Rich buyers and the pandemic - agency’s survey lifts the lid

A sentiment survey amongst wealthy international buyers suggests the affluent sector of the western world is seeing similar house buying frenzy to that the UK.

The survey of 900 Knight Frank customers across 49 markets, shows that on average 19 per cent have moved in the past two years.

This rises to 25 per cent in Australasia and North America. Of the non-movers, 20 per cent say they are more inclined to move in 2021 as the pandemic continues.

The agency also suggests cities are back in favour. 

Out of those respondents who are more inclined to move in the next 12 months, 38 per cent of them are looking at city locations with 33 per cent opting for the suburbs.

Some 46 per cent of respondents are more likely to buy a detached home or villa but demand for apartments has increased to 19 per cent, up from 12 per cent in 2020. Knight Frank says this reflects an increase in demand for both larger, more spacious apartments, and pieds-a-terre in city centres.

The appetite for ski homes has increased from 11 per cent in 2020 to 18 per cent in 2021 with demand from North American and Asian buyers above the global average.

Eighty-four per cent of respondents said that the energy efficiency of a future home is important to them. Some 28 per cent said they would be more likely to buy an energy efficient home if future environmental regulations were to have a direct impact on its value and around 27 per cent would be willing to pay a premium for a greener, more energy efficient home

Kate Everett-Allen, head of international residential research at Knight Frank, says: “Over two-thirds of people expect the value of their current home to increase in the next year with most expecting a rise of between one and nine per cent over the 12-month period. This coincides with Knight Frank’s Prime Global Forecast which highlights that global house prices are, on average likely to increase by four per cent in 2021.” 

Further findings from the report reveal that the pandemic has sparked a wave of second home demand. Some 33 per cent of buyers say they are more likely to purchase a second home as a result of Covid-19, up from 26 per cent last year. Of those looking to buy a second home, 23 per cent say the pandemic has influenced where they want to buy and 22 per cent say it has delayed their purchase plans.

Mark Harvey, head of international residential sales at Knight Frank, adds: “Prime buyers in Europe and the US will find a markedly different landscape now to 2020. Stock is lower, vendors are less willing to negotiate on price and, after several months of tight travel restrictions, overseas demand is strengthening. 

“Some buyers are willing to take a more watchful approach and wait until the final quarter of the year when they hope vendors will be less intransigent on price. Others are keen to act quickly where they can see compelling value before prices shift higher.

“Two trends stand out in the last few months. Firstly, a growing ambivalence of some buyers when it comes to location, provided they can secure a co-primary home that delivers the lifestyle and enjoyment they feel they’ve missed out on. And, secondly given low savings rates and frothy stock markets, buyers are taking a more defensive stance by rebalancing their portfolios with a greater focus on tangible assets such as property.”