The Rising Demand Of Urban Homes
According to leading property agents, during the pandemic both homeowners and renters had moved out of cities to countryside properties to take advantage of the extra space. Now when the pandemic restrictions are over, what does the property picture look like? Has the desire to be closer to the convenience of public transport and within easy reach of social entertainment and culture hubs reverted to pre-pandemic? Or does having that extra space for families and being closer to nature stayed with people enough to remain in the countryside?
Although flexible working and rising house prices has been the major point to permanently move away from cities, property experts suggest that house buyers and renters have been returning to cities. This return has triggered the price rise of urban properties. Now, in average, house prices in UK cities have risen 9.2 per cent since the beginning of the year, while houses in suburban areas rose by just 7.9 per cent over the same period, according to Halifax.
Andrew Asaam, mortgages director at Halifax, said that “the pandemic transformed the UK housing market. Homeowners wanted bigger homes and better access to green spaces, fuelling huge demand for larger properties away from urban centres. This accelerated house price growth in the suburbs and more rural areas, while in cities it was much slower.
That trend did not disappear completely this year, as house price growth in these areas remained strong. But, as daily life started to get back to normal for many, the opportunity to live in cities became more attractive again, driving up demand.”
He also added that the change in economic conditions, such as the increased cost of living, was now putting “downward pressure on the housing market in general.”
Sheffield takes the lead in the race of the greatest house price inflation with prices rising 18.9 per cent to £228,353. This is just below the current UK city average of £238,144 according to Halifax.
To compare with the surrounding areas, Doncaster shows the prices rise by 18.3 per cent, while Bassetlaw’s house prices grew by just 3.4 per cent.
Sheffield is followed by Southampton, Leeds and Edinburg. In Southampton house prices rose by 16.2 per cent, making the average price as high as £240,459. Leeds show 13.6 per cent growth and the average house price of £226,923. In the capital of Scotland residential properties prices increased by 12.9 per cent making the average house price £276,831.
People changed their attitude towards homes during the pandemic. Their properties became places to work as well as to relax and make memories with loved ones. This prompted homeowners and renters to to look for properties with more space both inside and out.
This is changing now. Although some businesses adopted a flexible working pattern, so convenient during the pandemic, most offices put an end to working from home. People need to travel to get to work and back – not an ideal solution considering the constantly rising fuel costs. Demand to be closer to working places, which are mostly in cities, has increased, and, with it, house prices.
Chris Druce, senior research analyst at Knight Frank, commented that “Following the reopening of the economy after lockdown, town and city markets have performed strongly as people recognise the value, amenities, and entertainment they (towns and cities) offer.”
According to Chris, last year the number of Knight Frank sales in regional towns and cities, as a percentage of all UK sales outside of London, was 40 per cent, up from 38 per cent in 2020. Year to date this has accelerated to 44 per cent of all Knight Frank UK sales outside of London.
London properties show the price growth of 6.8 per cent since January this year, while prices for houses outside London rose by 4.6 per cent.
This rise in property prices has led the high street banks to increase their mortgage rates. Last week the average fixed rate for a two-year fixed mortgage across all loan-to-values has climbed to 6.53 per cent. The average rate for five-year fixed deals also increased to 6.36 per cent.
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