When the pandemic hit, many thought the property market would be devastated, but in many cases, the opposite has been the case.
The property market can be a funny old beast. Just when you think it’s bound to drop, it picks up pace once again. Such has been the case during this pandemic. Prophecies of doom and gloom proved to be unfounded. In many places, the market proved to be much more resilient than anyone imagined. So, why is the market so robust and what does this mean for overseas buyers?
Boom times in Britain
To see the issue in microcosm we can head to the UK, which has just reported the fastest growth in years. According to the Office of National Statistics house prices rose by more than 10% in the year leading up to March 2021. This stands in stark contrast to predictions when the pandemic hit.
As the entire economy shut down overnight, most analysts understandably feared the worst. According to some reports, the property market would fall by 50%, even more than during the financial crisis of 2008.
Many people have pointed to the obvious impact of government support. It is true that this helped to keep the market healthy. The Government introduced a Stamp Duty Holiday for homes of a value up to £500,000. Crucially this also applied to second homes which created an even more favorable environment for owners.
These escape the impact of council tax, and some were even able to access free cash through the Coronavirus business support schemes.
However, while this has been important, they have not been the major factor. According to a recent survey from Nationwide the majority of buyers would still be considering making a purchase even if it wasn’t for the business support.
Other forces are at play and they are being felt across the world.
The pandemic prompted many people to rethink what they wanted from properties. Urban dwellings with little or no outside space were out of fashion, replaced by those out in the countryside and on the coast. Not only did these areas escape the worst of the pandemic, but they offered a much more pleasant way to pass any existing or future lockdowns.
Better still, the successful use of remote technology for work, such as cloud computing and video conferencing tools, proved that workers don’t need to be at their desks to be productive. Even as things return to normal, many people plan to continue working from home for at least part of their working week.
The need to be located in a cramped city flat, therefore, no longer applies in many cases and workers have been casting their net wide. Many people who own London property have discovered how much more they can get for their cash by moving into the countryside.
The results show through in the data. Rural house prices have been rising twice as fast as in the cities. London prices have even fallen in some categories.
The same trends can be seen all over the world. As in the UK, many governments were quick to support the property market with incentives and tax breaks. This helped cushion any fall and keep buyers coming into the market while the reality of life in the pandemic created demand of its own.
Although the economic impact of the pandemic should not be underestimated, many people escaped with savings enhanced, and in a much better financial position than they entered it. They have been using that money to invest in property – both for their primary residence and their holiday homes.
Demand for properties in much sought-after areas, holiday resorts and coastal areas, therefore, has remained strong. And with foreign holidays about to be put back onto the agenda, revenue from lettings is likely to return.
There has never been a better time to buy or sell overseas property worldwide.