It has been an extraordinary year. The world has shut down as a result of a global pandemic, and yet so many of us in Britain chose to move house. We all wanted more bricks and mortar, more green space, and to be part of a community where we could be healthy and happy.
As a result, house prices hit a record high in 2020. The latest figures from the government show that values rose 8.5 per cent to an average of £252,000.
Prices are still rising: the extension to the stamp duty holiday, 95 per cent mortgages for younger buyers and now even 40-year repayment terms are set to keep demand high for the rest of the year. Savills and Knight Frank estate agencies have revised their forecasts for the mainstream market — they predict average prices across the UK will rise 4 per cent and 5 per cent (up from 0 per cent and 1 per cent) respectively by Christmas.
Averages, however, mask big variations. Countryside hotspots and staycation honeypots may rise steeply, while urban city centres may not.
North and Northeast
If you want the most post-Covid space for your money, this is the region to head for. The portal Zoopla says that property there now costs an average of £171 a sq ft (compared with £279 in the Southwest and £323 in the East of England). However, there won’t be much choice. Home.co.uk says there are 32 per cent fewer properties on sale now than a year ago, pushing up prices, albeit from a low base.
Look out for Darlington, where the Treasury is relocating 750 senior civil servants. Karl Pemberton, chair of the Northeast branch of the Institute of Directors, describes this as “one of the most important announcements for the Northeast in decades”.
Northwest
House prices start from a low base, a typical Liverpool home is £127,000, and even much-hyped Manchester is under £200,000, according to Zoopla. However, government interest in keeping hold of “red wall” seats means infrastructure investment is growing — £211 million has been allocated this month through the Towns Fund. Savills says that house prices here could soar by 28.8 per cent by 2025, more than anywhere else in the UK.
Look out for Preston, which has been awarded £20.9 million for a series of regeneration projects. In the Good Growth for Cities index by PwC, the accountancy firm, it’s the best city to live and work in the Northwest of England for the second year running.
Midlands
Birmingham dominates the region, but has a muted market right now. The property consultancy JLL forecasts static house prices in 2021 before a rise of 4 per cent next year and 19.4 per cent in total by 2025. Hosting the 2022 Commonwealth Games may give the city a post-Covid fillip. Elsewhere, the regional market is generally strong, with most agents reporting a shortage of homes for buyers. In Grantham the Newton Fallowell agency reports sales so far this year that are 51 per cent ahead of 2020.
Look out for Digbeth, just east of central Birmingham and already a student favourite, which is set to have a huge new market for start-ups, cementing its edgy-but-trendy image.
East
House prices here are set to rise 5 per cent this year, according to Savills, which forecasts hefty increases thereafter, pushing the average from £310,240 now to £362,981 by 2025. “Norfolk and Suffolk in particular will continue to be in strong demand by those seeking a move away from the capital,” says Natalie Howlett-Clarke, joint head of residential for Savills Norfolk.
Look out for Fast-improving Ipswich, its dockside has been gentrified and its amenities improved thanks to the arrival of Suffolk University. Just east there’s trendy Woodbridge and the Suffolk Coast and Heaths area of outstanding natural beauty.
Southeast
Demand for homes in coastal areas such as Worthing, Brighton and Eastbourne has been booming, but will traditional commuter towns closer to London suffer if working from home continues and people choose to move further out? Savills is upbeat, predicting 5 per cent price rises in the commuter belt this year, although it says longer-term growth will be lower than much of the rest of the country.
Look out for Folkestone — Rightmove reports a surge of more than 60 per cent in searches from prospective buyers and renters there.
Southwest
Covid refugees fleeing big cities have headed west. Homeowners Alliance says the region’s house prices soared 10.2 per cent in 2020, but that’s slowing now. “Exceptionally strong demand continues for lifestyle locations, particularly on or near the coast,” says Roger Punch, a consultant at the Marchand Petit estate agency. The Cornish market has been supercharged by Rick Stein’s 15-part lockdown TV travelogue while, across the Tamar, Plymouth is to be a freeport.
Look out for Little-known Okehampton — on the edge of Dartmoor — which is on the up, £40 million of funding to reinstate rail services to Exeter has just been announced.
London
Life in the capital remains in the slow lane. The uncertain return to office work, ongoing travel constraints and fewer foreign students are all keeping a lid on price rises, although Knight Frank has just boosted its prediction for prime outer London to 4 per cent in 2021. In prime central London there are other factors: an extra 2 per cent stamp duty for most foreign buyers from April and the pound possibly strengthening during the year will depress international sales, the lifeblood of “new” areas such as Nine Elms, Earls Court and Battersea Power Station.
Look out for Savvy buyers scouting for properties sold off by panicking landlords. Hamptons says average inner-London rents have plummeted by 17.7 per cent in the past year.
Scotland
Buyers are out in force again in rural areas such as Elgin, Fraserburgh, the Borders, and Dumfries and Galloway, but the market in the big urban centres of Edinburgh and Glasgow is patchier. Phiddy Robertson, of the Galbraith agency in Inverness, says: “Buyers are paying significant premiums to secure attractive coastal property and we’re seeing more interest than ever from southern buyers for second homes.” The holiday for the Land and Building Transaction Tax, Scotland’s stamp duty equivalent, ends on April 1.
Look out for Aberdeenshire: Savills says that by late last year demand for homes in the county was 115 per cent above the 2019 level.
Wales
Agents still talk of the removal of tolls on the Severn Bridges more than two years ago being a spur for relocation from pricey Bristol and Bath, a move that’s accelerated in the past year with Covid. The pretty and family-friendly seaside location of Penarth, just south of Cardiff, is the big winner, with prices up 11 per cent in a year, according to Rightmove; the town’s Victoria Road is the most expensive in Wales, with an average house price of £870,000.
Look out for Coastal Pembrokeshire and Ceredigion, which are seeing a “tsunami” of second-home buyers, according to Carol Peett, managing director of West Wales Property Finders.
Northern Ireland
Although there’s a question mark over the post-Brexit local economy, housing market confidence is high, with prices up 5.3 per cent in a year, according to Propertypal, the region’s Rightmove equivalent. Expect more activity this year — the Northern Ireland stamp duty holiday is the same as in England, so will last until October.
Look out for Big demand for big homes. The Northern Ireland Research and Statistics Agency says 2,440 detached houses were sold in the final quarter of 2020, a 20 per cent annual rise and the highest quarterly figure in 15 years.
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