The post-lockdown rebound at the top end of the UK’s housing market looks set to maintain momentum beyond the summer, with high levels of buyer and seller commitment to moving both in the short and longer term, according to a major new survey from real estate adviser Savills.
Conducted in mid-August, the survey of 1,400 registered buyers and sellers revealed greater urgency in the desire to move than an earlier survey mid-lockdown. Demand is driven by a desire for the right home to suit new lifestyle expectations, with more space the key driver, suggesting that Covid-19 will leave a lasting impression on the market.
Demand intensified over summer, but pricing remains sensitive
Covid-19 has increased the desire to move home, the Savills survey shows. A net balance of 21% of respondents are now more committed to a move within the year, up from just 9% in April but below the 32% net balance recorded in June. In London, a net balance of 25% of respondents want to move within the year.
“Since the housing markets began reopening on 13th May, the top end has rebounded particularly strongly, as it is underpinned by equity,” says Frances Clacy, an analyst at Savills. “The stamp duty holiday is providing additional impetus, and when combined with the experience of lockdown, is bringing forward purchases that may otherwise have happened in two or more years’ time.”
Despite high demand levels, the market remains price sensitive, the Savills survey suggests. 56% of respondents are prepared for house prices to fall in the next year, but over two-thirds anticipate price increases in the next five years and 47% think they will rise by more than +5%.
“The uncertain economic backdrop and the finishing of the furlough scheme at the end of October, means short term price expectations remain cautious, though buyers are willing to take a longer term view on pricing,” says Clacy. “That is underpinning activity across the prime markets.”
Garden, garden, garden – the new location, location, location, especially in London
Buyer determination to avoid compromise on lifestyle factors has intensified over the summer. 62% said that the amount of garden or outside space had become more important, up from 49% in the firm’s April survey, and rising to 71% for those in London. Over three quarters of those with pre-school or school aged children now place more importance on the amount of outside space available.
“Many Londoners are looking to upsize to leafier prime areas such as Chiswick, Wimbledon and Wandsworth where viewing levels in the past four weeks have been up to two and half times higher than they were in the 10 weeks pre-lockdown,” says Clacy.
“This has translated into competition for the best properties and peak prices being paid for large family homes. We already know that a home with a good garden can come with a price premium of up to 16% in parts of London and we could see that premium rise further still.”
Where’s the (home) office?
Home working looks set to become a long term phenomenon. Over half (56%) of respondents said they are more inclined to work from home more regularly, up from 49% in April, including the vast majority of those working in finance and insurance services (83%) or the media, information, tech and science sectors (81%). Two-thirds of those anticipating to work from home more think that they will do so for three or more days a week.
This translates into a desire for a separate space to work from home, which 57% state is now more important than pre-lockdown, rising to 70% in London, 79% of those with children, and 84% amongst the under 40s, who are likely in smaller properties that won’t meet new lifestyle requirements.
Call of the country intensifies
This desire for more space and increased working from home has also boosted the appeal of a more rural lifestyle. In this latest survey, 48% of respondents said a village location was more attractive, up from 39% in April. Similarly, 53% find the countryside more appealing, higher than the 41% reported in April.
Savills saw the strongest July of activity in the prime regional and country house markets since 2007, while in London, which was slower to pick up, the same search for space has led to surprisingly strong levels of demand from upsizers.
“Many predicted that the immediate shift in priorities seen in April was just a response to lockdown, and would be short-lived, but this latest survey highlights greater commitment from people to make real changes,” notes Clacy.
“But, while sales subject to contract for properties worth £1 million or more may have doubled, and reports of competitive bidding become widespread, buyers are keeping their feet on the ground in terms of what they’re willing to pay in the current economic climate.
“Keeping buyer and seller expectations on pricing aligned will be key to maintaining the summer momentum through the autumn and beyond.”