Higher online share to boost logistics demand by 15%

Virus-driven behaviour changes that support a faster online transition will boost industrial demand over the coming years. But we don’t believe the view that higher online spending will cause rents to detach permanently from the underlying strength of the economy. And since we don’t expect to see the sort of supply shortages that plagued the UK market in recent years,…
Amy Wood Property Economist
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US Housing Market Chart Book

Rising mortgage rates to cool housing market in 2022

Housing market activity had a strong end to 2021, with sales and starts both rising. However, after a brief dip due to concerns over Omicron, mortgage rates resumed their upward trend and reached a nine-month high by the end of the year. A further rise in the 10-year Treasury yield means mortgage rates will rise further over the next few weeks. With lenders unlikely to significantly loosen credit conditions that will stretch affordability and cool the market. Indeed, there are now signs that house price growth is slowing and we expect it will fall from around 19% y/y now to 3% by end-2022. A surge in rental household formation is supporting demand, driving down vacancy and boosting rental growth. That has in turn attracted investors into the apartment sector, pushing yields to record lows and multifamily building permits to a 35-year high. Total returns will be a healthy 10% p.a. this year, before a gradual rise in yields pushes returns down to around zero by end-2025.

11 January 2022

US Housing Market Update

Material shortages hit housing completions

Shortages of materials and labour over the past year have not stopped builders from starting a lot more single-family homes. But they do appear to have prevented them from finishing them. That implies a surge of homes will be completed later this year as builders get hold of the last items needed to finish a property. With many of those homes already sold, we doubt that will boost the inventory of completed new homes. But it will allow the owners of those new homes to put their existing property up for sale, and that should finally help the existing home inventory to rise gradually later next year.

6 January 2022

US Housing Market Data Response

Mortgage Applications (Dec.)

After a brief dip due to concerns over the Omicron variant, both the 10-year Treasury yield and 30-year mortgage rate have since resumed their upward trends, with the latter rising to a nine-month high by the end of last year. That will help reverse the surge in housing demand seen late last year, with applications for home purchase set to fall back to where they were in mid-2021 over the next couple of months.

5 January 2022

More from Amy Wood

European Commercial Property Update

Has Athens been pushed off track by COVID-19?

After gaining ground since 2018, the recovery in Athens’ prime property values has stalled. However, we think that the catch up with the euro-zone will continue, albeit at a slower pace than in recent years.

6 July 2021

European Commercial Property Update

Vaccine passport no silver bullet for prime high streets

Lingering restrictions on travel mean that weakness in foreign tourist spending will continue to weigh on retailers’ incomes in tourist-dependent retail markets this year. This supports our view that prime retail rents will fall, even as the domestic economic recovery gets underway.

1 July 2021

European Commercial Property Update

Consensus catching up to the view of a weak recovery

The latest IPF Consensus forecasts are consistent with our view that prime office rents will fall this year and the recovery in 2022 will be weak, even as the easing of virus restrictions allows economic activity to rebound. However, outside of Emerging Europe, we are more pessimistic on the outlook after 2022.

3 June 2021
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