In April 1920, just as the World was emerging from its last global pandemic (Spanish Flu, in case you're wondering), there was an almost immediate explosion in real estate prices, and for most countries, that boom lasted through to the Wall Street Crash in 1929. According to a recent Harvard Business School study (ww.hbs.edu/faculty), typical Manhattan property prices rose in those nine years by more than 60%, only to fall catastrophically by 67% when the US stock market imploded: and even twenty years later (in 1939), the average New York home or (more likely) apartment was still stagnating at 56% of its 1920 value. To put that in perspective, an investment in listed US stock over the same twenty-year period would have outperformed real estate by 520%. 

And over in the UK, the situation was even bleaker: you'll have noticed the word "most" up there in the opening paragraph: well, in the first half of the last century, Britain was all too obviously missing out on all excitement. Domestic property prices fell year on year, every year, by 1% between 1900 and 1939 ( http://piketty.pse.ens.fr/), and the country still had Spanish Flu and the Wall Street Crash to cope with, as well as the crippling cost of paying for the Great War, and the aftershocks of the quaintly named "Long Depression" of 1897.

What does that tell us about today's post-pandemic economies, and real estate markets in particular? Well, without wishing to labour the point, it tells us macroeconomic events (like pandemics and wars) have an impact across the board. Still, real estate markets are much more localised: in fact, they're about as local as you can get… fixed to the ground.

So, spool forward a hundred years (or so), and US real estate prices are currently up by 5% year on year (albeit on a pretty thin market); while over in the UK, growth in new home construction has just hit a three-month low. S&P Global reported that a potentially toxic combination of higher borrowing costs and fears over Britain's economic future significantly inhibits real estate activity (www.spglobal.com). The Construction Purchasing Manager's Index, a sign of the buoyancy or otherwise within the UK sector, fell last month from 53.2 to 50.4 (and anything less than 50, let's remind ourselves, means the sector is marching backwards to stagnation).

It's the weakest UK sectoral performance since August, and it hasn't been helped by increased mortgage costs introduced as a result of the disastrous mini-budget of Messrs Truss and Kwarteng in September (the Bank of England increased the base lending rate to 3% last month, with the knock-on effect that real time variable rates are now running north of 5%). Small wonder then that David Solomon, CEO of Goldman Sachs, warned on Tuesday that there would be "bumpy times ahead", reflecting an increasingly uncertain future for UK housing.

You can only get a little more local than that (pandemic or pandemic).

And to emphasise the point that real estate is essentially local in character, we ought to compare those dire figures and forecasts from the UK with another post-pandemic economy that's doing rather well: India. 

Leaving aside obvious hotspots such as Mumbai and Chennai, across the Subcontinent as a whole marginal property prices (the difference between construction costs and what the end user pays) are expected to increase by between 10% and 15% over the coming year. Burgeoning population rates also continue to stoke demand for new homes: as a result, property appreciation rates, as well as ROI, are all on the up in India. In fact, in its latest monthly survey, JLL found that the Subcontinent has just experienced its strongest property sales performance since the halcyon days of 2014 (www.jll.co.in).

Now, that's really saying something…pandemic or no pandemic. 

Executive Overview

Most economic indicators have gone global these days, especially after the shocks of the COVID Pandemic…but it's important to remember we've been here before. Whatever the global impact might be, some markets remain stubbornly local.

Real Estate Markets in particular.