Housing market activity is definitely on the up – and London-based buyers could drive activity outside the capital. This is the view from estate agent Hamptons, as it publishes new housing market research. Last week we blogged about a possible ‘lockdown lift-off’ as agencies opened their doors again. Now Hamptons’ figures appear to be pointing in the same direction. “After seven frozen weeks, the housing market seems to be moving up a gear” they say.
The number of potential buyers registering with the agency has more than doubled, with new instructions and the number of offers trebling. This is a positive sign but the market has far from fully recovered and it will take some time before the impact of lockdown on pricing becomes clear.
Early signs are that London-based buyers are going to play a big role in housing markets outside the capital this year. Nearly one in five (19%) applicants who registered in a Southern Hamptons branch in April were from London, up from 12% in April 2019 and 13% in April 2016 when London outmigration last peaked. House prices in the country have lagged behind those in cities over the last decade, which means country homes now look relatively good value. So as we and other industry commentators have been predicting in the last few weeks, it looks as if there could be an increase in people hoping to move away from urban areas in search of more space and a home with a garden.
“Over the last decade house prices in prime areas of London have risen 79%, almost double the 42% recorded in prime country locations. This means that the average seller leaving London can gain an additional 953 sq ft by selling up and moving to the country, often the biggest pull for those making the move out of the capital,” says Aneisha Beveridge, Head of Research at Hamptons International.
Despite young people being most like to have lost work or seen their income drop because of the coronavirus pandemic (source: The Resolution Foundation) Hamptons data shows that first-time buyers are leading the increase in demand. In April, first-time buyers made up 44% of those searching for a property to buy, up from 24% in the same month last year. For those first-time buyers who haven’t lost their jobs or taken an income cut, that’s put them in a good position to save.
So if the government decides to add some stimulus to the housing market by offering a stamp duty holiday like it did in the wake of the 2008 financial crisis, some first-time buyers may even find they are in a better position to get on the housing ladder than they were two months ago.
Hamptons also keeps track of trends in the rental market. Its monthly lettings index shows that restrictions on movement throughout April meant that most tenants decided to stay put. That meant those homes that were available to rent last month took longer to let than usual due to the fall in demand. It took 29 days on average to let a home in Great Britain last month, the longest time recorded in April since Hamptons’ records began in 2013.
It’s also becoming clear that the income squeeze is impacting rents. Hamptons says rental growth continued to slow last month, with average rents in Great Britain falling for the second month in a row. Rents on renewed tenancies fell -0.5% year-on-year in April, yet London and the South East were the only regions to record falls.
But activity has rebounded quickly. Hamptons registered 13.4% more applicants so far this month compared with the same period last year. That means just under six applicants looking per rental property, up from just over four a year ago.