As suburb-dwellers relaxed in their generous gardens during lockdown, sipping a gin and tonic while stretching out on their lavish loungers, those residing in city centres looked on enviously. It was green spaces on the one hand, and green-eyed monsters on the other.
Life didn’t seem fair to the city slickers. How come their trendy pads with fashionable postcodes only had postage stamp patios? They say that less is more. But it doesn’t feel that way when you’ve paid more for less legroom.
The problem during lockdown was obvious: big cities are great when everything’s buzzing and open. Over 25% of UK companies closed during lockdown and all pubs were closed from 20 March to 4 July. The glass is half full when you’re a stone’s throw from infinite bars, restaurants and theatres. But when everything’s closed, and the streets are empty, that glass looks half empty too.
It’s no surprise, therefore, that agreed property sales in the suburbs are currently accelerating much faster than sales in city centres. The market has bounced back faster than most expected, but it’s clear that the pent up demand was for suburban homes rather than prized pads in Mayfair.
The big question now is whether this trend will endure. It’s hard to say for sure, of course, but it wouldn’t be a surprise if the city-centre property peak is behind us. After all, Covid-19 didn’t start the trend; it merely accelerated it. Renters have found the suburbs more affordable for years.
The new normal?
Figures from The Office Of National Statistics (ONS) show that over 340,000 people left London in the 12 months up to June 2018. And this trend isn’t unique to the capital. Other urban centres like New York and Chicago are experiencing a similar drift too.
The way we work these days is a big reason why. High-speed Internet and unprecedented connectivity make it so much easier to work remotely. Although some industries still need staff to remain onsite, the majority can function quite happily from home. And those who doubted this was possible before Covid-19 have absolutely no reason to doubt it now.
As the pandemic progressed, most organisations adapted to the new reality quite successfully. Meetings shifted to video calls; classes were taught virtually; even new business was won online. In fact, 13% of UK business leaders now expect to make the switch to home working permanent. Why pay for expensive commercial offices if you don’t need them?
The path taken by young homebuyers usually shapes the market’s future. Yesterday’s twenty-somethings would flock to city centres searching for career opportunities. They’d find a good job, meet ‘the one’, buy a property, and settle down. Although some would eventually leave the metropolis, many would remain in their urban utopia long-term.
But the times they were a-changin’ long before Covid-19. Those carefree twenty-somethings with no responsibilities suddenly became thirty-somethings with young kids. Proximity to nightclubs became less important. Schools, parks, and affordable houses became their priority. It made perfect sense to move to a larger home in the suburbs - somewhere close to work but with room to breath.
Coronavirus has embedded this trend. With trips to the office likely to become as infrequent as nights out for new parents, there’s little tying them to city centres anymore. You don’t even need a spacious home office to get by these days. Co-working desks are filling that particular gap in the market quite nicely.
What it all means…
With people cancelling their holidays left, right and centre, we expect sales to remain buoyant throughout August – especially as one of the few things that has actually taken a holiday this summer is stamp duty. By suspending the tax on homes under £500,000, Rishi Sunak is doing his best to boost the market. But will it be enough to save city-centre sales?
As demand continues to outstrip supply in the suburbs, estate agents can expect to be busy for the foreseeable future. City-centre estate agents, on the other hand, might be kicking their heels for some time. Today’s buyers will continue to crave space, a nice garden, and a sense of community. And as long as we’re around to make moving so much easier, nothing’s going to slow this trend.
But we shouldn’t write off city-centres forever. The ability to eat diverse cuisine, take in a show, and shop at famous fashion boutiques will always be in vogue. Life will, eventually, return to normal. And when it does, cities like London are bound to bounce back.
Although working habits have probably changed forever, today’s office spaces might become the affordable apartments of tomorrow. What’s more, city-centre properties will inevitably become more appealing when prices drop.
But don’t expect a return to full health until they’ve found a coronavirus vaccine. This, more than anything else, is the shot in the arm our city-centre property market needs.