The Covid-19 pandemic has had a wide-ranging and disruptive effect across the global economy, particularly on retail, hospitality, leisure and travel. The housing sector has proved remarkably resilient on the whole, although some disparities exist across Europe depending on factors such as the stringency of lockdown measures and the potency of government stimulus. Investors concerned with market volatility, the economic impact of a recession, and Brexit are turning to the property for refuge.
A survey from investment firm FJP Investment found that over half, 51 per cent, of investors believe that UK property will remain a sound investment regardless of Brexit and Covid-19.
A key determinant of transaction volumes across Europe has been the stringency of lockdown measures. The UK instituted a severe lockdown in March, restricting property viewings and home moves. Spain experienced extended lockdowns and saw transaction volumes fall up to 34 per cent (Madrid) in March. In July, Fitch, the rating agency, forecast a fall in Spanish house prices of 8 to 12 per cent this year — compared to a rise of up to 4 per cent in Germany.
By contrast, the second UK national lockdown through November has been characterised by greater flexibility to undertake viewings and progress sales. This is perhaps symbolic of governmental recognition that the real estate sector plays a significant role in driving economic recovery. Business in Stockholm, Sweden, for instance, proceeded without interruption with property market transactions continuing unabated. These transactions are currently 56.8 per cent ahead of volumes in July according to Savills.
In the UK, Inland Revenue figures suggest property transaction volumes are back to pre-Covid levels with over 98,000 residential property transactions in September, 20.3 per cent higher than in August this year. Changes in buyer preferences, pent up demand, mitigated housing supply, low-interest rates, fiscal stimulus & attractive fundamentals have spurred house prices to 5.6 per cent growth year-on-year in October using Nationwide data.
Two-fifths of 1000 investors surveyed in a marquee FJP Investment report are confident this trend will continue in 2021. The Urban Land Institute, in collaboration with PWC, picks London out as a top tier destination for property investment opportunities. The Emerging Trends in Real Estate Europe report places London in second, after Berlin, topping rankings for overall real estate prospects across European capitals. As such, 55 per cent of investors expect to be net buyers of real estate in 2021.
Across prime central London, buyers are becoming a lot more property-specific than area-specific. While places like South Kensington, Notting Hill and St John’s Wood have been very popular, we’ve also seen high levels of transactions in Wimbledon, Richmond and Wandsworth, Savills said in a report.