Whisper it quietly but the pandemic might just be coming to an end. Although the exit wave could be painful – experts don’t know whether the current rise in cases will be another tsunami or a mere ripple – the property sector is finally beginning to look forward to a semblance of normality. Everybody breathe.
It’s undoubtedly been a surreal 17 months for the industry. At the outset, many predicted doom. But what most of us got was boom. Sales reached record levels as buyers abandoned their chic city centre pads and fled for either the countryside or the suburbs. And then the stamp duty holiday really put the afterburners on. In fact, Rightmove has predicted that June could be the busiest month ever for sales.
However, the growth wasn’t shared evenly. Whilst areas with generous green gardens and ample outside space became desirable – barbeques, gazebos, hammocks, paddling pools, Pimms and even pets were snapped up like hotcakes – properties in urban centres felt like claustrophobic cages slap-bang in the middle of a ghost town. Demand and prices therefore fell in these inner city areas.
But now that the end of the pandemic is in sight, there’s hope that the green shoots of recovery are tentatively sprouting on the streets of London. After all, the majority of the adult population has now received at least one dose of the vaccine and government restrictions have officially been lifted. What’s more, the entertainment and hospitality industries (urban centre’s biggest draw) are finally beginning to fizz.
Signs of life
Although families are still craving spacious suburban homes, young people without children have very different priorities. They’ve been cooped up indoors for months, haven’t been able to socialise in groups, and desperately want to let off steam. The buzz of urban living therefore seems very attractive again.
Recent figures suggest this pent-up demand could be set to explode. Whereas the normally busy London property market has lagged behind the rest of the country in recent months – it’s taken London homes 57 days to sell on average compared with 34 days for the rest of the country – the trend is beginning to reverse. For example, asking prices in Westminster jumped 5% this month. And they jumped 2.4% in Kensington and Chelsea, too. This has come after months of stagnation.
A report by property consultancy JLL indicates the same. They’ve been keeping an eagle eye on demand in key cities and expect a strong recovery in both prices and rents over the next year. In fact, higher growth has now been predicted for London (6%) than the rest of the UK (4%).
What’s more, Rightmove wouldn’t be surprised to see even greater rises in cities up north. York, for example, has already seen buyer demand rise by 76% compared to January. Sheffield has seen a 57% increase. Seeing demand for urban locations outperform rural areas for the first time in a long time is surely an indication that life is returning to normal.
The economic recovery
The prospect of people returning to work is also helping urban centres to rediscover their mojo. Cities’ big attraction has always been their career opportunities as well as their abundance of amenities. It’s no surprise, therefore, that demand for housing closer to office spaces is beginning to pick up.
House prices and economic activity, in general, have always been inextricably linked. This is one reason why the pandemic boom was so peculiar – it’s rare for a housing boom to coincide with a downturn. The pandemic, however, created very unique conditions in which buyer preferences changed dramatically: 73% now say that outdoor space is extremely important compared with 43% pre-Covid.
The increasing demand for urban properties as the economy wakes up, therefore, feels normal again. The only question is, will the new normal look precisely like the old one? In other words, will those chic city pads be just as desirable as they were before Covid-19 reared its ugly spikey head, or will the bounce-back be partial?
There’s no doubt that the pandemic has changed what many buyers look for in a property. Plus there will always be those who fear another lockdown, perhaps due to new variants or an entirely new pathogen. Consequently, we wouldn’t be surprised if city centres lose a little of their long-term lustre. The increase in remote working, which is most definitely here to stay, might also affect the desirability of properties near business centres like Canary Wharf.
However, we could be talking fractions here. City centre properties will always have their admirers. After all, urban centres aren’t just economic centres; they’re also culturally vibrant and will continue to attract tourists. It’s significant that Chestertons’ offices in the Middle East, for example, are seeing increased enquiries from clients desperate to return to London.
Large infrastructure projects will also help city centres to recover. The opening of Crossrail in 2022 will make journeys to the capital easier. Meanwhile, cities in the North and the Midlands will also benefit from increased investment and the government’s levelling up initiative.
The bottom line? City centre estate and letting agents should ready themselves for a busy 12 months. The market in cities that never sleep definitely snoozed during the pandemic. But now it’s waking up as bright-eyed and bushy-tailed as ever.