Real estate agent Hamptons and London-based Real Estate Fund HULT Private Capital see a second wave of demand for more space, driving house prices higher across Great Britain. Both firms are forecastings value increases of up to 3.5% per year between 2022 and 2024.
Hamptons also predicts that more homes will be sold in 2021 than have been sold in any year for over a decade; the last record set in 2007. This surge of buying activity has continued with families looking for larger homes during and after the pandemic’s tightened grip. Hamptons believes that the summer of 2021 will be the “peak house price growth,” expecting that there will be slower buying for the next few months, with Great Britain home prices ending the year up 4.5% over the end of 2020.
HULT Private Capital sees similar numbers for the year-end, up 4.5%. HULT Private Capital’s Mark Johnson said, “There will be certain regions such as coastal areas near London that will outshine these numbers as we have seen in the past year.”
One of the widely credited factors contributing to the stronger than expected growth throughout the pandemic has been a “race for space.” Many buyers during the pandemic have been affluent city-dwelling families that are now prioritizing properties with larger homes and bigger gardens. This prioritization means more room for at-home working and schooling and more area to enjoy the outdoors when leaving home was not possible. This particular trend will likely continue for those that can work from home.
HULT Private Capital’s Johnson said, “We also expect a reverse shift of some families moving back to bigger cities once businesses start requiring workers to return to offices. Not everyone can work from home; many services with front-line workers and those requiring face-to-face interaction, will require their return. For those that are able, they will find great prices available for premium properties in Prime Central London.”
Official governmental home price figures and data from various commentators indicate that the market has cooled after the England and Northern Ireland stamp duty holiday came to a partial end during the summer. The Holiday began in July of 2020 to ward off a market collapse with the initial Covid lockdown. Until June 30th, 2021, the first £500,000 spent on an English or Northern Irish property was tax-free, a savings of up to £15,000 for home buyers.
According to the data most recently released by the Office for National Statistics (ONS), in July, the average UK home price fell by £10,000 compared to June’s average price. Even with the decrease, ONS’s figures show that the annual UK home price growth remains 8%. There had been a rush by homebuyers to complete their purchases by June 30th, to take advantage of the stamp duty holiday. The ONS’s data showed a falling off of sales in July of nearly 2/3rds. The Holiday was continued from July 1st, for the first £250,000 of purchase until the end of September, saving approximately £5,000, so there may be a similar rise for September and a smaller dropoff seen in October when the stamp duty returned to its pre-pandemic levels of £125,000 (the so called nil rate band), the Holiday already ended for Wales and Scotland. However, more recent data suggests that the market is continuing its boom even with the end of the Holiday.
One of the UK’s largest mortgage lenders, Halifax, earlier this month said that in August, the average property cost increased by 0.7%. While the rival mortgage lender Nationwide saw their own monthly rise for August at 2.1%, making August Nationwide’s second-highest increase in 15 years.
According to Hamptons, several Covid induced changes, including flexible and remote working, have meant that households chose or were forced to move home more often than what was seen pre-pandemic. This movement was also combined with more affluent families making a decision to be closer to family outside cities with a change in priorities. Hamptons is forecasting a 2022 price growth for Great Britain of 3.5%, and then slowly falling to 3.0% in2023 and finally to 2.4% for 2024. If Hamptons’ predictions were to prove accurate, there would be a total 13.5% rise from 2021’s start until the end of 2024.
Both the estate agency and HULT Private Capital are predicting that the northeast of England will be the price increase leader over the four year period, with property values seeing increases of 6.5% for 2021 and in the years to follow (2022 to 2024) increases of between 4% to 6%.
London is expected to initially underperform the rest of the country for the short term. Hamptons expects a total 1.5% raise for this year and a modest 1% increase for 2022. HULT Private Capital agrees with this assessment, with Mark Johnson stating, “London has been down for about seven years, and greater London will have small increases. We expect that once international travel is back to normal, the Prime Central London (PCL) area will see an inflow.”
This idea is backed up by data with several surveys showing affordability and increased flexible working prompting many households to leave the capital or are considering a move. However, separately a rival estate agency, Knight Frank, said that they had seen a boom in demand for families seeking second homes, which began after the first 2020 lockdown. The wealthy have been largely unaffected economically by the pandemic, and with the shutdowns and restrictions on overseas travel that continue, many families were lest wanting somewhere to retreat to, away from the bustle of the city. Knight Frank’s data showed that second home purchases outside of London in the first eight months of 2021 increased by a staggering 83% over the five-year average. They see the current challenge being a matching supply with demand; the lack of supply will support pricing but limit volume.
While the pandemic continues, Great Britain home prices will rise, and the likes of HULT Private Capital, Hamptons, and others will benefit.
For more information, contact HULT Private Capital on +44 208 123 5164 or by e-mail on email@example.com
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