We are starting to appreciate some of the damage that the Covid-19 crisis is doing to the economy but in the western world the first warning lights came when stock markets lurched downwards in late February. In the past 6 weeks There has been quite a rally (ironically since the UK went into lockdown on March 23) but at the end of last week (May 1) the FTSE100 index was still 24% down on its end-2019 level. From a property perspective, equities represent an alternative asset that often have a knock-on effect on property values as they would otherwise look expensive relative to equities and both asset classes are reacting to similar market signals.

To assess how strong this relationship is we have looked at what has happened to property values when there has been a stock market crash. The rows in Table 1 below show every year in which there has been a double-digit fall in equity prices going back to the devaluation crisis in 1969. The data in the table show the percentage change in equity prices in the year in question and the percentage change in commercial property values in that year and the two subsequent years (CY+1 and CY+2).

Table 1