Demand for apartments stagnates in Britain

SCLOSE between March and May, the real estate market came back to life. Nationwide, a lender, estimates that prices hit an all-time high in August. Pent-up demand and a temporary reduction in stamp duties have helped spur interest, but a more important factor, according to realtors, is that people are reassessing their housing needs. Spending weeks trapped inside has given them some serious thought about their accommodation, while the increase in homework is already having an impact. Richard Donnell, research director for Zoopla, a real estate website, believes Britain has undergone a “unique reassessment of housing needs”.

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People want more space. Price increases are positively correlated with size (see graph) and the value of one-bed apartments has declined since the market reopened. According to Zoopla, the time from listing a home to receiving an accepted offer has decreased across the board, but the larger the property, the greater the drop. Five-bedroom homes, which in 2019 took an average of 48 days to attract a bid, are now bought in 32 days, faster than one-bedroom apartments. Three-bedroom homes, the most popular category, sell out in just 24 days. Both tenants and buyers are less and less fond of apartments. Apartments fell out of the top five categories searched by potential renters on Rightmove, another real estate website, in favor of smaller homes. Access to a nearby garden or park is much more popular than a year ago.

Rightmove advises real estate agents who advertise on their website to emphasize different factors these days. While in the past proximity to a train or metro station was in high demand, this “isn’t going to be such a big selling point for buyers who expect to work more from home,” according to Miles Shipside from Rightmove. It is now, he explains, “to best enhance a guest room”. He advises sellers to buy inexpensive office furniture and install it in smaller rooms to demonstrate their potential as home offices.

The decline in the attractiveness of apartments is a challenge for London. While apartments represent only about a fifth of the UK housing stock, they represent just over half that of London. According to Rightmove, after the lockdown, 54% of property searches by London residents were in areas outside the capital, down from 45% a year ago, the biggest drop in interest of any city. But apartment abandonment is a problem elsewhere as well. Flats make up about two-fifths of new properties built over the past decade, and home builders fear the stereotypical block of converted flats in a former warehouse in the East End of London, the North Quarter of Manchester or of Newcastle’s Quayside is experiencing a permanent decline in value. “If you’re a successful two-income couple in your late twenties, now you can decide to skip the two-bed apartment that was the first rung on the ladder and go straight to the semi-three in the suburbs. »Says a housing owner.

Strangers don’t help. They mainly buy newly built apartments and, except in Hong Kong, where there is some interest in a change in status of UK national passport holders (overseas), international demand for apartments in Britain is low, as investors are waiting to see where rental yields settle. But the big question is domestic: is working from home forever, not just for covid?

This article appeared in the Great Britain section of the print edition under the title “Flatlining”