Global Updates

The fluid situation in global supply chains and its potential impact on inflation leaves central bankers trying to hit a moving target.

Nearly all economists polled by Reuters expect the Bank of England to push on with its third consecutive rate hike tomorrow, despite rapidly wavering sentiment. The Fed is also likely to stay the course.

The UK economy continues to show signs of resilience. Official figures published yesterday revealed the unemployment rate is now below its pre-pandemic level, though look under the bonnet and the data reveals a workforce fundamentally altered by the crisis - this is a good write up in the FT.

Employment remains a percentage point below its pre-pandemic level due to rising inactivity, which stood at 21.3% of the workforce - mostly driven by older workers opting out. For the first time, there are as many vacant posts as there are unemployed workers looking for a job.

Wages are rising, though not as fast as inflation. The picture changes markedly depending on where you sit on the income scale. Nominal pay grew by 6.5% for the top 1% in the year to January - compared to just 0.6% for the bottom 10%, according to analysis from the Resolution Foundation.

Buying and renting

Rock bottom interest rates and record low supply relative to demand is fueling record gains in house prices across the US. Rents are also surging as prospective buyers that were unable to purchase turn to rentals.

US single-family rents soared 12.6% in January compared to a year earlier, according to the latest CoreLogic Single-Family Rent Index. The index has now gained for ten consecutive months. Miami leads with asking rents up 39%.

Miami provides a good example of how the interconnected nature of sale and rental markets is driving rising prices in both markets. The city's larger accommodation, coastal living, and Florida’s low taxes are acting as key draws for a new breed of remote workers across the US. House prices climbed 28% during the most recent twelve months, placing it fourth globally in the Knight Frank Prime International Residential Index (PIRI 100).

 The property supply crunch

“We’re getting called out to appraise plenty of property but there’s an element of people sitting on their hands waiting for more property to come onto the market before they commit themselves,” Harry Bethell at Knight Frank Cheltenham tells Chris Druce.

Demand continues to outstrip supply in the UK's country market. As of February 2022, the amount of property for sale outside of London was 42% lower than it was in February 2020 before the UK’s first national lockdown. Meanwhile new prospective buyers were up 40% versus the five-year average. Offers accepted were up 42.9%.

While data for the first two weeks of March suggests a continuation of this trend, there are signs that supply may be set to improve in the near term with the numbers of market valuations ahead of sale beginning to rise.

 In other news...

Faisal Durrani on demand for Saudi Arabia's new super-cities.

David Bourla on the property implications of rising student numbers in France.

Elsewhere - Canadian property prices surge to another record (Bloomberg), the sky is the limit as Axa eyes prime British property (Times), and finally, Hong Kong's brain drain (FT).