We are now observing the first period of relative calm following a breathless couple of years for the UK property market. Relatively is the key word here, with performance continuing to surpass measured expectations.
Recent figures from Nationwide indicated the strongest start to a year for property in decades, with house prices up 0.8% in January alone, leaving a national average value of £255,556.
Alongside this period of remarkable growth have been a number of trends which point towards changing demand patterns and demographics in real estate – which stakeholders will need to keep a close eye on.
One of the more significant of these trends is the advent of remote and hybrid working.
Of course, we have seen many of the effects of this already – untethered from the need to commute or reside in urban areas, the ‘race for space’ incited a rush of demand for more spacious properties in previously overlooked and undervalued rural and provincial areas.
With six in ten UK workers working remotely during the first national lockdown in parallel to a frenetic period of transactional activity in the market, remote working will have already left its mark.
Looking forward, two fifths of British workers say they do not intend to return to office-based working patterns in the future, raising pertinent questions for how the market will shape up as circumstances evolve.
If, as expected, the transition to remote working proves sustainable in the long-term, it will organically re-order the preferences of many buyers.
The key for lenders to succeed in a market undergoing unprecedented change is to assess where emerging trends in demand may settle.
Accordingly, FJP Investment commissioned independent research, taking in the views of homeowners and how they have changed since the advent of remote and hybrid working.
The research found a significant pattern of homeowners and homebuyers reassessing what they desire and require from residential property.
For instance, almost one quarter (23%) of all respondents reported having reconsidered their priorities for future property purchases, while among the youngest group surveyed more than four in ten (44%) felt their preferences had changed.
Further, 27% of respondents said the space for a dedicated home office had risen in importance in the past years.
The study indicates that the ‘race for space’ will continue as a significant factor, fuelling interest in a broader set of property types than before.
Large numbers of buyers report being more attracted to properties with higher square footage (26%), while access to a private or shared garden or outdoor space was of heightened importance to nearly half (46%) of those surveyed.
It is evident from the data that remote working has altered how buyers assess value and worth in a residential property – with younger buyers particularly keen to ensure they invest in multi-functional spaces that can withstand changing circumstances.
Such a radical change in demand trends invites investors and developers to get creative with how they will look to raise supply and adjust to the societal changes brought by the pandemic.
FJP Investment‘s study found 17% of homeowners are now more willing to live in a different part of the UK, highlighting the potential for diversification and comparatively reduced risk investing in builds outside of cities.
Naturally, more flexibility on the demand side of the market will result in more opportunities for developers.
One such creative prospect is the enormous volume of abandoned or derelict property currently going unoccupied.
It is estimated there are 280,000 empty homes in the UK – resourceful developers may look to renovate this existing stock to increase supply to the market at a time of chronic shortage and heightened demand, at a markedly reduced cost compared to a ground-up build.
Equally, the decreased demand of commercial real estate due to remote working could prove the gain of residential.
Abandoned city-centre office buildings could now be more lucrative if repurposed into residential property for urbanite professionals still travelling into offices.
While the market appears in robust health as we emerge from pandemic, there remains a note of uncertainty over precisely how the dust will settle.
It is evident that the experience of lockdowns and remote working has given many individuals new decisions to make around their lifestyle, with many preferring to remain out of the office and adapt where they live to this new normality.
More plurality on the demand side of the market will present increased opportunities for diversification and innovation that could prove invaluable to facilitate a more balanced distribution of property value across the UK.