Property trends post-COVID-19
Although the Oxford Covid vaccine currently looks promising, it seems as though the Covid-19 pandemic will have long lasting implications for the way we work and live. As a result, the housing market has seen a shift of emphasis towards additional living space requirements and moves out of central London.
Until very recently, short commutes and easy access to local amenities have been at the heart of property purchase decisions. However, with home working becoming the new norm, dedicated work spaces and larger outdoor areas are now considered essential. Furthermore, estate agents have seen a surge in demand for self-contained buildings where communal foyers and lifts do not pose a health risk to the owners.
As a result of this change in demand, estate agents have reported twice the number of buyers looking to move outside of London compared with the same time period in 2019. This shift evidences that more space and lower density are seen as a good trade-off for less frequent but longer commutes.
What does this mean for the luxury property market?
The luxury property market can broadly be split into two categories – firstly, the luxury property market comprising houses outside of central London and secondly, the prime luxury property market which generally consists of flats located in desirable areas of the capital.
We are starting to see a sharp rise in demand for the luxury property market outside of London. Estate agents have reported a rise in value in the £5 million-plus country house market due to the lack of supply and the ability of buyers in higher price brackets to transact quickly. With expectations that working from home will be the new normal for at least part of the week, the wealthy seem to be drawn to the luxury of owning their own facilities, including swimming pools and tennis courts.
On the other hand, we have seen the opposite effect on luxury property sales in prime central London. This is largely due to the fact that most of these sales are discretionary rather than being driven by actual housing needs. Cautious buyers are therefore able to "watch and wait" to see what effect external events, such as the health of the UK job market, will have on the economy.
Furthermore, developers and estate agents have typically targeted Hong Kong and mainland Chinese investors to invest in prime central London's off-plan developments. However, current international travel restrictions present logistical hurdles for this specific market area to be targeted as effectively.
The future for luxury property
While a change in working trends has boosted the luxury property market outside of London, we anticipate that the prime luxury property market will soon catch up. Central London will remain an attractive long-term investment for both national and international investors and the current weakness of the pound could present a strong opportunity for overseas buyers. On the whole we remain cautiously optimistic that the current dip is a slowdown rather than a decline.
Jessica Scarlett is an Associate in the Residential Property team.
The current global crisis is evolving rapidly, and the rules and guidance for individuals, companies and other entities to manage its implications are similarly fast moving. Notes such as this may be out of date almost as soon as they are published. If you have any questions prompted by this article or on any other matter relevant to you, please get in touch with your usual contact at Forsters.
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