Our in-house specialists have taken a closer look into Savills’ recent prime regional houses outlook. This report presents various market trends that have emerged from the first half of 2021 and uses this data to provide a regional forecast for future growth.
There are five key themes for discussion in this article, these include the market’s quarterly performance; the ‘back to work’ urban revival; the continued popularity for country living; the demand for coastal properties; and the outlook for prices and a forecast based on the outlook for prices and buyer activity.
The first point in the article confirms the continued momentum of the property market as this quarter’s 2.2% average house price increase amounts to the highest quarterly growth since 2010. The rationale for this surge may be credit to the extension of the stamp-duty holiday boosted by the lockdown conditions increasing savings prospects and affordability for many. On the opposite end of the spectrum, the article reports strong activity in the prime market with the agreed sales of properties worth £1m or more having risen by 93% in comparison to the same periods of in 2017, 2018 and 2019. The challenge highlighted by Savills is the sustainability of this growth with a lack of available property to meet this continued demand. To elaborate on this, property development opportunities within London’s prime central market are becoming scarcer. The resilience of the market, combined with the recent investor incentives such as the relaxation to planning permissions for the conversion of commercial buildings for residential use, continues to attract overseas investors. According to another source, Coutts, the number of properties sold in this quarter compared to the previous year indicates a 27.3% increase in activity. Furthermore, the exclusive neighbourhood of Chelsea recorded a further 39.3% annual increase in sales in the first quarter of 2021. The continued demand for London’s prime central market, as reflected in both reports, is indicative of the urban revival mentioned in the next part of the report.
The easing of restrictions has caused many companies to consider their ‘back to work’ strategy as many businesses look towards the future of office working. Reportedly, this initiative has caused an appreciation to the value of property located in prime regional towns and cities by an average of 2.3% in the first 3 weeks of 2021. Savills suggest that the timing of this increase in demand indicates a longing for a more vibrant urban lifestyle as the removal of restrictions continues. Similarly, the time that families have endured separation during the multiple periods of lockdown may also be a cause of the sudden desire to relocate. The report also indicates that 48% of people named proximity to family as one of their top two reasons for relocating.
The Savills figures also show a sustained demand for the idyllic countryside and rural lifestyle, with country houses priced above £2m maintaining their status as the sector’s top performers showing a 2.9% quarterly growth and an 8.8% annual growth. The latter of which is the highest figure in over a decade. Initially driven by the confining social restrictions, the continued demand may be due to the shuffle in priorities and the health concerns attached to international travel. Areas of natural beauty are experiencing a renewed demand and as the report comments, this trend is likely to continue whilst there is an insufficient supply of the properties best placed to fulfil demand. Similar to the previous, the reported increase in coastal living from commuters and second home buyers has seen prime prices rise by 6.8% annually.
The final part of the report considers the emerging and sustained market activity discussed above and creates a forecast for the next five years. As can be seen in this table, the future for property in PCL is bright.
Table taken from Savills Research, accessible here: https://www.savills.co.uk/research_articles/229130/312850-0/prime-regional-house-prices—q1-2021#Outlook