Waterfront View 2021 Property Market Review

The waterfront property market has been riding the crest of a wave, with the pandemic reinforcing the desirability of waterside living and the quality of life it offers

BY CHRIS DRUCE Senior Analyst, Residential Research

WHAT’S DRIVEN DEMAND?

The waterfront property market has benefited from changing demand patterns that have emerged as a result of the pandemic, in particular the search for more open space and greenery. Successive lockdowns have also acted as a catalyst for those considering a change in lifestyle, while the greater adoption of working from home has boosted buyers’ flexibility when it comes to location.

HOW HAS ACTIVITY COMPARED TO PREVIOUS YEARS?

New prospective buyers looking for a waterfront property in the UK were up 18% in the year to 31 March 2021 versus the five-year average. Exchanges increased 2% in the same period and offers accepted were up 30%. Meanwhile, supply has tightened, especially outside of London, supporting price growth.

WHAT’S HAPPENED TO WATERFRONT PRICES?

The average price of a waterfront property increased by 2.1% in the second quarter of 2021. The annual growth rate for waterfront properties in June was 12%.

Housing market bounces back from the pandemic

Spending in the year to March 2021 in the housing market in England and Wales was at its highest level since November 2007. Some £274.8 billion was spent over the 12-month period. This was 8.1% higher than the £254.1 billion spent in the year to March 2020, the month of the first UK national lockdown.

London market sees record-breaking activity

The number of offers accepted in prime central and prime outer London reached its highest level in a decade in April, signalling strong levels of domestic activity before the expected return of international buyers later this year.

HOW MUCH OF A PREMIUM DOES WATERFRONT LIVING COMMAND?

In the second quarter of 2021, the average premium for waterfront properties was 49% more than properties with the exact same characteristics located approximately a mile from the water with no waterfront view.

WHICH WATERFRONT LOCATIONS HAVE THE LARGEST PREMIUMS?

Waterfront properties on an estuary had an average premium of 72% in the second quarter of 2021, which was the largest of any waterfront location. This was followed by lakeside/loch with an average uplift of 68%. Coastal properties had an average premium over non-waterfront properties of 61%, while an inland riverside location had an average uplift of 21%.

WHO’S BUYING WATERFRONT PROPERTIES?

Buyers based in the South East, South West and London accounted for 83% of sales in the year to March 2021. Within this group, London-based buyers showed the biggest increase, representing 22% of sales in the year to March 2021, up from 9% a year earlier.

Online searches for waterfront living surge

Web searches for UK waterfront property increased by 47% in the year to April 2021 versus the previous 12 months, as the pandemic encouraged people to reassess their lifestyles.

Forecast

We forecast prime regional and prime outer London prices will finish 2021 up 4%. Annual price growth in prime central London will be 2% in 2021 but it will be the fastest growing part of the UK market in 2022, with annual growth forecast at 7%.

DOES THE WATERFRONT LIFESTYLE APPEAL TO INVESTORS?

Investors are back, attracted by the strong performance of the country market since the pandemic and the prospect of a surge in UK staycations. Average property prices in the South West were 9.1% higher in the year to April 2021, according to Land Registry. While 2% of UK waterfront sales outside of London were for investment in the year to March 2019, this increased to 7% in the year to March 2021. Investment buyers made up 9% of waterfront sales in London in the year to March 2021, unchanged from the same period in 2020.

HOW POPULAR ARE WATERFRONT PROPERTIES AS SECOND HOMES?

There has been strong demand for second homes in the country market. The proportion of waterfront properties purchased as second homes outside London was at a 13-year high in the year to March 2021 at 20%.

WHAT IMPACT HAS THIS HAD ON SECOND-HOME SALES?

In the year to March 2021, sales of waterfront properties purchased as second homes outside of London were up by 196% versus the five-year average. For the whole of UK, sales of waterfront properties purchased as second homes were up 128%.

HOW HAS THE PRIME REGIONAL MARKET FARED?

Annual price growth in prime regional markets outside the capital was 6.7% in the year to March 2021, its highest level since before the global financial crisis. The higher-value end of the market continues to perform strongly, as it has done since the property market reopened on 13 May 2020 after the first national lockdown. Buyers have continued to seek more space, greenery and privacy post-pandemic, exploring a new work/life balance that could mean more people work from home more often. Country homes valued at £5m and above saw average prices increase by 7.3% in the first three months of 2021, with tight supply and their relative good vaule due to weak price growth before the pandemic contributing factors.


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