It would be an understatement to say that the Covid-19 pandemic has caused upheaval to sectors, industries and businesses around the world.
Property is one such example of this. The housing market has experienced a tumultuous year, with responses to the uncertainty caused by the pandemic and the lockdowns it has provoked meaning that the landscape of the sector, and the way in which people buy, sell and rent property has changed drastically.
The first national lockdown last spring saw the sector slow to an effective halt, as property professionals were forced to work from home and potential buyers and tenants held off from entering the market. ‘Stay at home’ orders meant that agents were unable to conduct their usual activities in terms of marketing and managing property.
However, lockdowns also meant that people’s behaviour shifted. Many people who were planning to move or buy new property before the outbreak paused their plans, and homeowners rushed to sell property quickly in hopes of making their financial assets more accessible during the period of economic uncertainty.
After the UK entered its first lockdown at the end of March 2020, both rental and buying demand data showed an immediate drop off. According to data collected by Rightmove, rental interest fell by 42%, and sales offers dropped by 70% in April according to Zoopla, as people presumably opted to stay put and wait out the storm.
Equally, many landlords looking to sell their properties were also restricted, with the UK government placing bans on placing tenanted properties on the market for the duration of the lockdown order.
But, as restrictions were eased the following summer, the sector experienced its first boom. New buyers and tenants flooded the market, as people rushed to continue with their life plans as the world returned to a partial normality. During the summer months, Rightmove suggested the number of properties that were “sold, subject to contract” were up by 125% compared to the same period the year before.
Increased demand for space
In September 2020, the bank Santander released data showing that more people than ever were applying for loans on the basis that they wanted to extend their space at home. Equally, one of the most integral deciding factors for people buying and upgrading houses during this period was space.
Many buyers searched for bigger properties that included larger living areas, more bedrooms and more outdoor space. These desires were presumably based on the fact that people had spent an unprecedented period of time in smaller, less private homes, such as apartments and suburban houses during the months they were locked down.
Notably, across the Atlantic, the story was much the same. The US housing market, which was hit hard by the first set of lockdown restrictions in April, experienced a revival in certain areas once restrictions were lifted in the summer.
Real estate professionals indicated that space was a key deciding factor in buyers’ needs in 2020, with Rose Quint, a researcher from the US National Association of Home Builders noting a steady trend for ‘upscaling’ within the upper-middle to top tiers of the US housing market.
The move away from the city
Alam Khan, the editor of Luxury Daily, goes on to analyse this trend further, in an interview with Forbes. Lockdowns around the world, Khan explains, have drastically impacted the way that affluent buyers in particular have approached the market in the past year; not only in terms of what they want their residence to look like, but where they want it to be.
Prior to the Covid-19 pandemic, many high-powered business owners and senior executives would opt for their primary residence to be close to their offices or businesses.
However, since global lockdowns forced many of these people to work from home for several months at a time, remote working for many professionals and companies has become the new norm. Some businesses, which found the switch cut their costs, have even opted to close their physical offices entirely.
In practice, this has meant that many of the people previously opting to live in major cities near their businesses, like London and New York, have been able to become more mobile. No longer needing to be tied down to one location, Khan describes a major trend in which those with the means and those with second homes away from cities have opted to make these their primary residence.
In this, they have chosen to focus on improving the amenities available to them in these properties, searching for bigger houses, with facilities like pools, sports facilities and large grounds.
The rise of luxury property
The UK’s property sector has not quite recovered from the effects of the pandemic – nor is it likely to return to a level of ‘normal’ anytime in the near future. However, certain sub-sections of it are booming, and analysis shows this is set to continue well into 2021 as the world adjusts to the ‘new normal’ it will be faced with.
Luxury property is one such example. Trends show an increased demand for luxury real estate in countries around the world, including the US and Britain, with more and more people showing interest in ‘dream homes’ and other forms of escapist property-related content.
Equally, with the circumstances and desires of affluent buyers continuing to be shaped by the Covid-19 pandemic, the luxury real estate sector is likely to continue to experience a shift as we continue into 2021 to reflect this.
*Luna Williams writes for luxury property developers, Great House Design
This post has originally been featured in Property Investor Today.