What a year it’s been. By now people must be sick and tired of reading about COVID-19 and the negative effect it has had, not just on people’s wellbeing, but on numerous jobs and economies across the world. The constant negativity has been extremely demoralising and quite frankly draining for all, so it’s definitely important to look for positive news where you can.
Despite an overwhelming expectation of a market crash this year, the property market has actually remained relatively positive throughout. House prices have continued to rise, especially during the second half of the year. Halifax’s House Price Index found that house prices rose by 7.5% in the year to October, thanks to extremely strong demand for higher value homes across the country. The quarterly increase was also very impressive, with a substantial 4% growth that brought average house prices to £250,427.
This increase in demand is sure to have stemmed from the pent-up frustration of being confined to one’s home for a large majority of the year. Peoples priorities for housing have completely changed after being forced to spend so much time indoors during the lockdown, with a massive increase in demand for more rural houses and properties as opposed to city centre living.
Multiple lockdowns across the nation have seen a massive reduction in the availability of the usual city centre lifestyle attractions. Bars, clubs and restaurants have all been forced to close, whilst the need for transport to and from work has been significantly decreased following the government’s encouragement to work from home where possible.
According to Rightmove, there was an increase in homebuyers looking to escape crowded cities in favour of moving more towards the country or the coast. Searches actually doubled for homes in small towns and villages with populations of less than 11,000 according to the property website. Close proximity to amenities such as the nightlife, transport links, shops and work has lost a lot of its attraction, and in turn made city centre living a lot less popular than at the start of the year.
So, what does this mean for investors? Well the increase in demand for properties outside of city centres has resulted in both an increase in optimism and confidence in the market, as well a change in focus when it comes to their investments. Research from specialist insurance providers Simply Business found that 10% of landlords want to expand their portfolio in the coming year, a substantial improvement compared to just 3% at the end of last year. This is quite a remarkable figure considering the economic uncertainty thanks to the pandemic, but as mentioned earlier, the property market has continued to remain strong despite the current climate and is understandably seeing a renewal in confidence.
Alan Thomas, UK chief executive at Simply Business, had this to say about the market’s remarkable upturn: ‘The Coronavirus outbreak and consequent lockdowns have been transformational in UK renters’ attitudes towards property, and therefore where landlords are looking to make their next investment’
‘The pandemic has resulted in people spending more time at home – both for work and leisure, while many of the benefits of city living have been impacted. It’s no surprise to see that renters are valuing larger properties with outdoor space.
‘There appears to be a shift in terms of what is considered a desirable property by tenants, and residential landlords – crucial to both the economy and the local communities where they provide housing – along with the market in general, are reacting to this.
‘What is clear though, is that the UK buy to let market is going through somewhat of a transition, driven by a move away from the previous demand for city centre properties.’
Despite this apparent shift in both tenant and landlord focus, the attraction of city centre living should not be underestimated. This pandemic will come to an end, and something of a new normal will resume – in which a massive amount of people will once again look towards city centre properties. Both sides of the property market are looking extremely positive for the foreseeable future, making it a good time to invest.
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