How will property market trends change in 2021?
Ten post dostępny jest także w języku: polski
The real estate market seems stable at the moment – even during the pandemic that dominated the economy in 2020, housing prices not only did not fall, but even periodically rose. We are not only talking about luxury properties located outside large urban areas, but also classic flats in the most desirable districts of large cities.
Of course, the impact of the pandemic on individual economic sectors, and therefore also on consumer behaviour, should not be minimised. In 2020, many customers had to change their plans and postponed the purchase of property until the following year. Those who did not have much savings feared that their businesses would suddenly cease to be profitable, which was not helped by the successive restrictions introduced by the government. This frightened even the most determined customers, who at the last moment decided to withdraw from contracts they were ready to sign, even at the cost of losing their advance payments. However, according to economic analysis, not all industries have been affected by the pandemic. Businesses in certain sectors, such as almost all e-commerce and especially e-grocery, as well as the courier, gaming, on-demand media, and EdTech industries, have seen significant gains. It was the group of clients associated with these categories that invested more boldly in real estate.
The second quarter of 2020 saw a drastic collapse of any ‘live’ meetings and presentations, which was particularly noticeable in real estate. At first, no one knew how to deal with this problem, but the industry quickly began to take advantage of modern technological solutions. As a first step, the possibility of presenting properties online, e.g. via video conferencing, was implemented. This posed a challenge for sales offices – how to present a property “virtually”, so as to impress the client? Here virtual walk-throughs in augmented reality, with the help of VR software, became the solution. For those working in start-ups, it was the perfect time to introduce innovative technologies to the real estate market, which, although it has developed in recent years, still badly needed the spread of such solutions. These are changes that will no longer be reversed in the years to come – those who have dared, often out of necessity, to try these methods will stay with them.
Signing documents has also become easier, with many companies making it possible to conclude contracts using a signature and a trusted profile. Customers did not have to worry about data leaking from unknown sources, as this solution has a high level of security. It was already used in the real estate industry before the coronavirus pandemic, but it has now become standard and will remain so in the years to come.
In 2020, the nature of property enquiries has changed somewhat. Significantly more customers (an increase of around 30%), instead of flats, were looking for houses providing a sense of security, privacy. There was no shortage of enquiries for terraced segments. At a certain point, the pandemic restricted free outdoor walking and clients, especially those with small children, started to look for properties with at least the smallest garden. However, I don’t think this trend is going to continue in the long term. In the second half of 2021, the situation should normalize and flats will enjoy a standard high demand, as in previous years.
Another trend has broken out in the real estate market – namely investing in land. Many customers have noticed the situation in Polish banks. Deposits stopped guaranteeing profits, which contributed to customers moving their money to other investments. Many of them decided to buy land outside the city – some chose plots of land for a single house for themselves, while others chose larger areas, which will be an excellent long-term capital investment. Luxury properties, city-centre flats, renovated townhouses and out-of-town residences have also started to attract more interest. These are investments that require larger outlays of money, but always bring high, practically guaranteed profits.
The entire real estate industry is looking forward to 2021. Development investments will largely continue, as there is still a shortage of flats on the market. Developers building estates of single-family houses will gain new customers who will swap flats for houses outside the city. The current situation only requires from clients a bit more prudence and decision-making skills when buying and selling property.
The author of the commentary is Tomasz Porowski, real estate investment advisor with Pantera Invest