Urbanisation and pandemics: what is the impact?


Urbanisation and pandemics: what is the impact?
The impact of the pandemic on the property market is more persistent than we initially thought. But what does this mean in concrete terms for property supply and demand? Credit Suisse's Real Estate 2022 study provides some answers.

The home office has blurred the line between home and work. As a result, the demand from people looking for housing is shifting to less central locations. This has the effect of slowing down the growth of large centres. However, it is important to note that this trend was already evident before the pandemic and that the pandemic has accentuated it. In its study, the SC states that "the Swiss resident population grew by 0.75% in 2020, while the population of the major centres grew by only 0.3%".

The interesting element of this study is the evolution of the demand for owner-occupied housing. While property prices have risen sharply, interest in home ownership remains high. With the pandemic, the quality of housing has become more important and has contributed to the attractiveness of cheaper, out-of-centre properties. In this respect, the SC study notes that: "The price difference for a new four-room flat can be up to 40% between the centres and the most sought-after suburban communities. The SC even estimates that the demand for owner-occupied housing could stabilise at an even higher level after the pandemic.

So have we reached the end of urbanisation? The SC data provide a rather gloomy conclusion, but other factors must be taken into account: cities remain attractive because of their diverse economic, social and cultural life. Moreover, with the end of the pandemic, immigration from abroad will increase again, which will, among other things, promote urbanisation. Finally, we can simply draw a nuanced conclusion. While it is true that the demand for urban housing has decreased, urbanisation is not over.

Crédit Suisse - Article