Growing numbers of Covid-19 infections slowed the economic recovery in Q3 but the success of the vaccination program limited the number of hospitalisations and fatalities. UK GDP is projected to recover further over the remainder of the year, reaching its pre-pandemic level in Q4 2021.
Inflationary pressures are building through higher fuel prices and supply chain failures, but the Bank of England are persisting in the view that this is transitory, and that CPI inflation will fall back to its 2% target by the end of 2023. Markets are now pricing in a rate rise to 0.25% by the end of the year and 0.5% in Q1 2022.
All Property total returns continue to improve at both the 3-month and 12-month horizon. In Q3, All Property total returns increased to 4.6% and in the 12-months to the end of September 2021, All Property total returns increased to 13.4%.
All Property total returns are likely to average 14% or more over the whole of 2021 and could reach 9% in 2022 with an annualised average of 9% in the 3-years ending December 2023.