How might the UK economy affect local house prices?

By Aiden Johnson-Hugill, Director at Grenadier and Louise Glanville, Associate at Knight Frank Exeter

This week it was reported that house prices are ‘expected to level down’ as a strained economy recovers from the coronavirus crisis. House prices in areas which are renowned for being high, such as London and the South East, are reported to be expected to suffer for some time before picking back up or ‘levelling out’. With this in mind, what can we expect in the South West?

Aiden Johnson-Hugill, Director at Grenadier said: “The effects of coronavirus will no doubt be felt for some time, not just in Devon or the UK, but worldwide. With people’s jobs being put at risk this, of course, has a knock-on effect which then in turn affects construction, buying, and selling of property. Over recent week’s we have seen an influx of new buyers from cities like London looking to relocate to the countryside. We envision this influx will continue to increase.”

Louise Glanville, Associate at Knight Frank, adds: “It wouldn’t surprise me if more and more people look to sell up and move out of the cities, especially as people have recently proved you can work just as effectively from home. I think over the remainder of 2020 we will see more people relocating and, for those who can afford it, more second home purchases in the South West.”

If you are one of the lucky few who can afford a second home, it might no longer be a London city pad that will be your first choice – rather a quiet, secluded retreat in the middle of the countryside.

Louise continues: “Country living can be somewhat different to living in the city. Slow internet, weak showers, and lots of garden maintenance are some of the things that spring to mind when people think about the countryside. But there are a lot of benefits to moving out of the city, space for one is a big difference. The size of property you can get for your money is typically larger and you’ll get the added benefit of outside space. Green space, clean air, and health benefit such as countryside walks are just a few of the things to love about living outside of the big cities.”

According to research by Knight Frank prime properties with outdoor space have grown with popularity over the last three months. Due to a scarcity of supply, there has been a high demand for country living during lockdown as people’s mentality turns to ‘it’s now or never’.

The most successful market in fact is the high-value market, those who can afford to buy properties £5m+. County houses valued at £5m+ have seen the ‘strongest price growth of any property type in the UK in the three months to June, due to interest in country living and the greater ability of buyers in higher-price brackets to transact.’*

Even though the property market was temporarily closed during the height of coronavirus, the market still increased, by 1.2%. “Buyers at the top end of the market have been willing and able to move quickly to secure their desired homes as lockdown restrictions have eased,” said Chris Druce, senior research analyst at Knight Frank. “The relative scarcity of homes available at this price point can spark competitive bidding, which has put a degree of upwards price pressure at this end of the market.”

Since the easing of lockdown there has been a strong market return with the number of viewings dramatically increasing. Now that people can travel to the South West and stay over, Knight Frank are seeing strong interest in prime homes, especially those with outside space. A good example of this is a property in Sidmouth which has just gone on the market for £2m.

Aiden Johnson-Hugill, adds: “To date, people very much have had the impression that living in the countryside means effectively living in the sticks and this just isn’t true. As Louise said, internet, transports links, high street shops, and innovative sustainable technologies are not just available to those who live in the cities, living in the countryside does not mean living in the middle of nowhere. People are starting to appreciate that there is a better work life balance, and those who can afford to will make the move first.”

With house prices expected to level out as the market regains confidence past the global pandemic, it is thought the UK property market will once again pick up with more of a focus on country, not city living.

Source: *Chris Druce, Knight Frank Research, 6th July 2020