689: Property Investors update - vaccination roll out early successes and outlook for 2021
Pandemic Crisis – Poor Performance by UK: The UK’s per capita has one of the worst levels of both infections and deaths of Coronavirus per capita in the world. When you consider we are an island state – this is even more remarkable. This could be related to a number of things:
• Poor management of lockdowns by the government – lockdowns coming too late
• No processes and procedures for dealing with pandemics (unlike Far Eastern and equatorial countries)
• Lax compliance to regulations by general public
• No serious consequence to people breaking regulations
• Aging population
• Densely populated cities with fair degree of pollution
• Many people loving in cramped condition
• Poor hygiene standards in home
• Poor hygiene standards in hospital and care home
• Higher degree of multi-generational families living together compared to mainland Europe
• International movement of people in and out of the country from all parts of the world
Investigation: No doubt there will be an extensive investigation into how the UK has suffered over 100,000 deaths whilst also encountering massive economic destruction – depressingly, pretty much the worst of both worlds. We think we can conclude there is nothing about COVID-19 that the UK can claim is anything to boost about – poor reactions to a gigantic crisis.
UK’s World Class Vaccination Programme: But when it comes to the last ditched reaction to losing control – namely the Vaccination programme – this story is completely the opposite. The government did some super things:
• Encouraged Oxford AstraZeneca to develop a world class vaccine – this can be stored in a fridge and can therefore be used in developing countries to easily vaccinate people globally – something Oxford and the UK should be proud of
• The first approvals in the world of any vaccines – demonstrating leadership, commitment and proactivity on the vaccination front
• Fast building of vaccine manufacturing cements at Oxford, Keele, Wrexham etc
• Early ordering of the Pfizer vaccine (notably 3 month before the EU)
• Achieving vaccinating (first dose) of 10% of UK’s population by end Jan 2021 (around 10 months after the crisis hit)
• Having a world class vaccination programme for the remaining population.
The levels of vaccinations is 3rd globally behind Israel and UAE and streets ahead of any other European country and the USA.
Economy: We believe by mid May 2021 – the economy and people will be in earnest starting to get back to normal business and social activities once the bulk of people down to age 40 have been vaccinated.
Property Investment: This regard to property investment, it’s difficult to predict whether house price will drop or not in the summer. Of course the upper end of the market will likely be negatively affected by the stamp duty holiday ending 31 March 2021 – unless this is extended. But the lower end of the market is likely to be negatively affected by the higher unemployment levels particularly after the furlough ends 31 March 2021. On the positive side, just as this happens the economy should be picking up after a successful vaccination programme roll-out. In London, the city will benefit from increased tourism and international travel from April onwards. The impact of Brexit teething problems will have died way by the summer as well.
Possible Snap Election: It’s also worth considering that the Tory party could go for a snap election mid 2021 off the back of a successful vaccination programme and house prices rising. It seems hard to fathom – but there have been some rumblings – it will be two years by 12 Dec 2021 since the last election – mid-term, so if the Tories see a big bounce, don’t be surprized if they want to gain another two years secure in office by going for an election. This would be a bold move – since Sir Keir Starmer with all his failing is a lot more electable than Jeremy Corbyn was – but the Tory party would take their cue from opinion polls later this year. If there is another election, expect Dominic Cummings to be back on-seat to spearhead an election victory for the Tory party. A lot would depend on whether they think they have won over the Labour voters in the north likely they did end 2019 when the mantra was “Let’s get Brexit down”.
Negatives - In summary, some of the negative for property in the next year:
• A huge increase in unemployment (and less properly employed people)
• End of the stamp duty holiday end March 2021
• Continuing COVID-19 economic depression – GDP dropping with an expected weak recovery
• The threat of capital gains tax increases to pay for the COVID-19 damage to the economy
Positives – the positive property prices are:
• Record low interest rates
• Banks still providing mortgage funding – supported by Government and Bank of England policies
• Brexit risks and uncertainties are dying away - and people wanting to upsize to large properties or move out of rental properties - in part due to more home working
• Successful vaccination programme boosts economy
• Stable Tory government with a big majority – political certainty for the next 3 years.
From Rural to Cities Again: During the Coronvirus pandemic – it became more trendy to live in country areas with lots of natural beauty, in part because there was less COVID-19 in these areas, they are good for exercise and home working allowed this. We expect that the UK will revert to more of normality starting April 2021 – when the relaxing of lockdown measures, the summer and social activities will lead people to want to be in cities again. There could be a big push for parties and enjoyable social activities once the bulk of people have been vaccinated and the economic gets back to its normal state. This should support city property prices from end 2021 onwards. But we have to conclude that the precedent of home working for many office workers will lead to more people working say 3 days in the office and two at home. This will allow more people to live further from the cities and keep driving these house prices up in places like Norfolk, Dorset, Wiltshire, northern Oxfordshire and may be places like Staffordshire and Leicestershire.
London: In London, central London and close to central London property prices dipped in 2020 whilst the outer suburbs with houses and gardens increased. We expect by end 2021 – city centre property prices to have stabilized and start to rise. It’s probably the perfect time to buy a 2 bedroom flat in Chelsea or Kensington without a garden or balcony. Five years from now, it will look like a bargain as the rich get richer – globally – and the middle classes and poor get squeezed further. The Tory party want London and the UK to be like the Singapore of Europe. New trade deals will be announced with tax breaks to attract business investment into the UK without EU constraints. No longer will we have unelected (appointed) European politician and bureaucrats dictating what laws and regulation we should follow and making it illegal for the UK to negotiate trade deals.
Europe and the Article 16 Debacle: The final comment is that if anyone doubted whether the UK should leave the EU or not, we saw their true colours last Friday 29 January when they enacted Article 16 of the Brexit deal Northern Ireland Protocol putting a hard border between Ireland and Northern Ireland after only 29 days into the agreement. Yes, they could wait no longer than 29 days before zapping us. They wanted to ban exports of vaccines – this could have started a trade war. They did this without even consulting the Irish Prime Minister. This smacks of gross incompetence and/or gross arrogance. And a complete lack of understanding of the sensitivities around Northern Ireland including the hard won by all parties Stormont agreement and peace deal. Talk about enraging people from Brussels – it was unbelievable. They blame the UK for their own incompetence on the vaccine front. Anyway, if you think back to 1974 when the UK signed up to the Common Market only – we came a long way – with the final stages being a push by Brussels to have a European Army – and taking control of the British military hardware and structures along with it. They had already seized control of our law courts. Time will tell how successful Brexit will be – but if the vaccination roll out is anything to go by – it will be a resounding success in the long run. Regardless of whether you think Brexit was a good idea or not, its worth at least acknowledging that firstly there was a Referendum where 52% of people voted to leave, then this was confirmed by an election victory for the Tory party with an 80-seat resounding majority to “Get Brexit done” – the only party that seems to want to be decisive - so one has got admit it’s the will of the people that we are leaving and it followed a democratic process. And we are leaving an un-democratic European bureaucracy that seems to have 3 or 4 Presidents – and the challenge is – can you name one of these? If you wanted to Remain - can you name all three Presidents of these institutions and ruling bodies, all appointed, all non-democratically. We certainly cannot!
We hope you have found this Special Report insightful and helpful to frame your property investment decisions. If you have any comments are queries, please contact us on firstname.lastname@example.org