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As the property market settles into 2023, people in the real estate industry are looking at innovative trends that will shape the industry this year.
From decarbonization goals to technological advancements, here are five of the key property trends that will impact real estate in 2023 and beyond.
What are the key trends in property investment?
The census has revealed that the majority of homes are now owned outright, as opposed to owning a mortgage. However, much of this is based on the demographics of people buying homes and when in their lifetimes, as house values have appreciated in value over time.
Rightmove states that cash, mortgage, contributions from family and friends, co-buying and ISAs are credited to the funding of most properties, however this is far from an exhaustive list.
5 Key Trends For Property Investors In 2023
2023 is a year to watch in property. Whilst employment flourishes and many types of property is in extremely high demand, there remains high inflation and political tensions worldwide, which has knock-on effects on individuals and businesses.
According to the CBRE’s UK Real Estate Market Outlook 2023, “Real estate investment markets will emerge from a period of uncertainty and activity should return.”
Business owners: Work from home or return to the office?
Particularly affecting commercial property but also influencing other investments is the debate between workers returning to the office or working from home.
Demand for large office spaces has fallen dramatically since the start of the pandemic, with landlords struggling to fill vacated spaces. Furthermore, many firms are downsizing or not renewing their existing leases as they reassess their space requirements. This has led to rising vacancy rates and a decrease in rental income for landlords.
However, some companies have issued ultimatums for employees to return to the office this year.
As many employers and workers settle on their preferences, many firms continue to hold onto their office space either as a precaution in case they need the space in future or because they could not break their lease. Many landlords are choosing to repurpose office space, as estimates suggest that between 10% and 20% of office real estate stock is being under-utilised.
The CBRE states, “No one knows for certain the amount of office space that will be needed for workers in the years to come. However, we do not expect a mass departure from office buildings going forward – even under the most pessimistic scenarios.”
The impact of climate change on landlords
Many commercial and residential landlords are adapting properties based on climate change.
These are important in order for landlords to meet their obligations to tenants.
EPC ratings can range from A (the most efficient) to G (the least efficient). From 2025, the standards will rise so that the lowest pass grade is C rating.
Commercial property is also impacted by the government’s plans for net zero. This blog post explains.
Rising cost of housing is impacting new buyers
The cost of housing is a major factor affecting property trends in 2023, as it has been for the past several years. The combination of low inventory and rising prices has left many people unable to buy or rent their own homes, especially in markets with high home values. This has forced more people into rental units, which have seen increased demand and rising rents.
The lack of affordable housing has also caused many people to move out of their current cities and towns, either permanently or temporarily, in search of more manageable housing costs. This trend is expected to continue as prices remain high and inventory remains low.
This presents opportunities for landlords as the demand for rented housing is higher than supply. The upward trend of house values means that for investors that have been on the market for a few years now have a property now worth more than the individual paid for it.
High demand for new build properties
A prominent property trend which has emerged throughout recent years is a shift to new build properties instead of older, period properties.
This is likely to closely link with the EPC rating referred to above, as new build homes are more likely to have a higher rating.
Demand for urban regeneration centres for renters
Urban regeneration investments have created an interest from home buyers and property investors who have a focus on returns and capital gains.
Over the past couple of years, numerous ambitious regeneration schemes have taken place in the UK.
Thus, future growth in property demand and value can be significantly strengthened by regenerations.
Next steps for property investors
To make the first steps on your property journey, claim your free Wealth Through Property e-book.
Wealth Through Property is the UK’s leading 2-day property investment course. It is designed to provide you with specialist knowledge of proven investor
strategies. Learn how to get started and build your property portfolio and gain real-world advice.
To find out more information about the property investment courses we offer call us on 01302 897131 or email office@touchstoneeducation.li.
