23rd March 2020, the world went into lockdown as the Coronavirus pandemic took hold across the globe. Little did we know this would be the start of a seismic shift in behaviours and attitudes towards everyday life; at work, school and home.
Individuals, business owners, healthcare, retail, and many more were forced to pivot strategies overnight; in some instances, accelerating 3-5 year plans in a matter of days and weeks.
Here are the key trends we see as shaping the sector.
Residential Property
The residential property market has undergone significant transformations which were largely accelerated by the lockdown measures put in place. As a result, some trends have remained while others have emerged, shaping the industry’s landscape in unprecedented ways.
Shifts in suburban living and rental demand
One of the most significant shifts since the pandemic is the move from city living to a preference for suburban rental options with gardens. This trend was fuelled by the desire for more space and access to outdoor areas during the lockdown period. However, with offices reopening and employees adopting a hybrid approach to work, the demand for this lifestyle has not diminished. MRI Software’s recent Rental Trends Survey (March 2024) highlighted that over 56% of respondents stated that local parks and green spaces were deemed essential within their local community.
Rental premiums and supply constraints
Despite the shift towards suburban living, the demand for multi-family properties remains strong. However with limited options available in the private housing market, coupled with the wider economic factors leading to a slowdown in deals, rental premiums are at an all time high.
Furthermore, the rise in interest rates and legislation changes, such as the abolition of Section 21 evictions, have forced many landlords to leave the market which in turn reduces supply but does not lessen the demand. Price rises and increased costs for landlords have become increasingly prevalent
Cost of living pressures
A consistent theme across all sectors, and one which can not be avoided, is the cost of living crisis. This has added another layer of complexity to the residential property market and has become a crucial consideration for both tenants and landlords, impacting affordability and operating costs. In turn, these pressures has also exacerbated the trend of delayed home ownership; due to the challenges of saving for mortgages individuals tend to remain in rental accommodations later in life and has further fuelled the demand for rental properties.
What are the core priorities now vs pre-March 2020?
Operational efficiencies and tenant experience still remain front of mind for many property managers and landlords. However, there has been an increased focus on long-term operational expenditure lifecycle costing, and intelligent facilities management. This shift allows operators to plan spend over more extended periods to ensure sustainable operations.
Furthermore, the rise in interest rates has forced many operators in mid-development projects to re-evaluate their amenity offerings, opting to add more rental units to maintain their internal rate of return (IRR).
Future trends in the private residential property market
The impact of inflation and interest rate changes on the rental market will be an areas of interest and could potentially influence future trends.
In response to rising rents and economic uncertainties, the market is likely to place a greater emphasis on business intelligence tools for detailed analysis and trend monitoring in order for strategic decisions to be made and priorities to be adjusted accordingly. In this sector, data will be viewed a necessity and property managers and landlords will need to consider investment in the tools that provide a granular view of portfolio trends. Alongside this, mergers and acquisitions could become prominent as more corporate agencies look to smaller, niche agencies in order to expand their portfolios and market reach.
Consolidation is anticipated across all fronts; among operators as well as operational systems which will ultimately lead towards integrated solutions for better efficiencies. Many operators who initially pursued fragmented routes will now look to streamline their operations within a single solution or ecosystem.
To cater for varied market demands, operators will look to diversify their offered across different residential sectors, covering student housing, co-living, multi-family, as well as single-family properties.
Regulatory Changes including the National Trading Standards will mean that agencies, property managers and landlords will need to provide greater transparency in the information and property listings they provide, and may well shape the future dynamics of the rental market.
As the residential property market continues to navigate the post-pandemic landscape, adaptability, data-driven decision-making, and a focus on long-term sustainability will be crucial for stakeholders to thrive in this ever-changing environment.
Jenni Matthes, Marketing & Insights Director at MRI Software
