Top of main content

Navigating today's dynamic property market

If you're a savvy investor, the global property market could present an opportunity to grow your future wealth. But the pandemic has triggered many changes in the sector – particularly in big cities – that may affect your investment strategy.

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.

Cities have lost their allure

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.

Many are abandoning urban areas

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.

Fewer are moving into cities

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.

Low demand has resulted in lower rents

As city dwellers often rent – rather than purchase – property, the shrinking urban population has dampened demand and increased rental vacancies. This has driven down the price of rent in urban centres, including San Francisco1, London2, and Hong Kong.

Housing prices continue to skyrocket

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.

Remote working will keep rents suppressed

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.

Rental demand will be key to inflation

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.

Start now

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.

1Source: Apartment List Data

2Source: HomeLet, Zoopla

Important information

Investment involves risk. Past performance is not indicative of future performance. This document is for information only and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. The mention of any investment product or class of investment products ("product") should not be construed as representing a recommendation to buy or sell that product, nor does it represent a forecast on future performance of the product. The information contained on this web site is intended for Singapore residents only and should not be construed as a distribution, an offer to sell, or a solicitation to buy any securities in any jurisdiction where such activities would be unlawful under the laws of such jurisdiction, in particular the United States of America and Canada. The specific investment objectives, personal situation and particular needs of any person have not been taken in consideration. You should therefore not rely on it as investment advice. Before you make any investment decision, you may wish to consult a financial adviser. In the event that you choose not to seek advice from a financial adviser, you should carefully consider whether the investment product is suitable for you.