More than twice as many £1m-plus homes were sold subject to contract in August than in the same month last year, pointing to a strong post-lockdown recovery in higher-value housing, especially outside London.
The number of sales agreed for UK properties valued at than £1m was 228 per cent higher than in August 2019, according to research from estate agent Savills. The trend was driven by a surge in activity in towns such as Guildford and Tunbridge Wells, while agreed sales declined in central London.
Lucian Cook, Savills residential research director, said it had been initially unclear after the easing of lockdown restrictions in May whether the rapid pick-up in homebuying activity was largely explained by the release of demand built up during the dormant months. But the surge in activity in July and August pointed to a more sustained period of growth, he said.
“The experience of the last two months tells us there might be something more going on — a more structural impact on the market driving people to move despite the economic backdrop,” he said.
Demand in the so-called “prime” market for more expensive homes varied widely by location. The number of new buyers registering with Savills in the 11 weeks to mid-August was up 120 per cent on the pre-pandemic average for homes in the south of England, excluding London and its commutable zones.
But in central London, where overseas buyers have been unable to view homes because of travel restrictions, it was down nearly 20 per cent. “This is, I think, the first time a housing market recovery has not been led by central London,” Mr Cook said.
At a local authority level, Savills found big jumps in sales agreed for £1m-plus homes in August in South Oxfordshire, Dacorum, Tunbridge Wells, Runnymede, Wealden and the Test Valley. The number of homes under offer in Guildford, the most active market, was 323 per cent higher than in August 2019.
The mainstream housing market has sprung back into life following the near standstill of lockdown, and data suggest the nine-month stamp duty holiday announced by chancellor Rishi Sunak in July added fuel to the recovery.
The Bank of England on Tuesday said the number of mortgages approved rose by 66 per cent between June and July to 66,300, from a low point of 9,300 in May.
The Nationwide housing index on Wednesday found the average UK house price in August had jumped to an all-time high of £224,000. House prices increased by 2 per cent between July and August, the highest monthly rise for 16 years, the lender said.
However, Savills’ research, which used data from TwentyCI, a consultancy, found that buyers remained highly sensitive to prices in the market for homes above £1m.
In spite of the rise in activity over the past two months, the number of agreed sales in which the price had been reduced was higher in both July and August than in the same months last year. In August, more than twice as many sellers cut their prices than in August 2019.
Mr Cook said: “The market has remained price sensitive to a greater or lesser degree. Where property has not been priced appropriately you’ve had to have a price reduction to find a buyer. It is the case that buyers remain acutely aware of the economic backdrop.”
Asked if the comparison with August 2019 flattered the figures for last month, when fewer people were abroad because of travel restrictions, Mr Cook said the August 2019 numbers for sales subject to contract did not differ substantially from the monthly average for the year. The answer would be different for December, he added, when fewer homes typically go under offer.
The sustainability of this trend is far from certain under a gloomy economic prognosis, as unemployment is expected to rise following the withdrawal of the government furlough scheme in October. In the agent’s regular survey of 1,400 buyers and sellers, 56 per cent of respondents expected prices to fall in the next year — but 69 per cent thought they would rise within five years. Buyers looking to make a long-term move appear willing to commit now in spite of the possibility that prices will fall next year — though not at any price.
“The uncertain economic backdrop and the finishing of the furlough scheme at the end of October, means short-term price expectations remain cautious, though buyers are willing to take a longer term view on pricing,” said Frances Clacy, analyst at Savills.