The impact of demographics on residential demand in a post-COVID world
29 April 2021

A world of changing expectations

The Covid pandemic has thrown up a myriad of potential futures, especially in the realm of residential real estate.  How will we use our homes tomorrow and where will we want them to be?

Speaking at this SPR webinar, Ed Hampson of Savills said that their research not only showed transactions activity in owner-occupied housing 63% above its 5-year average during the pandemic, but also that people have been moving further than usual in the period of lockdowns. Hampson suggested that this related to a fundamental shift in lifestyle choices, although it was mainly seen at higher price bands and among those who had already built up residential equity.  Those moving were increasingly driven by a desire to be close to open spaces and family considerations compared to pre-pandemic preferences.  Reflecting these trends, the East and South East of England have shown the biggest price increases over the last year compared to smaller rises in London and the Midlands.

For private rented sector (PRS) occupiers, Michael Adefuye of LGIM noted that the pandemic has brought a somewhat different set of priorities to the fore.  Media expectations of a flight from the suburbs has not happened in reality, at least for LGIM’s residential portfolio, although access to open space has certainly been at a premium.  The growth in working from home has lent even greater importance to Broadband speeds, not just in privately-occupied spaces but in the common areas of buildings as well.  Allied to this, Adefuye has seen a rise in enquiries about providing community working facilities within their properties. And in terms of locations, if anything there has been greater interest in being closer to city centres, with the potential to avoid using public transport by walking or cycling once offices open up again.

Drawing on UK-wide research, Tolga Necar of CACI agreed that people will still need to be connected to regional hubs, even if the preferred office week is now just 2.8 days on average.  A tendency to ‘live local and love local’ may bring a willingness to accept longer commutes, but he proposed that younger workers in particular are keen to return to the office.  Still, local amenities – eg for leisure and hospitality – are likely to become increasingly important in choosing home locations in future.  But Necar emphasised that it is the better off – those whose incomes haven’t been adversely affected by the pandemic – who are most likely to be able to follow through with these choices.

During the panel discussion that followed, led by Lucy Greenwood of Savills, it was agreed that both government and market actors are making more use of research data in their residential strategies.  Hampson noted that developers are seeking research on demographics and moving habits to inform decisions about their schemes, building on the work he produced jointly with Gaby Foord which showed buyers are willing to move further to new-build properties than second-hand ones.  Necar has seen government making greater use of CACI data to identify the specific localities where different types of housing are in demand, while Adefuye stressed that although local authorities have often used this kind of data, Covid has made them pay even more attention to housing.

Tim Horsey