Since the start of the coronavirus pandemic, the Economic Statistics Centre of Excellence estimates 700,000 people have left London. For many it is likely to prove to be a temporary migration and many recent residents of the capital are likely to already be trickling back as lockdown restrictions end and urban living starts to get back into its usual swing of bars, nightclubs, restaurants, theatres, and concert halls.
But a significant minority are believed to have permanently reconsidered their position as urbanites and have, are, or are considering selling up city properties in exchange for more rural settings. Commuting into London or another city centre 2 to 3 days a week instead of 5 sounds like a far more sustainable proposition. And for many may well swing a decision to exchange a smaller city property for a more spacious, indoors and out, alternative in a leafy suburb, village, or rural setting.
Others may be worried this pandemic is a warning to be heeded more may be on their way in future. That could mean an all-things-being-equal preference for the convenience of city-centre living is no longer considered as all-things-being equal.
Whatever the personal reasons behind the notable flow out of city centres housing market data shows it is happening. As a result, city centre property prices are being hit. With collective human memory notoriously short-lived that may not last long. Some who left may decide the Hunters wellies lifestyle is not for them after all. And a new generation of ambitious young professionals may well arrive to bolster demand again within a couple of pandemic-free years.
It’s not impossible that working and living patterns may have changed permanently over the past year. It may have simply accelerated the move to a more remote-work economy that technology advancements were anyway leading towards.
But cities have always been a draw to the young and city centre property prices always proven resilient in their bouncebackability after a crisis. There’s plenty of reason to suspect that won’t change drastically now. At least after a few months of relatively normal living have faded collective memory of the past year and something’s pandemic restrictions.
A return to pre-pandemic city living patterns would of course be expected to see city century property prices return to growth. Does that mean now is the perfect window of opportunity for a city centre investment?
The London postcodes currently considered a buyers’ market
Quoted in The Times newspaper, Gavin Brazg, founder of property sellers consumer advice website Advisory, says of current market patterns:
“We are in unprecedented times in the market because we have an unbelievably high percentage of owners who want to move home coupled with not many properties for sale.”
Mr Brazg notes how the UK’s property market usually displays plenty of regional variation, with rotating hot spots of buyer activity. However, he says the current situation is one of high buyer interest almost everywhere, except some parts of London. Of the UK’s 67 “coolest postcodes” for buyer interest, Brazg says 41 are in London. The result is property prices in some London postcodes estate agents are calling “a steal”, compared to a year ago.
But potential London property investors have to focus on particular areas, with the capital as a whole still technically defined as a sellers’ market. Bragz highlights E14, which covers Canary Wharf, Limehouse, Poplar, Isle of Dogs, Cubitt Town, and Blackwall, as one of the country’s ‘coolest’ markets at the moment. Just 24% of properties advertised as for sale in these areas are currently under offer.
Another central London postcode currently being neglected by buyers is the prime SW1 region that includes prestigious, pricey neighbourhoods Knightsbridge, Belgravia, and Chelsea, as well as popular neighbours Victoria and Pimlico. Only 18% of properties for sale in SW1 are currently under offer.
But the coolest of all is W1, covering Mayfair, Soho, and Marlybone, where only 11% of properties have attracted offers at their current asking prices.
Birmingham city centre properties are also an opportunity – but hurry!
The coolest city property market outside of the capital is currently Birmingham – the UK’s second largest city. But local real estate agents are convinced that is about to change, meaning the window of opportunity for a bargain Birmingham city centre property investment might be about to close.
Andy McHugo, an associate director at James Laurence estate agency in Birmingham, says inquiry levels are increasing again and buyers of residential property in the city returning. Apartments with balconies and terraces or room for a home office are particularly popular. He thinks the government move to allow 95% mortgages is having a positive impact.
Rightmove research seems to confirm that, with a recent analysis of 1.6 million properties for sale showing evidence demand for smaller properties, especially in city centres, is recovering. April saw a 39% increase in demand. That compares to a 32% increase in interest in village properties, suggesting the pendulum has swung.
City centre properties in regional cities like Sheffield, Norwich, and York were in highest demand. Rightmove’s Tim Bannister comments:
“These are early signs, but they certainly point to some good news for city centres across Britain. A number of agents are telling me they’ve seen a marked uptick in demand from first-time buyers, and they’re managing to sell city-centre flats more quickly than in earlier months of the year.”
“Right now some buyers are able to grab a relative city bargain compared with the heady price growth outside cities, but these early signs of demand could be the start of city prices rising again. So for those home-hunters who have their sights set on a city-centre flat, now is the time to see what’s available.”
The same logic would apply to city centre property investors. The next couple of months could be a quickly closing window of opportunity to snap up a bargain before prices rebound to, or close to, their pre-pandemic levels.