COVID-19’s impact on the UK property market is still unfolding. It began with a near-total market freeze that lasted from the moment the country entered lockdown on 23 March 2020 to its reopening on 13 May. Since, then, buyers have returned to the market with a vengeance.
Pent-up demand has combined with a stamp duty holiday that runs from 8 July 2020 to 31 March 2021. Buyers during this period don’t have to pay stamp duty on properties costing up to £500,000 (other than the 3% paid by those purchasing second homes and investment properties). This means buyers can save up to £15,000.
The result of this is that UK house prices hit their highest ever level in July, according to Halifax, with the average property price now standing at £241,604 – 3.8% higher than a year ago.
The situation in London is particularly interesting. Along with the rest of the country, London has seen its property market freeze and then bounce back to life. What makes it so interesting is the shift in buyer interest from Inner London to Outer London and the commuter belt.
Knight Frank, for example, has reported a 13% dip in web views in Inner London since the outbreak, along with a corresponding 13% increase in search traffic for homes outside the city limits (when compared with the five-year average).
According to the June 2020 Hometrack House Price Index, when the most important adjacent commuter areas are included in the definition of ‘London,’ the city ranks fourth in the UK for growth in demand since the start of the year. The report emphasises the current focus on outer and commuter locations:
“When we split London into inner, outer and commuter areas we can see that the share of housing demand has shifted to outer and commuter areas while slipping back in inner areas since the lockdown.”
UK House Price Index, June 2020, Hometrack
Changes to what people want from their home are playing a key role here. Zoopla surveyed 2,000 households and found that respondents’ top priority was having a garden or some other kind of outside space. The further out from the centre of London you travel, the more affordable such properties become.
“Outer London and the commuter belt have always attracted those looking for more space and better prices than can be found within Inner London. The COVID-19 pandemic has exacerbated this trend, driving up demand for commuter belt homes, as both buyers and renters seek to avoid the hustle and bustle of London while also gaining more indoor and outdoor space at home.”
Dale Anderson, Managing Director, Fabrik Invest