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General, Market Pulse

3 December 2021

How Will Property in 2022 Fare?

By the end of the year, one in 16 private households will have moved home – that’s how busy the UK housing market has been in 2021.

It’s the busiest, in fact, for 14 years, according to Zoopla. But then, never before has there been such an influence on home-working, thanks to the pandemic. For those who like statistics, analysts predict reckon this year’s frenetically-paced housing market will have recorded 1.5 million housing completions by December 31.

The property portal also calculated annual house price rises at 6.9% in November, with the average property having gained £15,000 in value over the course of the year. Nationwide’s Housing Index put growth even higher – at 10% annually (that was an increase on October’s 9.9%). The high street lender records the cost of the average UK property at £252,687.

Sales slumped by more than half in October

The November increase in property values is despite the fact sales plummeted to half that of the previous month in October (52% less, according to official HMRC figures) as people rushed to complete transactions prior to the Stamp Duty deadline.

In fact, Bank of England figures show mortgage approvals were the lowest in October since July 2020.

And, with interest rates expected to rise next month, will sales start to dry up and prices stabilize? Tom Bill, head of UK residential research at the Knight Frank believes so.

“Gravity-defying price growth is the result of low interest rates and tight supply, which are both things we expect to reverse next year, putting downwards pressure on prices,” he said.

Rival property portal Rightmove predict 2022 will see a 5% rise in asking prices, increasing the cost of the average property by £17,000. But it will be nothing like this year’s turbo rise.

Head northwards for bigger price increases

Property in some areas will fare better than others. Right now, Yorkshire & the Humber, Scotland, the south west and the West Midlands are the hot spots for buyers.

Central London properties picking up

London has been slow this year, with more buyers moving out rather than in to the capital. As a result, house prices have risen by an average of around just 2%. And that doesn’t look to be getting any better over the next couple of years either, with growth expected to be between just 1% and 1.5% annually.

Only luxury properties in Central London are expected to do well next year as more international buyers appear in the capital now that the lifting of lockdown has made travel easier for more areas.

A flourishing private rental sector

And what of the private rental sector? With demand continuing to outstrip supply – especially when it comes to high-quality rental property – there is only one way that prices can go – and that’s up, of course. As a result, the Build to Rent sector, together with Purpose Built Student Accommodation (PBSA) are both proving extremely popular with investors. Lloyds bank and John Lewis are just two of the high street names having declared an interest in becoming large-scale landlords in the past year.

Jill Stevenson

General, Market Pulse

21 November 2021

Broadband Quality Second Most Important ‘Must Have’ When Buying a Home

A super-fast internet connection can add £5,000 to the value of a property, according to more than 294 UK estate agents.

The comment came on the back of a survey which showed that a great broadband connection ie ‘full fibre’ is a main priority for many house buyers. To the extent that 34 per cent of buyers surveyed by Omdia said they wanted speeds of more than 300Mbps. Another 23 per cent are demanding 1 Gbps.

Broadband second only to property size

The main priority for house buyers, according to the survey was the size of their property (23 per cent), closely followed by 20 per cent stating that broadband quality was their number one. A further 18 per cent said they were more interested in the number of bedrooms, 10 per cent the age of the house or apartment was more important, while nine per cent said they would prioritise transport links.

“Poor wi-fi and a bad mobile signal can be a deal breaker,” admitted one estate agent, “while fibre broadband adds to the appeal.”

All homes to have full-fibre broadband by 2026

Telecoms regulator Ofcom say around 18.2 million homes (62 per cent) already have access to 300Mbps or faster, according to their research. The government meanwhile say they will fit out every home in the UK with full-fibre and gigabit-capable broadband by 2025.

A spokesman for London-based estate agent Foxtons admitted internet connections had increased in importance since the pandemic, in particular, but that buyers still valued schools and local amenities, as well as the size of a property.

Narrowing of the north-south property price divide

Meanwhile, predictions from another estate agent also made headlines this week in the property press. Upmarket Savills says it expects the north-south property price divide to narrow considerably over the next five years.

Both areas will still see growth – albeit northern growth should be higher than southern – but overall house prices could have increased by 13 per cent by the time 2026 comes around, they say. This is broken down into 4.5 per cent for Yorkshire and the Humber and the north-west over the next year, two per cent for London and three per cent for the rest of the UK.

The north’s ‘affordability cushion’

A company spokesman said: “There remains more of an affordability cushion beyond London and the south. The government’s levelling-up agenda has the potential to accelerate a rebalancing of the market but only if it gains meaningful traction.”

Despite the bigger increases in the north, London prices will still remain far higher with forecasts of property averaging £713,987 in the capital by the end of 2026, compared to averages of £272,732 in the north-west and £266,417 in Yorkshire.

Rental growth even higher than capital increases

And it is not only capital growth that Savills predicts will rise into double digits by 2026 – rental price growth is also expected to be up. And analysts at Savills say that will outshine capital growth at 19.9 per cent by 2026.

Jill Stevenson

Digital Issues, Market Pulse, November - December 2021

10 November 2021

The Staycation Boom

The hottest property investment strategy for 2022

From a commercial perspective, Covid-19 has had devastating effects on many industries in the UK, such as hospitality and travel, which have been severely impacted by the various restrictions. However, there have also been some industries that have massively profited from the pandemic.

Aside from the obvious uplift in PPE and pharmaceutical company revenues, tech companies offering remote working software such as Zoom and online retailers such as Amazon have enjoyed big profits.

Meanwhile, the property industry has been on a strange journey that not even the top experts could have predicted. The initial anticipation for a house price crash never materialised, with the introduction of stamp duty holidays contributing to an 8% year-on-year house price increase. Some buyers were able to save up to £15,000 in stamp duty, ensuring that the property market has stayed strong throughout the pandemic.

How property investment has been affected by Covid-19

The pandemic has resulted in a variety of outcomes for different types of property investors. The tenant eviction ban resulted in many buy-to-let landlords losing rental income, whilst growing house prices have also made it more difficult to make profits from buying property to let it out. On the flipside, the stamp duty holiday gave buyers a big window of opportunity to add new properties to their portfolios whilst avoiding paying the usual tax.

Holiday lets have become very lucrative investments

With foreign travel restrictions and health concerns over going abroad, the majority of British holidaymakers have been taking breaks in the UK, rather than missing out on their holidays altogether. Areas such as the Lake District and Cornwall have seen a huge uplift in bookings and searches for accommodation throughout 2021, with some holiday rental companies experiencing more than a 40% increase in summer 2021 bookings.

Domestic holiday experts are predicting that this demand for UK staycations is set to last, at least for the next four to five years, which opens up lucrative investment opportunities in holiday property rentals. As well as taking more bookings, many holiday accommodation owners and companies have increased their prices to maximise the opportunity they now have on their hands.

Choosing the best holiday accommodation for letting

For people who are interested in cashing in on the UK staycation trend, there are plenty of lucrative opportunities. Which one is best for you will depend on a number of factors including how much capital you have, how soon you want to see the returns and how long you want to be tied to the investment. Another important consideration is how much effort there will be on your part, as some investments allow you to invest and take a back seat, whilst others will require a lot more time and input.

Companies such as Advantage Investment offer high return on holiday let investments. Luxury lodge resorts are particularly profitable, requiring minimal effort and offering a clear exit plan after five years with 50% guaranteed ROI. You can find out more about their luxury lodge investments on their website [w]
advantageinvestment.co.uk/property/landal-barnsoul

Guest Writer

Digital Issues, Market Pulse, November - December 2021

10 November 2021

Market Pulse Round Up November/December 2021

Rental prices soar in rural locations

Rental prices have risen by 11% between the start of the pandemic and October 2021, a new rental index report by Rightmove has found. This brings the average cost of a rental in the UK to £1,041 per calendar month – compared to £940 in February 2020. In rural areas, which have become increasingly sought-after in light of the pandemic by tenants seeking additional space, the cost has risen by £123. Conversely, in urban areas rents have risen by an additional £25 per month.

Urban rentals set to increase next year

Analysts believe that with more people returning to work – at least in a hybrid fashion – that urban rental demand will start to see an increase. But they say this isn’t going to happen overnight and, in fact, there may not be any major changes until next year.

A new report by Savills says they’re already noticed an upturn in city-centre living, with Manchester and Birmingham, in particular, witnessing an increase in those commuting not far behind pre-pandemic levels. London, however, remains slow to change, with just 66% of travel returning (compared to figures in the high 80s and 90s for the other two cities).

A spokesman said, “the office isn’t going to go away – residents will still value additional space, but it is likely that they will also desire to be within reasonable commuting distance of city centres for the days they choose to work there.”

House prices up 8% over year in the “race for space”

September saw house prices registering the strongest monthly rise for 14 years, pushing the average cost of a home to a record high and reversing a three-month decline in annual growth. Across the year as a whole, the Office for National Statistics says values have risen by 8%.

Halifax, one of the country’s biggest mortgage lenders, said in September the average cost of a home rose by 1.7%, or £4,425, to £267,587. The previous peak was £263,162 recorded in August. Prices are up by more than £18,000 since last September and close to £28,000 higher than last June when the housing market reopened after the first Covid lockdown.

Russell Galley, the managing director of Halifax, feels a number of factors are affecting house prices. “The ‘race for space’ as people changed their preferences and lifestyle choices undoubtedly had a major impact,” said Galley. “Looking at price changes over the past year, prices for flats are up just 6.1%, compared with 8.9% for semi-detached properties and 8.8% for detached homes.”

Regional variations continue

Wales continues to experience the strongest house price inflation of any UK nation or region, climbing 11.5% in September to an average of £194,286. Scotland remains ahead of the national average at 8.3%, with an average house price of £188,525, while the market in Northern Ireland rose 9.3% to £166,299. The southwest remains the hotspot in England, reporting 9.7% growth in September to an average of £276,226, as the trend towards more rural living in a more flexible and remote working environment continues.

Greater London remains the nation’s growth laggard with house prices rising just 1%, albeit with the highest average price in the UK at £510,515. “The strength of price rises in Scotland and Wales is understandable given changing buyer priorities,” said John Eastgate, the managing director of property finance at Shawbrook Bank. “However, the lure of big cities, notably London, will inevitably return, and they may represent good value right now for both homeowners and investors.”

Meanwhile, homeowners in the capital are still finding that it’s taking longer to sell their properties than in other parts of the country with sellers waiting almost three months (58 days) to find a buyer compared with an average of 33 days in the southwest of England. In London homes are taking ten days longer to sell than the same period last year. However, director of estate agents Benham and Reeves, Marc von Grundherr, said that whilst London had so far been fairly “muted”, a return to the workplace and foreign buyers coming back will provide the capital with a boost. “Don’t be surprised to see London regain the property price growth top spot before the year is out.”

House prices to remain high as demand outstrips supply

A drop in the number of homes being put up for sale looks set to keep driving up prices, according to the latest Royal Institution of Chartered Surveyors (RICS) survey. The UK property market appears to be strong on the surface but Tom Bill, head of UK residential research at Knight Frank, believes that “there is an underlying weakness that needs to be resolved.”

He continued: “The imbalance between supply and demand is unsustainable and in many cases arises because prospective sellers are unable to find anywhere to buy themselves, creating a vicious circle of low supply. In some cases, they cannot even find properties to rent as a short-term option.

“There were 13 new buyers for every property listed in the UK in September. Over the last five years, the only time demand has exceeded supply to a greater extent was in January 2020, the first month of the short-lived Boris bounce.

“The imbalance is keeping upwards pressure on prices but, like many other parts of the economy, needs to resolve itself over the next six months to ensure greater stability in the UK housing market in 2022.”

Age of first-time buyers increases

Not surprisingly, this ever-increasing rise in property prices will be matched with a corresponding rise in the age of first-time buyers, says the study. At the moment the average age across the UK is 33 and in London it’s 35. In ten years, the study predicts the average age will be 34 and 37 respectively. Compare those figures to 2006, when the average age in the UK for first-time buyers was 30 and 32 in the capital.

“House prices continue to cause affordability headaches for the majority of hopeful first-time buyers,” said Nigel Purves, the chief executive of Wayhome. “Millions will be priced out of desired areas and forced into renting for far longer than they initially planned.”

Guest Writer

Market Pulse

8 November 2021

Housing Market Still Strong as Festival Season Approaches

As house prices reached an average of £250,000 last month, according to the Nationwide, it’s left analysts wondering just when exactly the cooling off period is going to begin.

Certainly, even Christmas approaching hasn’t put that many buyers off. Knight Frank’s research though may be worth a look at. They’ve found that come April 2022 there will be more housing supply. That, combined with increased mortgage interest rates should slow things down a bit, they suggest. And yes, the Bank of England did hold their base rate last week, but that hasn’t stopped lenders from already beginning to increase mortgage interest rates.

Lenders already increasing interest rates

HSBC, NatWest and Nationwide increased rates while the Skipton Building Society removed all of its three-year fixed rates the following day. The number of sub-one per cent fixed rate deals with a 40 per cent deposit are falling rapidly: from 131 to 116 within the past two weeks, and more going daily.

Last week Leeds Building Society put up rates on mortgages at loan-to-value ratios of 80 and 85 per cent. Having said that, the majority of the interest rises aren’t huge. High street lender Barclays raised its two years fixed rate last week from 0.86 per cent to 0.91 per cent.

Bank expected to raise rates to 1 per cent by end 2020

Meanwhile, the Bank of England does expect to raise its base rate from 0.1 percent by a further per cent – but not until the end of 2022. And that’s according to the Bank’s own Inflation report. It also means that for a typical borrower ie £150,000 over 20 years, it means an additional mortgage payment of £71 a month.

Pandemic preferences and price rises

Meanwhile, the desire for more space sees new entrants into Knight Frank’s list of the most popular locations to move to. Leeds, for instance, made the top 10 for the first time, while Cornwall nudged Richmond-Upon-Thames down a peg. When it comes to property price rises, homeowners in both Liverpool and The Wirral saw the value of their properties increase by 21.6 per cent during the pandemic.

For those still keen to sell, James Cleland, head of Knight Frank’s Country business, recommends January as the time to put their property on the market. Buyers, will still be around, he insists and there won’t be the supply of property that’s anticipated come the spring.

Zoopla’s Head of Research Richard Donnell said the best place to sell right now, according to the portal’s research, is in Wellingborough and Nuneaton.

“It’s less than two weeks for a property to go from on the market to under offer,” he said. “But it’s fair to say that all regions across the UK have got a time to sell of less than a month.”

Donnell also said the market was very strong in both the Midlands and the North of England. That’s because in both areas housing remains affordable and “there’s almost very few limits on how much people can bid up the cost of housing.”

Jill Stevenson

General, Market Pulse

20 October 2021

14-year Monthly Record for House Price Rises

House prices in England hit a new monthly record in September as they increased in value by 1.7% between August and last month. And that was the biggest monthly rise since just before the recession in 2007.

The figures were from the latest Halifax Price Index and were a reversal of the previous three months where property values had fallen month on month.

Property up £18,000 year-on-year in September

The 1.7% rise worked out at £4,425 added to the price of the average home in England, bringing that figure to £267,587 for September. It’s a jump of £18,000 on September 2020 when the property market reopened after the summer lockdown.

Other statistics, produced by the lender, show that the price of apartments have risen by 6.1% whereas both semi-detached homes and homes have gone up more – by 8.9% and 8.8% respectively.

In terms of other areas of the UK, property inflation in Wales outdid all other areas, coming in at 11.5% last month. In Northern Ireland the figure was 9.3% and in Scotland prices rose by 8.3%.

South-west is England property price champ

In England, house price inflation is highest in the south-west, at 9.7%, bringing the cost of the average property there to £276,226. London, though, continues to lag behind the rest of the UK. Prices aren’t falling there anymore, but they aren’t rising as fast as the rest of the country at just 1% between August and September.

Estate agents say they are still more buyers than there are properties on the market. This brings property analysts to believe that prices, and the property market, will remain stable – despite the possibility of tax rises and inflation in the near future.

But Tom Bill, head of UK residential research at Knight Frank, refers to this property shortage as ‘an underlying weakness’ in the market.

He said: “The imbalance between supply and demand is unsustainable and, in many cases, arises because prospective sellers are unable to find anywhere to buy themselves, creating a vicious circle of low supply. In some cases, they cannot even find properties to rent as a short-term option.”

Citing around 13 new buyers for every property listed in the UK last month, he said the last time there was such as short supply of properties was back at the beginning of 2020. In a bid to encourage house buyers now that the Stamp Duty Holiday has come to an end, mortgage lending is loosening too.

More mortgages coming onto the market

Certainly, the threat of rising inflation doesn’t seem to be having any effect on them. They offered lower interest rates in the third quarter of the year than the previous one. House deposits were lower too.

There is currently, what many in the industry would describe as a ‘mortgage war,’ taking place. Many High Street and online lenders are even vowing to introduce more mortgages until the end of next month. Most of the lending recently has been for re-mortgaging, rather than from those buying or first-time buyers (many of whom are still complaining of being priced-out of the market).

According to the Bank of England’s credit conditions survey mortgage lenders were encouraged by the improving economic outlook and rising house prices. Around 18% of them said they anticipated a further easing of credit conditions in the fourth quarter too.

Even the prospect of what many believe will be a rise in the Bank of England’s base rate from 0.1% to 0.25%, around December, isn’t putting lenders off. Analysts say they will simply absorb the cost so that low interest mortgage deals will continue well into 2023.

Jill Stevenson

Market Pulse

11 October 2021

Rental Prices in Rural Areas Soar During Pandemic

Rental prices have risen by 11% between the start of the pandemic and today, a new rental index report by Rightmove has found.

It brings the average cost of a rental in the UK to £1,041 per calendar month – compared to £940 in February 2020. In rural areas, which became far more sought-after during the pandemic for the additional space and distancing, the cost has risen by £123. In the less popular urban areas it’s gone up by far less at just £25 per month.

Demand for rural rentals well outstrips supply

The statistics also show there were 45% less rentals available in the suburbs and 61% fewer in rural areas since the start of the pandemic. In fact, 64% of all rental properties available were for urban areas (that was nearly half – 48% more – than pre-pandemic. Those available in the suburbs dropped 13% to 33%, while in rural areas the drop was from 6% to 3%.

The property portal based its analysis on more than 300,000 rental listings and stock for the period February 2020 and August 2021.

No ‘real change’ until next year say analysts

Analysts believe that with more people returning to work – at least in a hybrid fashion – that urban rental demand will increase again. But they say this isn’t going to happen overnight and, in fact, there may not be any major changes until next year.

A new report by Savills says they’re already noticed an upturn in city centre living, with Manchester and Birmingham, in particular, witnessing travel that is almost back to pre-pandemic levels. London, however, remains slow to change, with just 66% of travel returning (compared to figures in the high 80s and 90s for the two more northern cities.

A spokesman said “the office isn’t going to go away” and added: “Residents will still value additional space, but it is likely that they will also desire to be within reasonable commuting distance of city centres for the days they choose to work there.”

Mortgage rates for first time buyers falling

Meanwhile, buy to let landlords and first-time buyers, or those looking to remortgage will be interested to learn that mortgage interest rates are still falling. The rate for new mortgages in August, for instance, was 1.82% (a drop of 1 basis point since before the pandemic). For everyone else the rate remains at 2.05% and which, in itself, is a record low.

The low mortgage interest rate has helped propel the property market this year, despite soaring property costs. Mortgage approvals are still higher than before the pandemic, with lenders giving the go-ahead to 74,500 mortgages in August.

House prices up 8% over year

The average house may have fallen by £10,000 between June and July, figures for the Office for National Statistics show, but values have risen by 8% over the past year.

Upmarket estate agents Hamptons predict a ‘second wave of demand’ for house sales where house prices will increase to around 3.5% a year between 2022 and 2024.

Jill Stevenson

Market Pulse

24 September 2021

London Lagging Behind Property Sales in Northern Parts

Home owners in London are taking longer to sell than anywhere else in the UK, according to the latest Rightmove House Index.

It means those who are in two minds about selling right now would be better off waiting, says new research which forecasts a boost in house prices over the next decade.

But back to slow selling in the capital – owners there are waiting almost three months (58 days) to find a buyer. In Scotland it’s taking less than one month (24 days) and in the South West a month (33 days). In London it’s 10 days slower than the same period last year.

Average UK asking price up 5.8%

The average property price increase over 12 months in London is just 0.8%, bringing the cost to £638,285. In the UK as a whole the price rise is 5.8%, with the typical seller asking for £338,462.

Demand too is up – almost double the pre-pandemic figure. But more properties are coming to market now that summer is passed and the quieter season of autumn in settling in. This means prices may start to stabilise.

Sam Mitchell, of online estate agent Strike said: “The property market has proved its resilience yet again, with transactions climbing 32% in August.

“We’re witnessing another flurry of activity as buyers and sellers rush to complete before the final stamp duty savings are removed this month, with properties valued under £250,000 still benefiting from the relief. But the strength of the UK housing market goes well beyond fluctuations around changing tax policies, and we see little sign of it slowing down in the months to come despite the stamp duty holiday finally ending.”

Meanwhile, according to new research by Compare the Market, hold on to your home at the moment. Sell in a decade and make around one third of its current value, according to the study.

Using historic ONS data and future predictions, analysts say a property currently valued at £248,496 will probably be worth £286,107 in five years, by 2031 it’s market price will be around £323,718.

But, for prospective landlords, there is also the issue of rental yields. At the moment the north west has some of the highest. But the north east, Yorkshire and the Midlands aren’t too far behind in this regard either.

And, in terms of capital increases they are looking good too. Property prices in Yorkshire are expected to rise by 28.6% over the next decade. In the north east, they are expected to increase by 28.4%. The biggest rises, according to analysts, are expected to be in both the East and West Midlands property market, with an increase in property prices of 29% by 2031.

Age of first-time buyers increase

Not surprisingly, this ever-increasing rise in property prices will be matched with a corresponding rise in the age of first-time buyers, say the study. At the moment the average age across the UK is 33. In London it’s 35. That’s expected to go up to 34 and 37 respectively in 10 years’ time.

Compare those figures to 2006 when the average age in the UK for first-time buyers was 30 and 32 in the Capital.

Jill Stevenson

Digital Issues, Market Pulse, September - October 2021

9 September 2021

Market Pulse Round Up September/October 2021

Average rents increase by 6.6%

The latest report by the HomeLet Rental Index shows the average rent increased by 2.2% between June and July, with the figure now sitting at £1,029 pcm. That’s a record high and the second month in a row where the sum has exceeded £1,000 per month. It’s also a jump of 6.6% in a year. Zoopla’s Rental Market Report also shows it’s taking 16 days per property to rent out.

The biggest annual increases were in the southwest with annual growth of 12.9%. Next was Wales with a 11.8% rise, while the East Midlands was third with 10.8% rental growth. Rents in London had a 2.1% annual increase, bringing the average rent in the capital to a monthly £1,645.

The increase is down to demand far outstripping supply. The build-to-rent sector – offering upmarket amenities and concierge services – is now beginning to fill some of that need, but there remain large gaps in supply.

Buy-to-let landlords “growing in confidence”

The sector may have been hit by a raft of tough legislation in recent years, but the BTL market is still strong. And it’s going from strength to strength if a recent report by the National Residential Landlord Association’s quarterly Landlord Confidence Index is anything to go by.

This is backed up by a report commissioned by The Deposit Protection Service which found that 34% of existing UK landlords had – or were about to – increase their property portfolio. All said they were encouraged by recent price growth.

House sales fall by 62%

As predicted, following the end of the most generous Stamp Duty Holiday offering from the government at the end of June, house sales fell in July – and the slump was pretty big. Only 82,110 properties swapped owners in July, compared with 213,370 the previous month.

The figure, produced by HM Revenue and Customs in late August, shows a dip of 62% between June and July. The number of properties was still 1.8% higher than in July last year but, at the time, buyers, sellers and estate agents were still struggling with the lockdown demands of the pandemic.

Property analysts are predicting a rise in sales again in September – just in time for the end of the government’s current Stamp Duty tax-free saving on the first £250,000 of a property in England and Northern Ireland.

House prices begin to drop

Not only has the reduced Stamp Duty tax relief impacted on the number of sales, but it has also led to a drop in prices. In mid-August we saw house prices fall for the first time this year following the surge brought about by the pandemic. Rightmove’s latest house price index revealed the average property was valued at £1,000 less in August when compared with July, a drop of 0.3%, whilst Nationwide’s research demonstrated a 0.5% drop over the same period.

The biggest property value falls were, not surprisingly, in four-bedroom homes (the type of property that benefitted the most from the more general £500,000 Stamp Duty Tax break).

Despite fluctuations in house prices, historical data shows that prices will ultimately increase over time. Indeed, records by the Office for National Statistics show the value of the average house in the UK has grown by more than 20% over the past five years (from June 2016 to March 2021). Some analysts believe that by 2060 house prices will be double what they are today, meaning the average house will cost a pretty astonishing £422,723.

Current buying trends set to continue

But the market is expected to continue to tick over post-October and beyond, even without a Stamp Duty Holiday, as the impact of the pandemic forced many individuals to rethink their lifestyles. As Sarah Coles, property analyst at Hargreaves Lansdown, put it: “[The Stamp Duty Holiday] didn’t create demand from nowhere. There was already a crowd of people ready to buy because of changes in how we wanted to live, and pent-up demand from the closure of the market during the first lockdown. The tax break just opened a window … through which this crowd of people tried to squeeze.”

Meanwhile – and perhaps not surprisingly given current buying trends – a Zoopla analysis showed that of 15 locations where demand for property was falling, ten of these were in London. Looking at the period 5 April to 25 July, the analysis discovered that in the capital’s SW and E postcodes, demand fell by 26.5% compared with the previous four months.

Demand for property in areas such as Shoreditch and the City is poor, with many people continuing to work from home for the foreseeable future. In other areas of London there are problems with cladding – lenders aren’t willing to give mortgages unless buyers present an EWS1 external wall safety certificate.

But there is good news for luxury inner London homes in the likes of Mayfair and Knightsbridge, thanks to the return of international buyers looking for a second home in the capital.

Houses 8m2 smaller today than 40 years ago

An interesting report by ElectricalDirect in August showed how, despite soaring house prices over recent decades, the actual size (floor space) in property has shrunk. Where in 1980 you could count on having around 75m2 for instance, by last year you were looking at your average property measuring 67m2.

And while we’re getting less floor space for our money, the average cost of UK property has increased by a staggering 171% since 1980: back then you could expect to pay £18,377 for your own home, today it’s more likely to be around £247,898.

However, there are some parts of the country where house sizes have increased. In Cambridge, buyers have 10% more space to move around in compared with previous years in the city, but the downside is that they’ll pay for it. House prices there have increased by 57% since 2011. You’ll get more value for money in the seaside resort of Blackpool where house size has increased by 3% and prices are only expected to rise to an average of £138,680 by 2025.

A shift in commercial property preferences post-pandemic

Commercial property investors and landlords are repositioning their portfolios by selling up retail and office space and opting for student campuses and warehousing instead. That’s because, in 2010, retail outlets and offices made up 70% of commercial property sales. Today it’s only around 35%, according to Real Capital Analytics.

Global investment firm Blackstone is just one of many companies who have gone down this route in recent months, having seen how the pandemic has altered the commercial and residential property outlook. In commercial property terms, it’s all about students – both in relation to accommodation and research and development facilities (ie: high-tech life sciences campuses). Warehouses are also faring well with the increase in logistics companies.

The “golden triangle”: Oxford, Cambridge and London

Earlier this year a 40% stake in Magdalen College’s Oxford Science Park was offered at £100 million – more than five times what the college paid just five years previous. The “sweet spot”, according to investors in the “golden triangle” between Oxford, Cambridge and London. Around £2.4bn was invested in life sciences property there last year and there’s still room for growth, say analysts. Most big investors want to get in from the off though, saying the big money is in building new campuses and labs.

Warehouse shares up 16% post-pandemic

An increase in online shopping – particularly during the pandemic – has led to a huge demand for warehouse space by distribution companies. The shares of warehouse developer Segro went up 16% recently. Office supplier British Land and Land Securities have lost around 30% of their share price since the pandemic, whilst shares for shopping centre supremo Hammerson are down by 75%.

Guest Writer

August 2020, General, Market Pulse

26 August 2021

Fewer Property Sales and City Rental Prices Down

As predicted, house sales fell in July – in line with the end of the most generous government Stamp Duty Holiday offering.

And the slump was pretty big. Only 82,110 properties swapped owners in July, compared to 213,370 the previous month.

The figure, produced by HM Revenue and Customs this week, shows a dip of 62%. It was 1.8% higher than in July last year but then, at the time, buyers, sellers and estate agents were still struggling with the lockdown demands of the pandemic.

Stamp Duty holiday like ‘opening a window’

But the market is still expected to continue to tick over post-October and beyond in the absence of the Stamp Duty Holiday – thanks to the pandemic effect forcing many individuals to rethink their lifestyles. As Sarah Coles, property analysts at Hargreaves Lansdown, so succinctly put it:

[The Stamp Duty Holiday] didn’t create demand from nowhere. There was already a crowd of people ready to buy because of changes in how we wanted to live, and pent-up demand from the closure of the market during the first lockdown. The tax break just opened a window … through which this crowd of people tried to squeeze.”

The London property rollercoaster

Meanwhile, a Zoople analysis showed that on 15 locations where demand for property was falling, 10 of these were in London. Looking at the period April 5 to July 25, it discovered that in the capital’s SW and E postcodes, demand fell by more than a quarter (26.5%) compared to the previous four months.

Demand for property in areas such as Shoreditch and the City is poor, with many people continuing to work from home for the foreseeable future.

In other areas of London there is problems with cladding – lenders aren’t willing to give mortgages unless buyers present an EWS1 external wall safety certificate.

But there is good news for luxury inner London homes in the likes of Mayfair and Knightsbridge, thanks to the return of international buyers looking for a second home in the capital.

North East has biggest drop in demand

In Newcastle upon Tyne and Cleveland and Teesside, demand fell by 18.7% and 18.5% respectively. However, some locations in the North East enjoyed a 15% rise to June so figures were normalising. And, although demand in Darlington fell 27.1%, it was still historically high – 53% above the average in the same period in 2019.

Cities suffering slump in rental prices

When it comes to lettings, rental prices are rising fastest in the north east and south west. Both due to demand and supplies issues. Outside London, tenants are now paying 3% more for a rental, bringing the average cost to £780 per month. Zoopla’s Rental Market Report also shows it’s taking 16 days per property to rent out.

In the capital rents have fallen by 9.9% year-on-year, making it one of more affordable times to move there. In Leeds monthly rental prices have fallen by 0.7%. In Manchester they’re down 1.1% in Manchester, while landlords in Edinburgh are receiving 3.2% less than in 2019.

Jill Stevenson

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