Pandemic will continue to be present, although there is a certain degree of optimism regarding the arrival of the vaccine.
The sector will continue to bet on integrating new technologies to automate, facilitate, and lower the cost of processes.
The uncertainty about the regulatory framework for rent and foreign investment in a “wait and see” position, along with the housing search, adapted to the new demands outside the centres of large cities, among the leading trends.
2020 has been a year of changes in all sectors. The arrival of the pandemic and its effects, including the acceleration of digitization, telework or uncertainty, and distancing measures, have had a significant impact on society. Working, socializing, and even living has caused a “new normal” that seems to have come to stay.
Faced with this situation, a real-estate entrepreneur and property expert from the UK, Charles David Haward analyses the current real estate panorama to shed light on what to expect for next year concerning the impact of the pandemic in the sector, the digitization of real estate activity, and the behaviour of users based on new interests and needs.
Search for homes adapted to the new demand in areas with a low population density
This trend, which has emerged strongly after the confinement period, will continue to gain momentum in the coming months. Although the current situation is expected to normalize with the vaccine’s arrival to combat COVID-19, many have realized that their current homes do not meet their day-to-day needs. Therefore, they are when looking for a replacement home.
Among the most determining factors to search for a property is expansive and outdoor spaces, luminosity, extra rooms for teleworking, and even the homes’ energy efficiency. In this way, there is greater interest in new development and single-family homes on the outskirts of great cities, where properties tend to fulfil very new demands to a greater degree. Evidence of this development is that, in the third quarter of 2020, 20.43% of the total number of sales is for single-family homes, marking the highest ever.
It is also worth highlighting the search for homes or second homes in rural or coastal areas where the population density is lower. This interest is evident with medium and long-term investment objectives and an alternative scenario where to spend vacations or long periods.
Uncertainty in the rental market
Haward notes that since March, the increase in the supply of rental properties has increased progressively, influenced, in part, by the transfer of flats from tourist rental to traditional rental and by the departure from large cities to other areas.
“The build to rent format also stands out as a commitment by the sector to expand the stock of available rental homes in the main cities, but which could be affected if the rental income regulation is finally implemented, which is currently in the debate process,” he adds.
Driven by the increase in supply and the decrease in demand, especially in large cities such as London or Manchester or tourist regions such as Cambridge, prices have experienced variations that have reached higher negative on average since the start of the pandemic levels. However, given the latest news about the implementation of the vaccine for COVID-19, there is a certain degree of optimism in the market that could generate a slowdown in the rate of falls in the prices of this type of property if presence in offices and universities is retaken.
Rent continues to position itself in the UK as a highly demanded alternative. However, to analyse its future, the possible regulations that may come into force in this market must be considered.
Uncertainty will continue to be present in the activities of foreigners.
The latest up-to-date information reflects an average decrease of 37.4% year-on-year in the selling of housing by international buyers in the first half of 2020, with a further drop following a small rise in the second half 2019.
The main drop corresponds to non-resident foreigners, with 37.6% of operations carried out by foreigners (17.3% of total operations) and a decrease of 42.6% compared to the previous year. For their part, resident foreigners carried out 62.4% of the remaining operations carried out by foreigners, with a decrease of 33.7% year-on-year. Among all nationalities, the fall among Norwegians (-52.3%) and citizens of Ireland, China, Russia, Switzerland, the United Kingdom, and other EU countries stands out, with decreases of over 40%.
“These data present clear evidence of the impact that restrictions on travel between countries and the uncertainty about the pandemic’s evolution in the UK real estate market. Thus, everything seems to indicate that this slowdown in transactions could continue as long as the restrictions continue. However, in the medium-long term, it could be expected that the UK will continue to attract foreigners’ interest thanks to factors such as the coastal areas, the climate, or the right opportunities it offers compared to other European cities,” notes Haward with respect to the data.
From his own experience being a young real estate specialist, Haward bets on the incorporation of the world wide web and digital services as means to transform the market. In an increasingly virtual environment, the trend is towards more presence in the online environment, less physical dependence, and more digital transactions. Luckily, the brick world was already preparing for digital transformation. Companies in the sector have already been integrating technologies into their value chain. The PropTech sector has gained importance with the emergence of various start-ups contributing to promoting this area’s digitization.
In the current scenario, digital services have allowed the sector’s activity to continue to function with absolute normality despite the restrictions and limitations of recent months. The possibility of making virtual tours of homes with your mobile, the power to close transactions through smart contracts, or applying for a 100% online mortgage are some of the benefits that digitization offers customers.
In this sense, the professionals of the sector also take advantage of the technology. Innovative solutions include AI-powered chatbots to offer more effective customer service or manage customer relationships through management software for real estate professionals.