite COVID-19 restrictions, underlining the enduring confidence investors have in the sector.
Snaith also stressed the importance of taking a mid to long-term view, particularly when it comes to rental growth and demand.
He explains that “the long-term fundamental strength of the sector remains: there isn’t enough good quality housing stock being built to accommodate the shifting demands of populations across Europe”.
Furthermore, he adds that “student housing has the benefit of being resilient in downturns, as the driver of demand is education and a good quality higher education is always a valuable commodity”.
Ultimately, if the demand for PBSA remains high, so too will prices in the medium and long-term.
The research conducted by Savills tells a similarly positive story for the future performance of PBSA investments. In its report, Savills declares “three reasons why the PBSA sector still looks like a good choice for investors going forward”.
Like Knight Frank, Savills acknowledges the performance of PBSA following the 2008 financial crisis, stating that the “PBSA sector was one of the few asset classes to show resilience” and “provided investors with robust returns”.
It also points to the significant undersupply of PBSA in major European countries. Should, as predicted, student numbers continue to increase long-term as a result of the pandemic, Savills says that illustrious institutions – such as those universities in the UK – “may well see competition for places – and accommodation”.
Early indications from Knight Frank suggest that the UK’s property market is taking “its first steps back towards normality” following the lifting of some COVID-19 restrictions in Britain.
Knight Frank reported that data for the week ending May 16th recorded the “number of new prospective buyers, registering with Knight Frank, reached the highest level since the second week of March”.
Of course, activity for this time of year is considerably reduced over the normal average. However, these figures do “provide an early signal of what may follow”.
James Clarke, Head of London Sales at Knight Frank, summarised: “In these early days it has become clear that the market will spring back to life more forcefully than most people would have imagined only a few of weeks ago.”
Similarly, new data also shows that more tenants are beginning to move properties in the UK once again.
According to Goodlord’s Lettings Activity Tracker, between 12th April and 7th May new tenancy applications “rose by 45%, and completed tenancies by 22%”.
In order to underline just how significant this increase is, between 17th March and 14th April the “number of new tenancy applications plummeted by 72%”, a decrease of 75% in market activity over the same period just 12 months previous.
Tom Mundy, Chief Operating Officer of GoodLord, commented that these figures offer “some glimmers of hope” and that “the numbers are showing early signs of levelling out”.
On 6th May, Savills published its findings of its latest Residential Market Survey, asking close to 700 prospective UK property buyers and sellers about how COVID-19 has affected their market intentions and expectations.
And some of the responses have underlined the importance of providing key facilities and amenities, such as outdoor space and good technology.
Amongst other findings, the survey found that around “39% of those under the age of 50 expressed an increased inclination” to upsize or move to a property that will enable them to work from home more efficiently and regularly in the future. This includes close to half of the Savills sample who said that “a separate space to work from home has assumed increased importance, with good access to Wi-Fi also becoming more valued”.
The survey also added that outdoor space has also become an increased priority, particularly amongst tenants under the age of 40 years old.
Manchester City Council has cited the development sector as an “essential element” of the city’s three-to-five-year recovery from the impact of coronavirus.
As reported by Place North West, Manchester’s property market will be one of the key sectors to help ensure the city’s economy picks up where it left off pre-COVID-19.
Quoting a report to the executive of Manchester City Council, it says that “sustaining “confidence” in the commercial and residential development markets is a priority”.
The report also goes onto to say that continuing to promote and encourage investment and development “is an essential element of effective and sustainable recovery, and will also help bolster our tax base going forwards”.
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