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How has COVID-19 affected the property market?
During the first phase of the pandemic, the property market closed. From March 2020, the property market, along with the whole world, was on standby. After the property market was forced to close for a month, it was expected that prices were going to drop. Yet, the reality of the drop was extremely minimal. On average, prices dropped by just -1.02% between March and April.
When you compare the property market to other investment vehicles, such as the stock market, property proved to be extremely robust in this period. The stock market recorded its worst crash since 1987. Thus, proving how stable the property market is in comparison to other investment options.
What also worked in the property market’s favour, was that a lockdown increased peoples appetite to move home. This, along with the stamp duty holiday, meant it did not take long for the activity to build back up once lockdown was lifted. Even throughout the second and third national lockdowns, prices continued to rise.
House prices across the UK have reached unprecedented levels of growth. This growth has persisted from 2022 and will continue to persist through to 2022. Even with the stamp duty holiday coming to an end, the supply and demand imbalance is still forcing prices upwards. Lockdown massively slowed down supply levels and with demand twice as high as pre-pandemic levels, this is a trend we expect to continue.
Therefore, we can be instilled with confidence that the property market can remain resilient throughout the Omicron wave.
How has COVID-19 affected the rental market?
The rental market tells a slightly different story than the property market. During the first lockdown, those living in high-rise, city centre flats were experiencing less-than-ideal living situations. As city centres were closed and professionals worked remotely, tenant demand shifted to commuter areas. On top of this, as universities turned to online teaching, a dip in the student rental market was expected.
That said, although the picture for the rental market was thought to be less promising, expectations were exceeded. In recent months, rental demand has been higher than ever. The lack of supply has massively driven up rental prices, causing rents to reach an all-time high in September 2021.
Therefore, although the rental market may paint a different picture to the property market, it has still proved to be a reliable investment. Despite a brief period of uncertainty, demand has remained stable throughout the pandemic. Rising property prices have impacted this as many tenants are being priced out of the market and tied down to renting for longer. Also, remote working gives professionals the flexibility to work from wherever. Therefore, tenants have been able to experience living in different cities without having to move jobs. This level of flexibility is a huge benefit to renting.
Both these factors will continue to underpin the rental market in 2022, thus investors can be confident rental demand will remain strong.
If we have learnt one thing throughout the pandemic, it is that the property market is extremely durable.
All things considered, both the rental and property market have excelled in the face of adversity. This is extremely promising for predicting the future of the property market. One thing investors can take comfort in is that we have been through this before. When COVID-19 first arose, investors had no idea how the market would react. Now, having gone through this once, we have a track record to work from which has been substantially positive.
If you are considering making an investment but contemplating what the future of the market could look like, there is no better time to invest than the present. The property market has proved it is capable of dealing with the effects of Omicron. For a savvy investor, now is the perfect time to invest. Whilst competition is low, you could be securing the best deals on your investment whilst being confident it will increase in price over time.
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