UK TOWN & CITY INSIGHT
Chris Druce Senior Research Analyst, Knight Frank Research
BEST OF BOTH WORLDS
Urban residential property markets are in a strong position as the UK moves into the post-pandemic period.
While the ‘escape to the country’ trend has dominated the last year, there are signs that a resurgence in town and regional city living is underway. The 15 locations featured in this publication offer the best of both worlds for many buyers. Namely, the space, greenery and access to the countryside that has fuelled demand since the pandemic but together with amenities and services.
The number of offers accepted from buyers moving from urban to rural locations peaked in January 2021, according to Knight Frank data. While in March 2020, the month of the first lockdown, just 9% of all offers accepted were from those moving from urban to rural locations, the figure was 28% in January 2021. It has been in decline since and stood at 23% in June 2021.
THE UK TOWN AND CITY MARKET AT A GLANCE
The percentage of town and city sales outside of London in Q2 2021, the highest figure in the same quarter for ten years
Average price growth for towns and cities outside London in the ten years to Q2 2021.
Number of people that left London to settle in one of our featured locations in 2020.
Underlining this growing momentum, the percentage of town and city sales of all UK transactions outside of London was 42% in the second quarter of 2021, the highest figure in the same quarter for ten years. The ten-year average for town and city sales as a percentage of total UK sales outside of London is 37%.
While space and greenery remain a key driver for prospective buyers, amenities and services are of increasing importance. Knight Frank’s sentiment survey from June found proximity to pubs, restaurants, theatres and entertainment had gained in popularity. Proximity to such venues was more important for 31% of people compared to before the pandemic. That rise compared to an increase of just 18% at the start of this year.
Hybrid working presents new opportunity
With major employers such as John Lewis and PwC adopting hybrid working models as a consequence of the pandemic, people have more flexibility around location too.
Whether it is HSBC’s new headquarters in Birmingham or investment bank Goldman Sachs imminent arrival in the same city; Santander’s new £150m, 144,000 square foot head office set to open in 2023 in Milton Keynes; Bristol’s growth as a second home for legal and professional service firms; or Oxford, Cambridge and central England’s development as a world-class location for life sciences, there is a growing pool of high quality employment available outside of London for those looking to relocate.
This is feeding into a long-established trend that since 2011 has seen the annual number of people leaving London for our 14 featured cities and towns– a breakdown for Edinburgh is not available – increase by 38%, according to the ONS. Despite a series of lockdowns and the closure of the market in England for close to eight weeks, 43,109 people left London to settle in one of our featured locations in 2020.
Those relocating from London bring spending power. The average value of homes in England increased by 55% over the decade to May 2021, according to the UK House Price Index. However, prices increased by 76% and 68% in outer and inner London respectively over the same period. Buyers looking to sell and move out of London are often able to trade up as a result. You can see where they look to buy in more detail here.
Town and city markets are back in demand after a year focused on country living
Those relocating from London bring spending power. The average value of homes in England increased by 55% over the decade to May 2021
Town and city performance
Since Q2 2020, the average price of a town or city property outside of London has risen by 8%. Despite a strong performance in the country house market over the past year, properties in towns and cities have outperformed rural locations during the last decade. In the ten years to Q2 2021 the average price of a country property increased by 15%. Average prices for property in towns and cities outside of London climbed by 24% during the same period.
In year to June, new prospective buyers registering in our 15 featured locations were up 72% versus the five-year average; and exchanges increased by 84%.
Due to the challenges of a third national lockdown at the start of this year and the distortions created by the stamp duty holiday in England, supply has not matched demand, placing upwards pressure on prices. At the end of June 2021 the amount of urban residential property listed for sale was 17% lower than at the end of January 2020 – and the first national lockdown.