Whatās Going On Here?Data out on Tuesday showed London apartment prices are finally beginning to turn a corner and recover from pandemic-induced declines, suggesting big city life may not be dead just yet. What Does This Mean?The average London apartment cost 10% less last October than it did in December 2019. But vaccine rollouts now appear to be making city living more attractive again: sale prices were 1.2% higher than that last month. Whatās more, recent research suggests that an expected exodus of office workers from the UKās capital has failed to materialize despite the home-working hegemony. That should signal good news for the future of major metropolises everywhere. Why Should I Care?For markets: Investors heart cities.
Swiss bank Julius Baer has been saying all along that cities will continue to be the growth engines of global economies ā and of investorsā portfolios too. Forthcoming swaths of government stimulus spending are likely to be lavished on city-centric infrastructure such as roads, railways, and bridges. Urban digital infrastructure could get a boost as well, with 5G-fueled data collection making city management more efficient. And buildings themselves should get smarter as equipment monitoring improves maintenance. Public companies carrying out all this work stand to benefit.
The bigger picture: Global housing markets are still running hot.
While London apartment prices have only just begun to bounce back, many other housing markets have been on fire throughout the pandemic. Governments are now worried that unprecedented economic aid packages and ultra-low mortgage rates are pushing property prices artificially high, setting them up for a sharp correction. And when home prices fall, people could well cut back on spending ā damaging economic growth. While some countries are taking action by tightening lending standards, others are hoping things will gradually calm down of their own accord once interest rates rise and upgrades to larger suburban homes are mostly completed. | 