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Cities Return to a New Normal
The property market is constantly changing. If you are an investor wondering what the property market will look like post-pandemic, you are not alone. Life is beginning to bounce back to a pre-pandemic world. City centres are opening back up and many professionals are returning to the office. However, the way people choose to live and work has shifted massively. As a result, this has created some interesting trends in the property market. Buyer trends are evolving, leaving many investors questioning what their next property move will be.
The pandemic has had a huge impact on city centres. During lockdown, they became deserted. The rise of remote working meant professionals moved out of city centres in search of more space. Especially in the peak of lockdown, those living alone in high-rise flats, with no gardens, felt the impact of lockdown much more.
However, we are currently entering a ‘new normal’. Some workers are beginning to return to city centre life. Savills Hybrid Working Index gave a close examination of what the future of hybrid working could look like. Locations with larger homes, longer commutes, and faster broadband speeds could make the shift to hybrid working quicker. With hybrid working here to stay, buyers are putting greater importance on the idea of a ‘home’. In particular, having a suitable workspace.
Having spent the majority of the last year inside, buyers are realising the importance of having a ‘home’. For property investors, it’s worth considering a property with ample space, indoor and outdoor. For buy-to-let landlords, furnishing your property is a great way to turn it into a ‘home’. Having a well-furnished property will boost tenant appeal and help let our your property for the highest rentals and limit void periods.
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Despite the rise of homeworking, it is likely residents will still want to be a commutable distance from the city centre. Essentially, buyers are now able to have the best of both worlds – additional space but with the city centre at arm’s reach. Buyer trends are shifting towards suburban areas. The millennial generation have been accustomed to renting and the flexibility that comes with it. However, the millennial generation are now entering their 30-40s. Often, this is the age that tenants begin to look for more ‘family’ suitable areas away from the city. This is massively fuelling the demand for rental homes in the suburbs.
The report also highlighted the current success of Manchester and Birmingham. It is expected these cities will lead the way in the property investment world. As many tenants left the city centres for more space during lockdown, the pendulum is beginning to swing back, and demand is returning. Out of the whole of Europe, Manchester is second on the list of cities that has seen travel within the city return to pre-pandemic levels, at 96%. Also, fourth on the list was Birmingham, at 89%. The same can not be said for larger cities, such as London, where the percentage of travel within the city is just 66%. Once again, we can see demand is shifting outside of the capital. Manchester and Birmingham are proving to be strong competitors, absorbing most of the tenants who flee London. This trend will continue as the HS2 is on the horizon. Connectivity will be stronger than ever; Manchester and Birmingham will create some extremely powerful property markets.
To conclude, the property market has faced some huge shifts. In the peak of lockdown, many city centres became ghost towns. This caused a huge boost to housing demand – in particular, demand for more space. As a result, demand was lowered in some major cities. The Savills report unpacks that we are beginning to enter a post-pandemic world. Workers are beginning to return back to the office. Therefore, demand is rising in city centres once again. However, demand is still extremely strong in suburban areas. The millennial generation, the prime rental demographic, are entering their 30-40s. Therefore, millennial demand is rising in suburban areas. Suburban areas offer more ‘family-friendly’ properties. Also, with the rise of hybrid working, tenants are still hoping to be a commutable distance away from work. Therefore, commuter towns offer the perfect alternative.
Most notably, the Savills report revealed that Manchester and Birmingham are leading the way in terms of residents travelling within the city. Therefore, we can expect tenant demand to remain high in these cities. As we know, Manchester and Birmingham present two very strong property investment markets. In a post-pandemic property market, these cities will continue to lead the way.
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