Are house-hunters poised for return to big city? Escape to the country fuels a 6% house price rise in 2020 – but London house viewings bounce back
- House prices nudged upwards to end 2020 at an all-time high of £253,374 in December according to Halifax
- Mini-boom after the property freeze at the start of lockdown led house prices to climb 6 per cent last year
- Last year saw exceptional house price growth as the market bounced back strongly after the March lockdown
- Rightmove recorded busiest ever start to a new year with visits to site up 30% on the same period in 2020
House prices nudged upwards to end 2020 at an all-time high of £253,374 after a boom led by homeowners heading for the country, but experts now say buyers could be looking to return to London.
The mini-boom that arrived after the property freeze at the start of lockdown led house prices to climb 6 per cent last year, with the average home adding £14,295 in 2020, according to Halifax.
Estate agents now predict a boom in sales in London in the wake of an exodus of City workers last year, who fled lured by the prospect of working from homes in the countryside and on the coast.
London-based estate agent Dexters said it expects to see sales and lettings transactions in the Capital doubling in volume during 2021, with the boroughs of Camden, Kentish Town, Tufnell Park and Kensington and Chelsea tipped to be the year’s ‘star performers.’
Property listing website Rightmove, meanwhile, has seen a record number of viewings this week, recording its busiest ever start to a new year.
The firm said the number of people contacting estate agents about a property to buy is 11 per cent higher than at the start of 2020, and those enquiring about a property to rent is up by 22 per cent.
This property in Kenwood, north London, was one of the Capital’s most viewed properties for the month of December. The eight-bed detached house is on the market for £15,000,000
At the other end of the market, this property in Romford, was also one of London’s most viewed properties in December. It is on the market for £120,000, shared ownership
This stunning modern four-bed home in Abbots Oak, Leicestershire is listed on Rightmove for £1.65m
Also listed on Rightmove is this two-bed apartment in this historic building in Bath for £450,000
Estate agents Yopa told MailOnline and This is Money that 24.1 per cent of viewing requests in January 2020 were for London properties, which plummeted to 17.6 per cent in April and May as the pandemic took hold
London-based estate agent Dexters said it expects to see sales and lettings transactions in the Capital doubling in volume during 2021, with the boroughs of Camden, Kentish Town, Tufnell Park and Kensington and Chelsea tipped to be the year’s ‘star performers’ (pictured in this map)
Busiest ever start to the year as home-hunters seek New Year moves
Rightmove has recorded its busiest ever start to a new year, with visits to the site up 30 per cent on the same time period in 2020.
People contacting estate agents about a property to buy is 11 per cent higher than at the start of 2020, and those enquiring about a property to rent is up by 22 per cent.
The impending end to the stamp duty holiday, more people re-evaluating where they live and the housing market staying open have all contributed to Rightmove recording its busiest ever start to a new year.
Rightmove said it saw record viewings this week despite the new lockdown.
The property giant said it ‘gives hope to those who already have or those who are planning to put their property on the market to sell or rent out in early 2021.’
Rightmove’s Director of Property Data Tim Bannister said: ‘January is usually one of our busiest months of the year as people start to make new year plans to move, as was the case at the start of last year when we also had the post-election bounce that gave hope of an active spring market, before that all changed with the temporary closure from March until May.
‘We didn’t know how this year would start with so much change and uncertainty around restrictions, but it’s been reassuring for those people hoping or needing to move that the demand we’ve seen so far is the highest we’ve ever had in January.’
While house prices ended the year on a high, according to Halifax’s house price index, the monthly rate of growth slowed to 0.2 per cent in December.
December was the sixth consecutive month that a record price high had been hit, this month-on-month growth was a big fall from November’s 1 per cent, and suggests that the market is cooling down.
Dexters currently has more than 100,000 people registered looking for a London home, as well as thousands of enquiries from international buyers looking to snap up properties in the Capital once overseas travel resumes.
Buyers are coming from Hong Kong and Saudi Arabia wanting to purchase ‘bolt hole’ homes, ‘due to concerns over the political and economic stability of their country,’ according to the estate agent.
Estate agents Yopa told MailOnline and This is Money that 24.1 per cent of viewing requests in January 2020 were for London properties, which plummeted to 17.6 per cent in April and May as the pandemic took hold.
That fell further to 16.3 per cent in June – when there was first talk of a possible city exodus as many no longer needed to live near the office thanks to homeworking becoming the norm.
But viewing requests for London homes have regained some ground, rising to 22 per cent in September, 24.2 per cent in October, 25.5 per cent in November and then ending the year on 22 per cent.
Veteran estate agent Russell Quirk told MailOnline and This is Money that demand from buyers for London is already gaining traction again.
Mr Quirk added: ‘I firmly believe homeowners and buyers will return to the Capital. While transactions in London in 2020 were down dramatically, demand has started to return from enquirers via the portals.
‘I think there is some data that shows there was a bit of an exodus, with several estate agents reporting more people moving out, than into London. But it has to be said that some of those reports are merely self-serving for firms.
‘There was definitely a sentiment for home owners that they didn’t need to be in the city and so close to their desks because of working from home; which I’m sure to some extent will remain a fairly robust sentiment for come City workers. But that change of mindset will only ever be temporary.
‘I also think that, working aside, we are inherently social creatures and because of that there will be generally a return of wanting to come back to the office. The city centre will hopefully revitalise and the move towards living in the wilds of the countryside and working with a dodgy broadband will subside in time.
‘Some people suggest that Covid will change our ways and habits, but I think when we look back in a few years’ time, we will say that it was just a blip in history.
‘I firmly believe homeowners and buyers will return to the Capital. We must also look at the data – there is soft data that shows people are simply browsing homes out in the wilds. It is the hard data that shows actual transactions.’
Halifax reported a 6 per cent increase in house prices across 2020 as a whole, as this chart from BuiltPlace.com shows, which also compares the bank’s mortgage-based index to Nationwide’s
In Long Melford, Suffolk, this four-bed detached home is listed on Zoopla for £550,000
This three-bed detached home in Oswestry, Shropshire is priced at £250,000 on Zoopla
Last year saw exceptional house price growth as the market bounced back strongly after the March lockdown.
This is Money’s analysis of indexes for the year to November showed that the average house price across the major reports increased by 6 per cent, or £15,000.
Other than the North East, all regions of England surpassed their 2007 pre-downturn peak.
Halifax predicted that house prices would fall by between 2 per cent and 5 per cent by the end of 2021, although it admitted that forecast uncertainty was much higher than usual this year.
The 2020 increases were spurred on by the introduction of a stamp duty holiday by Chancellor Rishi Sunak in July that added to an already buoyant market, but this is due to end on 31 March unless the government opts to extend it.
Halifax also said the impact of the pandemic on people’s finances had been delayed by government support, but that unemployment would rise as the year continued.
Russell Galley, the managing director of Halifax, said: ‘While the economy should begin to recover in 2021, helped by the roll-out of Covid vaccines, the jobs market will inevitably adjust to the changes in demand that are occurring, and unemployment is expected to rise.
House prices increased in December 2020, but only by £131 as growth starts to slow down
‘With the stamp duty holiday also due to expire in March – and lower levels of demand – housing market activity is likely to slow.
‘Taking all of this into account, the post-summer surge in house prices is unlikely to be sustained.’
Even though prices are likely to fall, Galley says that they could end 2021 at the same place they started before the pandemic.
‘Prices are expected to fall by between 2 per cent and 5 per cent, although forecast uncertainty is much higher than usual given the current economic and political environment,’ he said.
‘It is also important to note that such a fall would only partially reverse the almost £18,000 (7.6 per cent) increase in average prices experienced over the past 12 months.’
Nick Barnes, head of research at estate agent Chestertons, predicted a smaller decrease in house prices in 2021 of 1.5 per cent.
‘There were 4 per cent more homes for sale in 2020 than the previous year compared to a more than 40 per cent rise in buyers. In London, Chestertons’ pipeline of deals at the end of 2020 was 53 per cent higher than a year ago and buyer enquiries were 49 per cent higher,’ he said.
‘Although the hangover from Covid-19 will be felt throughout 2021 and beyond, and despite the uncertainties following the UK’s departure from the European Union, the outlook for the residential market in 2021 is positive.’
Anthony Codling of property data platform Twindig said: ‘In 2020 house prices were subdued in the first half and strong in the second.
‘Will 2021 be a mirror image of 2020 a strong first half and a subdued second as the stamp duty Holiday ends and the possibility of increased capital gains tax on housing transactions takes the heat out of the housing market? Or will the vaccine cure Covid and heal our economy and keep the UK housing market-fighting fit? Time will tell, but for now, it’s onwards and upwards.’
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