Homebuyer demand leapt 49% around Christmas and New Year
Zoopla’s monthly house price index confirmed the demand for property soared by 49% in the four weeks to the 16 January, long after the end of the stamp duty holiday, with the need for three-bed houses outside London powering the trend, being four times higher than the five-year average.
The most sought-after areas included Thurrock in the London commuter belt, Barking and Dagenham zones of East London, Glasgow and suburban Birmingham. The pandemic, Zoopla said, continued to shape buyers’ needs.
In a snapshot of London’s high-end market, the Coutts London Prime Property Index found that demand for “super prime” properties in the capital set a record last year. It said sales of homes worth at least £10m rose by 90% in 2021.
‘Safe as houses’
Peter Flavel, chief executive of Coutts, said: “The phrase ‘safe as houses’ has never rung more true as high-end buyers are keen to take advantage of bricks and mortar investments across the capital.
“For many investors these prime and super prime properties provide the opportunity to put funds into assets that offer the space they need as hybrid living continues to influence lifestyle choices. For others it’s about capitalising on the opportunity to scoop up a home in a central London postcode as prices are lower than before.”
Coutts, a private bank and wealth manager, said buyers apparently weren’t put off by the 11% rise in the prices of multi-million-pound homes, with sales nearly doubling from 56 in 2020 to 106 last year. Sales were especially busy in Kensington, Notting Hill and Holland Park as buyers sought a patch of green during the pandemic.
Grainne Gilmore, head of research at Zoopla, said: “Even after nearly two years, the pandemic-led ‘search for space’ is one of the factors creating record demand for homes.” The market was also being lifted “by office-based workers re-thinking where and how they are living amid more hybrid working models”, she said, although “in some cases, as offices re-open, some demand is flowing back into city centres.”
Imbalance is easing
She also cited “the highest rate of demand for flats in the capital than at any time since the end of the first lockdown” and said that while the number of homes available for sale was lower than typical levels, “there are signs that the imbalance between demand and supply is starting to ease. As more potential sellers are able to find a home to move to, this will spur more supply in the weeks and months to come.”
Supply showed a small overall increase with the total stock of homes for sale 44% below the five-year average, a slight improvement over 47% down a year earlier. Zoopla said that some buyers may be keen to acquire a home loan before any expected increase by the Bank of England in base interest rates.
Emma Cox, sales director at Shawbrook Bank, said that “locking in a competitive, fixed rate, mortgage may never have been a smarter decision than now.”
Sellers enjoyed an annual price growth of 7.4% in the average price of a house in December, according to Zoopla, one of the highest rates since 2014.
Desire for green
Tom Bill, head of UK residential research at Knight Frank, said: “Demand has been unrelenting since the UK property market re-opened in May 2020. Cheap finance, high volumes of accumulated savings and a desire for more space and greenery have fuelled activity, none of which will disappear overnight.
“Apartments are also moving back onto the radar of buyers as lockdown restrictions are lifted, which has created a temporary sweet-spot of extremely high demand.”
Help from workers at home
Demand for flats outside London was seen to be rising for the first time in five years, thanks in part to working from home. Within the capital, demand for flats reached the highest level in 19 months, with Zoopla reporting that agents saw an influx of overseas buyers from Hong Kong, aided by changes in visa rules.
Housing demand “continues to be skewed and is testing even the most ambitious of buyers”, Cox said. “Bidding wars, cash buyers and foreign investment are dominating a market that already had its fair share of challenges. In fact, the current reality makes the government’s Levelling Up agenda even more important.”
However, the uptick in demand, Cox said, “does fall in favour of landlords and property investors. If they are in a position to add to their portfolio in the newest hotspots, acting now ahead of any further interest rate rises is wise.”
Zoopla also reported that the average housing price in the UK had risen by December 2021 to £242,000 from £216,500 a year earlier. By category, costs for terraced, semi-detached and detached homes averaged £289,500 – up 8.8% – while flats averaged £175,700 – up 2.2% – year-on-year.