Life after Lockdown – Is This the End of City Living?
The following article is taken from our most recent guide – Life after Lockdown, where we explore the future of the property market after three national lockdowns and whether we’re seeing the end of city living as we know it.
One of the major ‘trends’ that we’re seeing arise out of the global pandemic has been the shifting demand between urban areas and more rural settings. Following a year of being confined indoors, the importance of our homes is being pulled into sharp focus.
Obviously, this has prompted the question: will the new normal affect the demand for urban living? As tenants look for more space and ‘outdoor areas’, does this mean that city-centre apartments – a ‘bread and butter’ asset for many investors – are on the way out? Most likely not.
Research suggests that to return to the urban/ rural split you might have seen in the market 40 years ago would require nearly 1.5 million new homes – one third of the current rural housing market.
Similarly, consider this – people don’t purely move to cities for easy access to work or nightlife.
Sure, that’s a big appeal but the truth is cities offer a lifestyle that can’t be found elsewhere. For many young professionals, one of the largest demographics in a rapidly growing rental market, cities offer something that no other location can.
According to Andy Foote, Director at SevenCapital, investors shouldn’t be changing their strategies based on short-term trends:
“We’ve seen the “London exodus” as city dwellers race out of their rented city-pads for more spacious accommodation near parks and countryside on the outer edges of the Capital – or even further afield. We’ve heard of increased searches for larger sized rental accommodation, perhaps with an extra room or with a balcony.
“Some of these trends are likely to last and should, of course, be noted and monitored over the coming months. But this shouldn’t require a complete rethink of your existing investment strategy; certainly not if your strategy is one that has long proven successful.
“The most important thing to remember if you’re reconsidering any part of your property investment strategy, is first and foremost that the events of this year – the pandemic and subsequent lockdown – may not be long lasting.
While there’s also obviously a growing demand for green space – admittedly few and far between in many key regional cities – this has likely been exacerbated by lockdown. When life returns to ‘normal’, people that have hastily moved away from city life may miss it more than they thought.
What’s more likely is that we’ll see people prioritise space, affordability and access. Emerging regional markets will continue to outperform the cramped London market and demand in these areas will ‘redistribute’.
Both tenants and buyers will move to more affordable suburbs rather than competing to live at the heart of the action, choosing properties that still have easy access to the city centre but can provide more value for money.
This is especially true of cities such as Birmingham, where areas such as Digbeth and the Jewellery Quarter are growing in popularity with young professionals. Birmingham is a prime example of an affordable location that is delivering the quality lifestyle worthy of higher rental prices.
The second city is still incredibly affordable in comparison to London but is relatively similar in terms of career opportunities and nightlife, meaning higher rental prices and higher yields.