The housing market and economy currently holds London as it’s price bubble, having almost doubled in the past 10 years after the 2008-09 recession. Current conditions in the midst of a global pandemic mean that companies and employers are reconsidering the benefits of holding physical property and office space in London as the world, seemingly led by Twitter and other large technology organisations, turns to remote working and virtual office space. What does this mean for the housing market, particularly in London?
Caused by a credit crisis and led by necessary but destructive bailouts to banks, the most recent recession in 2008-09 caused a drop in all sectors, the property market included. The market bounced back, gaining on average 3% per year and putting the average London house price at £619,303 in 2017. Prices in Central London continue to inflate, with prices more often than not in their millions for a flat. Rightmove.com details ‘Last year most property sales in London involved flats which sold for on average £553,275. Terraced properties sold for an average price of £686,009, while semi-detached properties fetched £657,708.’ With London prices so grossly inflated - as they have been so often reported - do we expect this level to hold steady through and past the Coronavirus pandemic? I expect demand to rise in the more rural counties of Britain such as Essex, Hertfordshire and Yorkshire. Could there even be smaller price bubbles emerging in and around large rural towns and cities such as Colchester, Norwich or in the Dales? We should not expect this change to happen overnight, it could take years to materialise as people get used to the notion that they don’t have to live in a big city to be able to obtain and maintain a city career.
As well as people moving to and living in more rural areas, companies and businesses that must have a physical office may choose to move their headquarters outside of London in order to follow talented and qualified individuals that would have previously been found in a higher ratio in London.
Like myself, many people will have agreed a sale on their rural property in the weeks or even days before the lockdown was enforced. This has meant that we are locked into some sort of limbo where we can neither proceed with the sale or search for a property to buy/rent. This limbo also gives people time to consider the quandary that they are in - is it worth selling at the pre-pandemic rural price in order to buy or rent closer to London in order to save money on travel (as was a strong pre-pandemic reason to move), even though city travel is likely to be greatly reduced in a post-pandemic world. If it is not worth moving now, then how long should people wait before they reap the benefit of keeping their house in what could end up being the rural Hackney-style price inflation bubble?
The only thing that is certain is that there does absolutely seem to be a pre-pandemic and a post-pandemic world, and it does feel as though we are on the cusp of a market revolution of sorts - how much things will be affected remains to be seen.
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