Urban realities and the future of city real estate
Six months have now passed since lockdown commenced in the UK and the impact of COVID-19 truly began to take its toll on life as we know it. Beneath the constant anxieties around our health and the health of those around us, an economic morass has been developing. Job losses, business closures, and economic recession are all bound to factor into our lives long after the virus has (hopefully) been brought under control; everything from our eating and drinking habits, to the prices of city real estate will be affected.
The impact of working from home
Many have speculated on the condition of the housing market post-COVID. Not only is there less economic stability throughout the population at present, but we have seen an unprecedented shift in the way our lives are carried out. In 2017, a record-breaking 801 billion passenger transport kilometres were recorded in the UK – and 19% of that total was undertaken for commuting or business.
With government advice to work from home wherever possible, the realities of city living have been made clear. Will we continue to work from home? Matt Hancock posited the idea of obliging employers to allow home working earlier this summer. If so, home doesn’t need to be located in population-dense, polluted metropolises solely to facilitate easy access to an office or central hub. With housing prices traditionally higher in cities too, many saw the drawbacks of the limited urban space they could afford when they were asked to work from home.
However, although plenty were predicting a mass exodus from the big cities back in Spring, this hasn’t yet materialised. The average home price in the UK (no doubt due to the temporary stamp duty cut, pent-up lockdown demand, interest rates at a record low and government support for mortgage holders and workers) soared to record highs in September, taking analysts somewhat by surprise.
Whether that trend is set to continue beyond the artificial bolstering it has enjoyed is the question.
City living or escape to the country?
Nevertheless, this reinvigoration of an already jittery Brexit market could be short-lived – and what will be the impact on urban housing more specifically?
The idea that city residents are thinking about making a break for the country is firmly evidenced. In June and July, Rightmove found that the number of buyer enquiries from people living across ten UK cities was up by 78% compared with this period last year. They also found a 126% increase in people considering rural village locations, compared to a 68% rise in people searching for properties in towns.
But is this all blue sky thinking? The reality seems more stable; a Hampton’s study reports a predicted house price rise for London of 2.5% in 2020, preceding a fall of 1% come 2021.
Despite a fall in house prices last year and a predicted contraction for 2021, Hampton’s predicts a return to a long-term growth trend for house prices in the city by 2022.
Perhaps it’s all wishful thinking, then, and urbanites will remain in city housing. Real estate prices in the country’s cities and especially the capital look set to remain stable, and continue their growth tangent, despite many city dwellers’ dreams of escape to a rural idyll.