How has the property market impacted house-related retail?
As we slowly come to grips with the new normal and try to navigate the pandemic, more of us are switching from our COVID-19 routines and returning to some sense of normality.
We’re taking holidays again, shopping in stores rather than from our laptops and meeting up with friends in-person instead of virtually. Work is still being carried out largely remotely, but many businesses are adopting a hybrid model to adapt to the desire for more flexibility.
But one of the other outcomes of the pandemic has been a surge in property purchases and sales, with housing market activity increasing significantly over the past two years. So, how have our decisions regarding moving changed our spending habits and are we spending more or less on home-related items now?
What effect does the property market have on the economy?
According to the Bank of England, the housing market is closely connected with our spending habits. When house prices rise, homeowners become better off and feel more confident in their ability to afford purchases. Some may borrow against the value of their home to renovate or to spend on goods and services.
However, with the expected shift in base rates, others may sell up and move in order to avoid feeling the pinch, with Mortgage Broker and MD, Pete Mugleston from Online Mortgage Advisor, warning that “lenders have already started to up their rates in anticipation of a base rates shift, with Barclays, HSBC, NatWest and TSB doing so right after Chancellor Rishi Sunak’s latest budget speech”. Going forward, this change in the financial aspect of moving could influence people to stay in their current homes for longer than they perhaps would have last year.
With mortgages serving as the largest source of debt for most people in the UK, it’s no wonder that fluctuations in the property market can affect the rest of the economy.
Buying and selling property doesn’t just impact GDP in the form of housing itself but also through other services such as estate agents, legal fees and house-related products. And it seems that with more time on our hands, and more disposable income in some cases, as a result of lockdown measures and social distancing, we’ve been investing in our properties more than ever.
How have purchasing trends changed?
A survey from home retailer Made.com revealed that 86% of consumers polled want their homes to be a place of sanctuary, and that 40% had chosen to invest more in their homes with new homeware items.
While furniture might seem like a lower priority compared to other purchases, many homeware retailers have enjoyed some of their best months, profit-wise, as a result of us spending more time at home and craving a comfortable living environment.
Over a third of those surveyed claimed that they were already feeling the effects of burnout as a result of returning to socialising and activities outside the home, which suggests that we won’t be packing our calendars with as many hobbies and events as we did pre-COVID-19. The desire to build a relaxing refuge that enables us to unwind and recharge has influenced our spending habits considerably, with consumers spending more on sink-in sofas, textural products and ambient lighting.
But another factor that has contributed to an increase in house-related buying is that many people took the pandemic as an opportunity to upsize their homes. With more of us working from home and craving more space around us, both inside and outdoors, to live comfortably with one another, it’s no surprise that there was an uptick in people purchasing furniture to furnish larger spaces.
A shift in marketing tactics
Office-related furniture sales might be dipping, but there’s still a rise in the sales of other homewares. For example, dining and kitchen items have increased, according to data from virtual shopping platform Hero, which indicates that more of us still feel more comfortable entertaining and spending time with loved ones at home rather than in public.
With the kitchen renowned as the heart of the home, and research showing that more of us want to create a sanctuary in our properties, promoting kitchenware is a marketing strategy that could provide brands with huge profits.
It’s expected that we’ll spend less time at home in the near future as more opens up and life adapts to the challenges faced as a result of COVID-19. But customers still want to return to a safe, comfortable space and home-related retail brands are able to make that happen. But the ever-changing rules regarding social distancing and retail closures mean that there’s still a preference for online shopping. It was once the case that big ticket items such as furniture would be purchased almost exclusively in showrooms and stores, but that’s no longer the case.
Digital imaging has made it possible for brands to inspire customers with products and layouts, while providing the opportunity for customers to visualise products in their homes when they can’t travel to stores or pick up items in person. From AI software to apps, customers can see a product in place before they make a purchase, streamlining the buying journey and retaining customer interest throughout the pandemic.
There’s no denying that the housing market has been tumultuous over the past two years, with the pandemic directly impacting housing prices and the demand for property. While it’s unclear what lies ahead in 2022, it’s expected that the housing market is likely to return to normal although the increase in the base rate could take the heat out of the market and encourage people to stay put for a while longer.
For house-related retail brands, this poses a great opportunity to market to customers looking to embellish and redecorate their homes to make them more inviting as we spend less time outdoors.
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