We're here to help you find the answers as you optimise the property portion of your portfolio. Here are some key market trends to keep an eye on.
Moving to a big city was once an aspiration for many young people. But all that changed with COVID-19, which greatly reduced the appeal of urban living.
Restaurants, bars, and leisure facilities shut down as the virus spread quickly in indoor public spaces. Lockdowns and remote working also confined many residents to their small rental homes.
As the pandemic wore on, many city dwellers decided they wanted more space or a bigger garden, things that are often not affordable or available in cities. This forced people out of the urban core and into places where property is cheaper.
The impact of urban flight is magnified by a lack of people moving in the opposite direction.
Many people who would typically move into urban areas were unwilling or unable to do so in 2020. Young people are also starting their jobs or education online, causing many to stay in their parents' homes for longer.
While rent has dwindled, housing prices have risen globally. One of the main reasons is that those who are leaving cities are more likely to be able to afford a home where property is cheaper.
Furthermore, would-be home buyers have benefitted from a combination of low interest rates and income levels that haven't been overly affected by the pandemic.
As remote working continues, it may be hard for cities in the developed world to regain their pre-pandemic appeal. COVID-19 has accelerated the shift towards smaller urban areas as people seek more spacious homes and green spaces. So it may be hard for rents to move substantially higher.
Looking ahead, investors should monitor population flows as a critical determinant of rental demand, prices, and, in turn, aggregate inflation.
If the end of COVID-19 results in a return to urban living, then rental demand and prices could recover. However, if these flows are held back, lower rents will drag on headline inflation for some time to come.
HSBC can help you capitalise on strategic investment opportunities in the quickly evolving global housing market. We can facilitate your wealth ambitions with products and services tailored to property buyers seeking sound investments around the world.
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