Are we rerunning 70s inflation? This week’s property news, including resilient non-residential transaction data & office landlords ‘￡34bn cash crunch’
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The latest major property news stories from this week: Analysts explore whether we risk rerunning 1970s inflation, a new leasehold bill makes its way to parliament, London home sellers accepting ‘￡25k discounts' and the latest transaction data.
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We haven’t turned the corner yet - latest HMRC property transaction figures show macro-economic conditions continue to subdue residential and commercial property markets
The seasonally adjusted figures for residential property transactions in the UK declined three per cent from September 2023, with a 21 per cent reduction compared to the same period last year. Meanwhile, non-residential transactions for October 2023 exhibit three per cent month-on-month growth. However, the year-on-year analysis for commercial property transactions reveals a minor decrease of less than one per cent.
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Leasehold and Freehold Bill starts progress through UK Parliament
The Leasehold and Freehold Bill has begun its journey through parliament. The bill aims to ban new leasehold houses, limit ground rent for new flats, and expedite property sales for existing leaseholders. Key features include the extension of standard lease durations to 990 years, transparent service charge bills, and measures to empower leaseholders.
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Office landlords face ￡34bn cash crunch in Europe as staff shift to working from home
Economists warn that European office landlords are facing a ￡34bn cash shortfall from 2023 to 2026 due to the growth of remote work, married with high interest rates and declining office values post-pandemic. S&P Global Ratings predicts a funding gap in the commercial real estate sector, indicating a ￡34bn reduction in bank support for office landlords compared to the previous three years.
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London sellers failing to acknowledge the property market has ‘begun rebalancing’
London home sellers are reportedly conceding substantial discounts in order to push through a sale, averaging ￡25k below asking prices, according to Zoopla. Despite being the most expensive part of the UK to own a home, the nominal value of a London home has only risen by eight per cent in the last seven years, significantly lagging behind the 28 per cent increase in UK house prices over the same period.
Inflation’s second wave: Are we really watching a 70s rerun?
Social media has been full of graphs ‘demonstrating’ that we are potentially looking at a rerun of 1970s inflation, but are they correct? Many analysts are concerned about structurally higher and volatile inflation in the next decade, along with corresponding shifts in central bank rates, driven in part by oil and gas price spikes. Although a ‘rerun’ of the 70s isn’t guaranteed, and the severity of inflation has not reached the same heights, the prospect of a second inflationary period remains possible.
News stories curated by BloomSmith, leading commercial property VAT funders.