THE TRANSATLANTIC MAGAZINE
Property markets in the US and UK have widely affected by the COVID-19 pandemic and associated lockdowns on both sides of the pond, but opportunities do exist for those who are planning to buy property in the USA or UK, according to recent findings by property experts Knight Frank.
According to Knight Frank research, a USD-denominated buyer purchasing in London in Q1 2020 would have seen a 5.9% discount on prices from Q1 2019, or a massive 17.1% discount on prices compared to Q1 2018. Even bigger discounts are available for USD-denominated buyers looking at property in Auckland, New Zealand, where discounts equate to 14.3% from Q1 2019, or 25.3% from Q1 2018.
Given current market conditions, Knight Frank are forecasting that "prices will fall by 5% in prime London markets this year, with most of the decline already priced in. Based on an analysis of achieved prices over the last 10 weeks, in addition to other economic and housing market data, we estimate average prime central London prices fell by 1.4% in May, taking the annual change to -5.1%."
In the short term, the firm found that weaker pricing during the lockdown saw "prices in some areas of prime central London down by as much as 25% over the last 5 years", but that "with demand for London property recovering towards pre-lockdown levels faster than supply, downward pressure on prices is reducing."
Knight Frank's research into the US residential market has also identified several opportunities worth being aware of. For example, of the US cities Frank Hirth analyse, the firm predict "Miami to perform the strongest in 2020 and 2021", explaining that "the market was already strengthening here last year, in part due to the SALT tax deduction which heightened Florida's appeal but the Covid crisis has also underlined Miami's lifestyle advantage for many living in high density markets".
LA is another city of potential, with the firm reporting that "Los Angeles's distinct lack of new prime supply should cushion price falls there". Knight Frank's research sugests that in New York, "much like London, we have seen prime prices already enter a period of downward correction in recent years and transactions were picking up early on in 2020. We have seen evidence of safe haven flows from emerging markets in the last few weeks into New York and the volatility of equity markets has prompted some high net worth individuals in the US to rebalance their investment portfolios giving greater weight to property assets."
Knight Frank finish by explaining "The US has posted some positive housing market indicators in recent weeks, in particular mortgage applications and new home sales. However, despite news that household incomes in the US may hold up better than those in Europe, analysis from Capital Economics suggests data for existing home sales is unlikely to look as buoyant given credit conditions are tightening, and inventory levels are at record lows."
Knight Frank have a research section of their website which contains more detailed information on property in the UK, US and around the world - for further reading, go to https://www.knightfrank.co.uk/research