How will Covid-19 reshape the property market?

Home buyer and seller priorities in the housing market will change in light of the experience of Covid-19 and the extended lockdown, with moving intentions, budget, size of property and location all impacted, a new survey from property group Savills suggests.

The firm surveyed almost 700 registered buyers and sellers between April 21 and 27 to explore how their attitudes to moving had changed and how that might impact market activity.

With buyers expecting to split more of their time between home working and the office, well  connected locations such as Cardiff and surrounding areas – with access to good transport links that also offer plenty of outdoor green space – are likely to be in greater demand.

“It is clear that the current crisis has made people think more about the space they live in, the attributes they most value in a home and in some cases, where they want to live, all of which is likely to drive activity at the top end of the market as we come out of lockdown,” says Daniel Rees, head of residential at Savills Cardiff.

“Areas with good access to Cardiff central and train line services are likely to prove particularly popular as will the surrounding coastal areas of the Vale of Glamorgan which offer plenty of green space and easy access to the countryside.”

In line with Savills research projections, the survey pointed to a slowdown in activity in the short term, with a recovery later this year and into 2021.  However, while 37% said they were less likely to move within the next six months some over a quarter (27%) believe a move is more likely within this period, a net balance of -10%. This moves into a positive +9% within the next 12 months and +29% within 24 months.

Almost half (49%) said they will be more inclined to work from home even after current restrictions are lifted. As a consequence 44% of respondents said a separate work space has assumed greater importance, rising to 61% amongst the under 40s, with good access to Wi-Fi also becoming more valued.

Some 39% of respondents under 50 stated an increased inclination to upsize, rising to 42% among the under 40s. The desire for a garden or outdoor space has also become a more pressing consideration for 71% of this age group.

At the other end of the property ladder, there appears to be a growing commitment to downsizing among wealthy older households, albeit this trend (20% of  respondents) is less pronounced than the desire for more space amongst younger prospective home movers.

The desire for space and a greater emphasis on the outdoors was expressed by many respondents.  Around four in 10 would now find a village location more appealing than previously, while 54% of those with school age children now find the idea of a countryside location more attractive than pre Covid-19.

Daniel continued: “The potential for a rural renaissance comes at a time when country property looks increasingly good value compared to prime houses and flats in our most desirable towns and cities. Well-connected village locations, ideal for those who can split their working week between home and office, are likely to be in particular demand.”

Just under half of respondents do not expect the selling price of their existing home nor the amount they would be willing to spend on a new property to have changed as a result of Covid-19.  The other half felt both would fall, the majority by up to 10%. However 20% of respondents felt that their budget to buy a new home might fall by more than this figure. Only 5% of respondents believe the value of their home could have risen.

Lucian Cook, head of Savills residential research, said: “This suggests there is likely to be some downward pressure on pricing in the short term, coupled with a period of much lower activity. Reassuringly, the survey suggests that buyers and sellers broadly agree on how they believe the lockdown has impacted values, and this alignment should help underpin the recovery as we come out of lockdown and buyer caution begins to lift.”

Savills forecasts of short term price falls of between -5% and -10% in a low transaction market, with average UK house price increasing by around 15% over 5 years assuming a V-shaped economic downturn and recovery. The equity rich prime markets are expected to be the first to recover, led by prime central London which has looked good value on a global stage for some time.