As the lock-down continues, we thought it would be interesting to gain a view on the current state of the UK property market, as well as some interesting potential for innovation in the sector.
Current Market Trends
At the end of April, real estate intelligence company Zoopla published an estimation that £82bn worth of property transactions were on hold due to Coronavirus restrictions.1 The extensive barriers posed by lockdown measures are expected to halve the number of completed property sales for 2020; unsurprising given the many moving parts which govern property transaction.2 The Government also issued specific guidance, advising people in the middle of the acquisition process to put their plans on hold where possible. Nonetheless, the fall in demand appears to be slowing, and as the market adjusts to the changes, the North appears to be rebounding fastest, consistent with our thesis surrounding the attractiveness of property in the region.
Though the length of the lockdown measures will ultimately determine the depth of the economic hit to the housing market, there are some positives as it relates to being a buyer in the current market. Those looking to purchase a home will benefit from the significant cut in the base rate and government-led initiatives to support the market. The fall in demand is by no means consistent geographically, with Zoopla noting that demand for property in areas such as Liverpool, Manchester and Leeds has been more resilient to the shock caused by the pandemic. Finally, March saw a significant weakening of the pound against major peer currencies, which is likely to have bolstered interest in real estate from abroad and signals increased portfolio inflows through the year.
Evolving Patterns of Demand
While the overall trend for the housing market has tipped downward, the switch to working from home has provided some interesting insight into changing demand trends. People with jobs in major metropolitan areas have long experienced a climbing cost of living, especially as it relates to rent. A recent survey from Moneypenny shows that around half of British people surveyed indicated that they would be comfortable continuing to work from home.3 This sentiment is already starting to show within the market, with real estate consultancy firm Savills indicating a significant rise in interest in more rural areas around such as Gloucestershire, Inverness and Dorset.4 The situation has provided employees, especially older workers, with the prospect of carving out an improved work-life balance without a significant hit to their productivity at work.
Currently, adaptation is the name of the game for most industries. This certainly applies to the property market and we believe that lock-down will bring significant changes to the property markets – namely the process of buying and selling property will become more agile. Savills notes that while agents are keen to restore physical viewings as soon as possible, many vendors are increasing their capacity to provide virtual viewings and even virtual valuations.5 We see these developments as bringing a lot of potential to the housing market, allowing people to consider purchasing properties that would require hours of travel to visit and appraise, which will ultimately boost the flexibility and diversity of demand for property in the coming years.