Print
version
version
In June 2020, the Knight Frank has conducted a survey of 700 clients from 44 countries. All of them planned to purchase real estate through the company.
The results show that the pandemic significantly affected the mood of buyers. They are looking for larger houses in the open air. Considerations of medicine and a comfortable environment came forefront.
One in four respondents said that the pandemic period had increased their desire to change their place of residence within the next 12 months. The majority of those planning to move (40%) would like to find a new home in the same location. Just over a quarter (26%) are looking for a new home elsewhere within the country, while 34% are considering buying property abroad.
The list of attractive countries is headed by the United Kingdom, Spain and France. They are followed by Australia, Canada, Switzerland and the United States. According to the respondents, these countries can offer a high quality of life, political stability and a decent level of education. In addition, it is easy to get there at peaceful times. New Zealand, Portugal, Malta and Norway also took high positions.
When it comes to motives, buyers put improving the main residence for their family first (15%). The second most popular answer (13%) is better access to quality healthcare. In third place (12%), respondents put the desire to have a holiday home in the sun, and in fourth place (11%) is convenience in terms of work or business.
After long isolation within four walls people want more space. About 45% of respondents said they were more likely than before the pandemic to buy a house or a villa for a family. 40% would like to have a house on the coast line and 37% would choose property in the countryside.
However, the demand for apartments has not changed much: 52% of respondents said that their attitude remained the same.
People plan to live in a new way. They are beginning to value free space more and choose places with a lower population density.
Almost two-thirds of respondents believe that they are more likely to work from home after the restrictions are lifted. This explains why 64% of respondents think that the home office has become a more important part of the future home.
At the same time, about a third of respondents said that their attitude to travel to work will remain the same. In other words, the office will retain its role as a place for innovation, teamwork, learning and socialization.
Two-thirds of respondents now consider to have a large garden or open space. For many the link between well-being and outdoor recreation has become obvious.
Another demand of a new lifestyle is privacy: 52% said that it has become more important for them when searching for housing. In addition, the number of significant factors included the possibility of expansion and extension of premises: the coronavirus increased the desire (or revealed the need) to settle near elderly or distant relatives.
Travelling is critical not only for those who dream of vacations or their own home abroad. Current homeowners are looking to get something out of the 2020 rental season.
The survey shows that more than a quarter of respondents have either already traveled abroad, or will do so within a month of easing the isolation measures. Another 25% plan to travel 1-3 months after restrictions go down, and 36% plan to travel within 3 to 12 months. Only 13% of respondents said they would wait 12 months or more before going on a foreign trip.
Buyers expect property prices to fall in the next 12 months, but the budgets of most of them have remained unchanged or even increased during the lockdown. This is stated by 53% of respondents.
Is it possible that customers have wishful thinking when they want to negotiate a discount? In April 2020, Knight Frank made a global forecast based on a survey of the company's agents working with premium real estate. It showed that prices are expected to fall in 16 of the 20 cities considered in the study around the world. However, most agents expect a sharp recovery in prices in 2021. They believe that buyers need to act quickly to benefit from lower prices, as 14 cities are expected to see growth next year.
In addition, 56% of respondents expect prices to fall over the next 12 months, 27% believe that the drop will be less than 10%. At the same time, 25% of respondents do not expect changes, and 19% expect even price increases.
Approximately 53% of buyers believe that their purchasing power has remained the same or even increased since the beginning of the crisis. People didn't have the ability to spend, so they probably spent less and saved more. At the same time, more than 30% of respondents claim that their budget has been reduced by more than 10% since the beginning of the crisis. Reasons: massive reduction in salaries, working hours, or company staff.
The pandemic has focused buyers ' attention on homes as a place to live permanently, with many seeking shelter in case of new outbreaks. 26% of respondents said that they are more likely to buy a second home because of the pandemic. Most likely, this is due to the desire to wait out possible new waves of disease and restrictive measures.
Knight Frank data confirms this point: immediately after restrictions were lifted, there was a surge in requests for premium second homes in major locations in France and Italy.
Potential buyers of second homes also appreciate the space outside the home, dedicated space for work and greater privacy. Almost one in three respondents (32%) wants to buy a home that they can expand. Almost 30% are more likely to search for a property with places for guests.
Almost two-thirds of buyers (61%) say that the choice will depend on how the country's government handles the crisis. Therefore, countries such as Germany, Austria, Greece, the UAE, Singapore and New Zealand may take high positions among second-home buyers in the coming months.
Global changes that have emerged as the result of the pandemic.
The situation in the real estate market is constantly changing, but in the next few years it may undergo fundamental changes. Most likely, it will affect taxation, the issuance of preferential visas and conditions for foreign investment, as countries seek to fill the treasury after unprecedented fiscal measures to support businesses and the population.
Change is already happening. Spain proposes to change the wealth tax. Portugal has adjusted the tax on non-permanent residents. The UK is reviewing the capital gains tax. At the same time, Chinese buyers faced higher taxes on foreign income, and foreign buyers in Australia faced a longer application process.
In the post-pandemic world, tourists prefer isolated rooms rather than hotels with large shared spaces. At the same time, politicians are trying to revive the tourism industry and revive the economy of their countries. Therefore, there may be a truce between the authorities and platforms like Airbnb.
In major cities will keep a limit on the number of nights that housing can be rented out, but in the coming months we may not see new restrictions being introduced with the same enthusiasm.
The border between the main house and the second house blurred during the isolation. Since children receive online education and parents work remotely, some people began to spend more time in the second home than in the main place of residence.
This period demonstrated the increased productivity of this lifestyle, the benefits of working without daily trips, as well as more time with family, prompting thinking about reducing the working week in the office to three days instead of five.
The connection with the office and life in the city was not interrupted. People keep their city apartments, but residents of, let’s say, Geneva, Singapore or New York City will have increased interest in larger houses in neighboring Evian, Sentosa Island or Long Island.
Negative lending rates are the norm for Switzerland, Japan and the Euro zone in general. This could spread to the UK and the US, providing an additional incentive for housing markets, as paltry deposit returns increase the attractiveness of real estate for investment.
Although loans will be cheap, experts already see that banks are taking a more cautious position by raising interest rates on loans. This means that highly leveraged people may be considered too risky clients. Therefore, the problem of affordability for first-home buyers will not be so much about the price of housing and their income, but rather the need to accumulate a larger deposit, which may delay them in the rental market for a longer period.
In a long run, the good news for the first-home buyers is that many countries accelerate their housing construction and renovation plans, which means that new supply will gradually appear on the market.
The coronavirus has accelerated the transition of businesses to the Internet, allowing millions of people to work from home, and authorities are looking forward to capitalize on this trend.
From the US to Japan, governments and local councils are announcing new laws and initiatives that will help boost their economies after Covid-19 and repopulate towns and villages to counter years of migration to megacities.
For example, Barbados has launched a 12-month visa to encourage foreigners working remotely to settle on the Caribbean island. At the same time, Savannah in Georgia gives up to $2,000 to cover the cost of moving to remote technicians who will move to this city for at least one year. It is likely that other rural and second-home markets will follow in tracks.
Author: Ksenia Vatnik
Photos: pixabay.com
