Well, summer is over. Although weather wise, it never really started. The kids are going back to school, I’ve already lost the central heating argument and the Great British Staycation is finished for another year.
It’s been an extraordinary 18 months since the start of the pandemic.
I’m often left amazed by the collective ability of human beings to find solutions to complex problems, and our willingness to adapt to new circumstances.
However, given that this week’s blog is a market update, I should probably spend some time discussing property.
Here too, much of what seemed to be undeniably true for such a long period of time is now being questioned.
Whilst the pandemic hastened shifts that were already underway, the real game changer has been something else - the internet. But more on that another time.
Everything is changing
Prime central London: Expensive
Prime outer London: More affordable
Not any more.
Lateral space: expensive
Vertical space: more affordable
Less so.
Proximity to a tube station
2019: Definitely.
2021: Maybe
Proximity to a park
2019: Nice to have, not essential.
2021: Hang on, I’m working from home today. I’ve got a series of Zoom meetings. Where else am I going to walk my impulsively purchased lockdown dog?
Just 18 months ago, that last sentence made zero sense, but now it’s starting to affect buying patterns across the UK.
For an industry which tends to move at a snail's pace, it’s been quite the shift.
262,487,046
No, this isn’t the number of times my kids have asked inane questions over the summer holidays.
Instead, it’s the amount of money spent on property in Hampstead and Belsize Park (NW3) in the first five months of 2021. More than any other postcode in London, and the UK too.
I find this unsurprising, because in many ways NW3 is the perfect post-pandemic location. Hampstead Heath has 800 acres of open space, making it the third leafiest suburb in London. The area has a village-like atmosphere and yet it’s close enough to central London to be in most places within 30 minutes.
Meanwhile, according to research by Knight Frank & Savills, Knightsbridge apartments are now 11% below their five year average, and the best value in central London.
As a result of this perceived value, buying activity in Knightsbridge in the first half of 2021 was the highest in five years, with 158 apartment sales.
It’s all relative of course, but Knightsbridge being perceived as good value, and Hampstead starting to look expensive is almost a complete reversal in fortunes.
Who wants to be a Millionaire
Outside of London, it’s a similar story.
Data from Knight Frank shows that the UK’s average property value increased by more than 13% in the last year. That surge has created 19 new ‘million pound markets’, defined as locations where one in five home sales are now consistently above the £1m mark.
However it’s not just areas like Newquay (+22%) and St Austell (+17%) in Cornwall, and Lymington (+18%) in the New Forest that have seen large increases in average housing values.
Areas like Hackney, Holloway and Vauxhall are all now considered million pound markets. Which is a pretty remarkable statistic.
Research by TwentyCi for the Sunday Times shows that the number of UK homes valued at £1m or more has risen by nearly 100,000 in the last year alone.
Yet, as the above graph demonstrates, it’s still far more affordable to buy a home outside of London. Probably for the foreseeable future too. Although I wouldn’t be surprised if net migration from the capital becomes more pronounced and the regions continue to catch up.
The Fourth Quarter
So what can we expect from the rest of the year? Low stock, high demand in what’s now known as ‘emerging prime central London’.
Possibly the exact opposite in ‘prime central London’.
The success or failure of the latter market in the months leading up to Christmas will largely depend on the return of overseas travel in a meaningful way.
Data from Prime Resi, The FT, Knight Frank, Savills, Cluttons & Twenty Ci
Things I’ve been inspired by this week
My wife likes reading and watching the news. A lot. I turned on the television one evening this week and was greeted by the BBC news channel.
What I went on to watch played into a lot of things which I find really interesting - property, people and as I said earlier, the ability of human beings to adapt to new circumstances.
You can find it here.
How did the residents of one street make it through the last year? Oxford Gardens runs through the heart of Notting Hill in London. It's an unusual street - multi-millionaires living next door to housing association tenants - but they have one thing in common: all of them spent much of the last year at home. Filmed from the start of the first lockdown, this is an intimate and heartwarming portrait of how the residents of one street coped with the pandemic.
