The retreat from major cities has been the pandemic’s big real-estate story — but that doesn’t mean metropolitan house prices have suddenly got cheap.
From New York to London to Sydney, ultra-low interest rates and vast government fiscal support have limited distressed sales. Still, apartment rents have plummeted and suburban bidding wars have erupted as millions of workers have learned they can work from anywhere.
“There’s been a spatial shock, whereby you don’t have to go to the city to earn money necessarily,” said Andrew Burrell, chief property economist at Capital Economics. “We think cities will change a lot.”
As vaccine rollouts allow more cities to tentatively reopen offices, bars, restaurants and museums, here’s a look at what’s changing — and what’s stayed the same.
Rents are where the Covid-19 effect is most obvious. Widespread job losses in fields like hospitality mean big groups of renters simply can’t afford to pay what they did previously. International students are gone. Young people have moved back in with parents.
And at the upper end of the market — where the biggest price falls have been — wealthier renters have opted not to stay in virtually closed cities.
While the price drops have stabilized, landlords are still having to offer steep discounts and perks to encourage people back. Which is an opportunity for some.