Monday Market Memo | Did you hear about the new world record property transaction?

NEW KIDS ON THE B2L BLOCK

New figures over three consecutive quarters show that the number of new buy-to-let mortgages in the UK is holding firm, while growth in the overall total is slowing. This indicates that overleveraged landlords in low-yield areas are trimming their portfolios while new entrants are taking advantage of better opportunities and remain optimistic. 78,000 new mortgages were granted in the year to September while 50,000 existing ones were paid off or sold.

HOUSEBUILDER SHARES HELPED BY HELP TO BUY

Shares in UK housebuilders Berkeley, Persimmon and Bellway have risen by more than 50% this year, partly due to government support for help to buy. Those valuations may start to settle down, depending on what housebuilding measures come in the budget on November 22nd.

NEW US TAX PLAN COULD HIT HIGH-END INVESTORS

A new US tax plan (which is yet to be finalised) hit shares of homebuilders by proposing a limit to Americans’ ability to deduct mortgage interest costs from taxable income when they buy homes worth more than $500,000. Mortgage deductions are worth a collective $64bn to US taxpayers, though 70% of the subsidy is claimed by the top 20% of earners, meaning any untoward effects on prices will be felt most at the high end.

BRAZIL ON THE BOUNCE-BACK?

Residential prices in Brazil remained flat in September, ending seven months of consecutive decline and fuelling tentative hopes that the steady deflation of its previously humungous bubble has ceased. It is unlikely to reflate again soon, with nearly two-thirds as many new homes hitting the market as total sales transacted between January and August.

NEW WORLD RECORD PROPERTY TRANSACTION

The Center, a neon-clad office building in Hong Kong, set a new world record for the most expensive single commercial property transaction in October, at $5.15bn. It smashed the previous record, held by the Century Link Complex in Shanghai, at $2.95bn. Both buildings were sold by the aptly named Hong Kong billionaire, Li Ka-shing.

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