The content of any financial promotions on this website has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Reliance on these promotions for the purpose of engaging in investment activity may expose an individual to a significant risk of losing all of their assets invested.

London House Price Growth to Hit 8% in 2022

|   Nov, 2022

Demand for flats is reviving in UK cities, as property buyers return to more settled working patterns, new research shows. Interest in flats overtook searches for terraced houses since the start of this year, property portal Rightmove said. But the hunt for extra space, which dominated during the pandemic, remains a key factor for buyers and renters. “Annexe” is buyers’ most popular search term, Rightmove said, with garages and gardens also high on the list. The property website analysed its data for the BBC to show how buyers and renters looking for properties were shifting their priorities. A picture has emerged of a renewed interest in urban and commuter areas, and a shift in the type of property being sought.

In January last year, a terraced house was the most popular, it said, ahead of detached houses and flats. A year on, flats recorded the highest demand.

“In the initial stages of the pandemic, houses stole the show, as people looked for as much room as possible. As restrictions have eased, being closer to city amenities has become more of a priority,” said Tim Bannister, Rightmove’s property data expert.

Race for Space

During lockdowns, data showed property hunters wanted countryside and coastal properties with gardens, and extra space indoors to work.

In the last five years, house prices have risen fastest for detached houses in predominantly rural locations, according to research by the Nationwide Building Society.

The average price rise for a rural property of 29% over that period, outstripped the 18% increase in urban areas. Average house prices in North Devon rose by 24% last year alone.

But spacious, rural homes have been in short supply. As they became less affordable too, some of the focus has shifted back to commuter areas and city centres. That shift has accelerated since the start of this year as workers began to spend more time at their office desks rather than the kitchen table.

Market commentators also suggest students and office-based first-time buyers are driving up demand in cities. Jack Hunter is one of those first-time buyers. The 26-year-old said he was “ecstatic” to have managed to buy a flat near the centre of Glasgow in recent weeks.

“Friends have been to 30 viewings and made eight offers and are still looking,” said Mr Hunter, who works in IT and technology sales.

“I don’t know if this will be my forever home, but I am glad to be on the ladder.” Mr Hunter said the location and access to a parking space were significant positives. Glasgow, like many UK cities, saw a race for space among buyers during Covid lockdowns. Although the impact was not as dramatic as in London, estate agents say there has been a rebound for city properties. Renters and buyers are spending as much as they can afford, says John O’Malley

John O’Malley, from agency Pacitti Jones, said that demand for Glasgow’s tenement flats had returned, with first-time buyers looking for something affordable and close to the city centre. Higher demand for flats to buy is mirrored in the rental market with higher demand for city centre properties to rent.

The number of renters in rural areas enquiring about available properties in cities has jumped 52% compared to January last year, while the number of renters in cities enquiring about rural properties has dropped 10%, the Rightmove data shows.

Where are the for sale signs?

A lack of homes available to buy or rent has been the biggest problem across the market, according to experts. This has driven up prices, even as the higher cost of living bites.

A survey of 3,000 people by the Nationwide indicated that 38% of those asked were either in the process of moving or considering a move – far outstripping the number of homes on the market. Only one in five of them was doing so to try to reduce their spending on housing. On Friday, the lender said UK property prices had increased by 12.1% in the last year. Official forecasts suggest that, although the pace of growth is expected to slow owing to the pressure on household budgets, there is little prospect of a fall in house prices. The ambition of adding value to a home, as well as the long-term prospect for many people of working at home for some of the week, has influenced the priorities of potential buyers.

Other Topics