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Is the pandemic-fuelled housing boom largely spent, or is there a second wave of demand yet to come?

The pandemic has upended how we live, what we want from a home, how we work, and prompted a reassessment of life goals with many prioritising a better work/life balance.

A year ago, we took the pulse of buyers’ attitudes to gauge the impact of Covid-19 on housing demand globally,

12 months on how is the pulse of buyers’ attitudes evolving?

  • Are the changes we’re seeing permanent?
  • For those that chose to move home, what are their priorities now?
  • How do the perspectives of buyers differ around the world?

Of note is the degree to which pent-up demand persists in some markets. Almost one in five people in a recent industry survey say that they have moved home since the start of the crisis, but of those that have yet to relocate another 20% say they plan to do so in the next 12 months.

Some are awaiting confirmation of changing work patterns before taking the next step, others are committed to buying their next home, be it a primary or secondary residence, confident of their ability to work remotely and secure a better lifestyle.

Nearly two-thirds of the surveyed plan to work abroad again once the crisis is over.

With strict lockdowns imposed in most markets over the last 18 months it is no surprise that more space was the top priority for buyers – 22% said more outdoor space was the key motivation behind their move, 19% said indoor space was the critical factor but there were regional variations.

When asked how important key property features would be when choosing their next home, 71% confirmed access to fast broadband would be more important. Next came a home office (67%) as well as space (indoor and outdoor) but views of nature (55%) and flexible living space (55%) also ranked highly. In terms of location, the focus is on health and wellbeing. Proximity to green space (68%), air quality (65%) and access to good healthcare (57%) were considered the factors respondents considered most important.

Almost one in four buyers (24%) say their spending power has increased since the start of the crisis, reflecting data from Moodys which calculated over US$5.4 trillion has been amassed globally due to enforced lockdowns.

Five key trends buyers should have on their radar!

  • Inflation

The pandemic has led to bottlenecks in supply chains with raw materials for construction a key casualty. This in turn is pushing prices higher. The concern for buyers is this is occurring at a time when the delivery of new stock and inventory levels for existing stock are already low. On one level this means accelerating prices, but it also means buyers are looking more closely at income generation, value opportunities as well as purchase, ownership, and sale costs to help mitigate the higher entry cost. Thorough research and good advice are fundamental to any purchase.

  • Cooling measures.

From taxing vacant homes, negative interest rates, to higher rates of capital gains tax, the number and range of policies aimed at curbing strong price inflation is on the rise. Knight Frank’s Global House Price Index confirms 13 countries and territories are now seeing annual price growth above 10% per annum. New Zealand, Ireland, Canada, and South Korea have all introduced new rules and restrictions in 2021. Governments have a mix of targets in their sights, from speculative investors to international buyers and from bulk purchasers to second homeowners. Research by the University of British Colombia suggests vacancy taxes on high-end homes has had little impact on the affordability of homes

  • Greener living.

ESG – Environmental, Social and Corporate Governance – is everywhere, although the E is currently the attention grabber. Investors and corporates have arguably picked up the baton first with higher yielding returns and demanding shareholders their motivation. For buyers, the bottom line is what matters. Cheaper, greener mortgages, or regulation-induced price inflation for the most energy efficient homes, will be what tips the balance for the end user. Recent climate events, a spate of zero carbon government pledges, and the UN’s imminent climate change conference, COP26, will shine a light on the significant role housing and the real estate industry as a whole has to play. More regulation and greater competition could be good news for buyers keen to embrace greener living.

  • Currency

Interest rates in some advanced economies are set to rise – although monetary policy committees are confident any move will be slow and incremental. Aside from a higher cost of debt, rate rises will boost currencies providing some buyers with an advantage when purchasing overseas. Capital Economics forecasts the US dollar, currently around 1.15 against the Euro and 1.35 against the British pound will, by the end of 2023, reach 1.20 and 1.40 respectively providing dollar-denominated buyers with an effective advantage in these and other markets. The Eurozone, Switzerland and Japan are the least likely to tighten their monetary policy and hence see their currencies strengthen, thereby ones to watch for potential currency-induced discounts. Monitor currency movements when buying and selling.


Aspirations amongst the ‘work from anywhere’ generation may have been dealt a blow. Pandemic-driven digital nomads tempted by locations such as Barbados, Dubai, or Portugal, may be called back to the office as companies could incur higher tax or social security liabilities in their destination country. Research by Leeds University estimates between £6.5bn and £32.5bn of UK revenue from personal income tax and social security contributions could be at risk if a third of higher rate taxpayers were able to work remotely and 10% to 50% of this group opted to leave the UK. Replicate this globally and the tax loss could be significant. However, companies are also realising that to attract the best talent they need to be flexible, so all may not be lost for remote workers, or buyers looking to capitalise on this valuable source of prime rental demand. The push and pull of the global investment landscape is changing fast!

Second Homes – With the rise of remote working, second homes or ‘co-primaries’ are becoming a viable option for more buyers seeking a better work/life balance

The pandemic has sparked a wave of second home demand. Some 33% of respondents say they are more likely to buy a second home as a result of Covid-19, up from 26% last year. For some, the ability to work remotely, alongside incentives such as visas for digital nomads, and a desire to travel after a period of confinement, has boosted demand for a home-from-home. To date, second home purchases have been driven by domestic buyers due to strict travel restrictions, but we have already seen a second wave of activity as rules start to ease, a trend already evident this summer across southern Europe and in particular here in Marbella.

Of those looking to buy a second home, 23% say the pandemic has influenced where they want to buy and 22% say it has delayed their purchase plan.

The UK, Australia and the US, top the second home hotspots globally but for Europeans, Middle Eastern and North American buyers, France and Spain rank highly. Some 67% of respondents confirm that the government’s handling of the crisis would influence their decision to buy a second home in that market, a factor reflected in the list of preferred destinations – all countries with advanced vaccine programmes or stringent lockdown measures.

Prime buyers in Europe and the US will find a markedly different landscape to 2020. Stock is lower, vendors are less willing to negotiate and, after several months of tight travel restrictions, overseas demand is strengthening.

Competition remains strongest in rural, alpine and coastal markets – the South of France, the Alps, Tuscany, Marbella, Lake Geneva as well as Barbados. The most active segments are between €1m and €3m and at the top end (€10m+) we’ve seen some big-ticket sales as determined buyers acquire best-in-class, turnkey homes.

Timing is everything, buyers need to be prepared, undertake their research prior to travelling and be able to make decisions quickly. Some buyers are willing to take a more watchful approach and wait until the final quarter of the year when they hope vendors will be less intransigent on price. Others are keen to act quickly where they can see compelling value before prices shift higher.

Two trends stand out in the last few months. Firstly, a growing ambivalence of some buyers when it comes to location. I’ve several buyers who are willing to consider multiple locations, provided they can secure a co-primary home that delivers the lifestyle and enjoyment they feel they’ve missed out on.

Secondly, given low savings rates and frothy stock markets, buyers are taking a more defensive stance by rebalancing their portfolios with a greater focus on tangible assets such as property. Its appeal as a store of value, an income generator, and a means of enhancing one’s lifestyle is an appealing prospect.

Source of article. Knight Frank global buyer survey 2021

About the survey The Knight Frank Global Buyer Survey was conducted between 10 June and 22 July 2021. The findings represent the views of over 900 Knight Frank clients located across 49 countries and territories. The data below sets out the profile of respondents in terms of age, income, location, and homeownership.

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