Author: Antony Antoniou

Across the UK as a whole prices rise by an average of £10,177 in 2020, equating to an increase in value of £27.81 per day. But in one location the daily rise was over £80.

Despite the rollercoaster year caused by Covid, and the subsequent lockdowns, average housing values increased in all parts of the country.

Properties in England benefited from the highest increase in value at £11,037 (£30.16 per day), followed by Wales with an increase of £8,706 (£23.79), Northern Ireland with £5,575 (£15.23) and Scotland with £4,408 (£12.04).

In England, the best performing regions outside of London reflect areas with higher property prices.

The South East ranks in first place, with the average property in the region increasing in value by £12,552 in 2020. It was followed by the South West (£11,671), the East of England (£10,108), the East Midlands (£9,470) and the North West (£9,059).

Properties in Wales ranked in sixth place with an annual increase in value of £8,706, higher than those in the West Midlands (£8,576) and Yorkshire and The Humber (£8,331).

Meanwhile, properties in Northern Ireland (£5,575) performed better than those in the North East of England (£5,084) in 2020.

Homes in Windsor in South East England ranked in first place, with an increase in value of £29,063 in 2020, equating to an increase of £79.41 per day.

Other locations that feature in the top ten and are within a commuting distance to London include Winchester in Hampshire, and St Albans and Bishops Stortford in Hertfordshire.

Reflecting the desire of many home hunters for a change of scenery and more space, locations outside London with the biggest increase in housing value include homes in coastal and rural locations.

Coastal locations also featuring in the top 10 include Penzance, the most westerly major town in Cornwall in third place, with the average property increasing its value by £23,437 in 2020 (£64.04 per day).

Hove, in East Sussex also features in the top 10, as does the coastal town of Christchurch in Dorset with value increases of £21,660 (£59.18 per day) and £21,782 (£59.51 per day) respectively.

When it comes to rural locations, the market town of Cirencester, as known as the ‘Capital of the Cotswolds’ ranks in eighth place, with the average property in the town increasing its value by £20,178 in 2020 (£55.13 per day).

Cheltenham in Gloucestershire and right on the edge of The Cotswolds is ranked just behind Cirencester, with an increase in value of £20,006 (£54.66 a day).

Meanwhile in London the total value of housing passed the £2 trillion mark this year,  now standing at £2.03 trillion.

The average London property increased in value by a substantial £19,609 in 2020, while the average value of a London home is now a hefty £658,195.

The biggest increases in London are found in the Royal Borough Borough of Kensington and Chelsea (£49,812) and Westminster (£47,882).

The London Borough of Merton, which encompasses leafy Wimbledon ranked in third place (£35,179), while the London Borough of Hammersmith and Fulham (£34,097), and the City of London (£30,839) make up the top five.

Gráinne Gilmore, head of research at Zoopla says: “The ‘once-in-a-lifetime’ reassessment among a large cohort of homeowners around how and where they want to live has led to strong levels of demand since the end of the first lockdown.

“The data reflects an increased demand for additional indoor and outdoor space, and some rural locations have seen a rise in activity levels as those no longer constrained by a daily commute look for a different style of living.

“These factors, coupled with the stamp duty holiday, has led to one of the busiest Christmas housing markets in a decade, and has underpinned price rises of nearly four per cent this year.”

This is despite the apparent rush from the city to the country because of the pandemic.

Figures from the Halifax show Islington in north London with the fastest growth in 2020, with the average property up by 13.4 per cent to £727,922.

Outside London, the biggest movers were Leeds – the country’s second-fastest rise of 11.3 per cent for an average of £247,116 – and Wolverhampton in fourth place, up 9.5 per cent for an average of £217,837.

Russell Galley, Halifax managing director, says: “Much like many other things about 2020, it would have been hard to predict which areas would see the greatest movement in average house prices this year.

“For example, depending on the borough, you could be looking at the biggest price rise or the biggest falls in the capital.

“House prices have leapt by more than 11 per cent in Yorkshire’s great cosmopolitan city of Leeds and almost 10 per cent in Wolverhampton at the heart of the Black Country.

“Further North, Doncaster and Inverness have also seen healthy growth and whilst the overall house price trend this year has been upward, anyone looking to buy in Paisley, Hackney or Aberdeen will find homes cost a little bit less than last year.”

Greater London had nine of the top 20 places for house price rises – Croydon saw a 10.9 per cent rise to £397,538, compared with a rise of just one per cent the previous year.

But pockets of the capital saw price falls – Hackney dropped an average 1.5 per cent.

Top 20 risers:

1. Islington – up 13.4% to £727,922

2. Leeds – 11.3% to £247,115

3. Croydon – 10.9% to £397,538

4. Wolverhampton – 9.5% to £217,837

5. Hounslow – 9.1% to £523,659

6. Doncaster – 8.8% to £176,728

7. Inverness – 8.1% to 195,534

8. Bournemouth – 7.7% to £310,205

9. Watford – 7.7% to £460,102

10. Romford – 7.6% to £391,000

11. Grimsby – 7.5% to £168,035

12. Richmond Upon Thames – 7.5% to £762,749

13. Kingston Upon Thames – 7.4% to £599,317

14. Bolton – 7.1% to £181,853

15. Belfast – 7.1% to 190,486

16. Lambeth – 7% to £618,445

17. Sutton – 6.9% to £468,180

18. Newcastle Upon Tyne – 6.6% to £213,887

19. Hillingdon – 6.3% to £493,671

20. Edinburgh – 6% to £274,246

The portal says homemover confidence and activity have been dogged by political uncertainty since 2016 but with a clear majority in the election, there is an opportunity to release pent-up demand in the spring, and for modest price rises.

Sellers’ pricing power will be enhanced by a lack of choice for potential buyers, with the proportion of agent stock that is available for purchase at its lowest for over two years.

Miles Shipside, Rightmove director and housing market analyst, says: “Given the Brexit track record to date, further political twists and turns should not be ruled out, though with a large majority there is a higher possibility of an end to the series of Brexit deadlines, and the prospect of an orderly resolution.”

Rightmove measures the prices of 95 per cent of property coming to market, and predicts that buyers and sellers will on average see a two per cent rise in those prices by the end of 2020.

“While this is over twice the current annual rate of 0.8 per cent it’s still a relatively marginal increase as it’s a price-sensitive market” says Shipside.

“There will be regional variations. London is finally showing tentative signs of bottoming out, and we expect a more modest price rise of one per cent in all of the southern regions where buyer affordability remains most stretched.

“In contrast, the largest increases will be in the more northerly regions, repeating the pattern of 2019 with increases in the range of two per cent to four per cent.”

But 2020’s housing market will still fall short of capacity, and the factors to allow it to return to full health will only be in place when Brexit is well in the past according to the portal.

Rightmove also says more needs to be done to help aspiring first-time buyers.

Shipside adds: “First-time buyers are the drivers of the market. Too many are struggling to save the necessary deposits, and not all of them want to buy a new-build home through Help To Buy.

“More ways of getting more people onto the ladder would help to limit rising rents, increase liquidity and transaction numbers in the housing market, and make the dreams of their own roofs above their heads a reality for many more of the younger generation.”

Reallymoving, a price comparison website that runs an index based initially on conveyancing quote forms, says the New Year will herald a turning point for the housing market, with prices dropping 1.2 per cent in January and 2.5 per cent in February.

Based on analysis of purchase price data from 30,000 conveyancing quotes, the site says the average property price in England and Wales will peak at £352,239 this month – December – before falling to £343,312 by February 2021.

The site also says that looking back over the second half of this year, the proportion of first time buyers in the market fell by 12 per cent compared to the same period last year, as the post-lockdown boom was driven by equity-rich homeowners higher up the ladder benefitting the most from the stamp duty holiday.

This trend helped push up average prices in the second half of 2020, which the site says will lead to a correction when the stamp duty holiday ends and first time buyer activity rebounds.

The site’s chief executive, Rob Houghton, says: “The mask is beginning to slip on the two-tier housing market of recent months, which has seen activity from equity-rich homeowners who are less affected by the pandemic, concealing problems at the lower end of the market where first time buyers have benefited little from the stamp duty holiday and faced considerable challenges securing higher loan to value mortgages

“The kind of growth we’ve seen over the last few months was never sustainable.

“Despite positive vaccine news, which will certainly boost confidence that the end of the pandemic is now in sight, there are significant challenges for the housing market to overcome in the short term, including the end of both the stamp duty holiday and the furlough scheme on March 31, which is likely to result in further downward movement in prices over the first half of next year.”

Larger country houses with labour-intensive outside areas and heavily-protected and listed interiors had been falling out of favour in recent years but Savills insists they are now favoured over flats and smaller homes with little outside space.

Its latest quarterly index shows that a substantial £2m country house has added an average of £111,000 to its value during 2020 whereas a flat or small terraced house of similar value – even in central London – has fallen in value.

“The unique circumstances of 2020, have led to a surge in market activity  at the top end of the housing market” says Lucian Cook, Savills head of residential research.

“This has supported prices and delivered some unexpected gains, but it hasn’t resulted in runaway price growth.”

The agency – using data from property consultancy TwentyCI – shows that the number of sales of £1m-plus property that were agreed in the 11 months to the end of November was 29 per cent higher than in the same period last year, despite a significant fall in activity during the first national lockdown.

The out-of-London subset of those purchases rose by a much larger 43 per cent.

“The very top end of the country house market, in particular, has had an extraordinary year – perhaps its best since the 1980s, as buyers sought a lifestyle shift and recognised the relative value on offer” says Cook.

Overall, prime regional house prices rose by 3.6 per cent in the year, while prime London values continued in the doldrums and rose by an average of just 1.1 per cent. Values in London’s most expensive central locations, where values remain almost 21% below peak, slipped by 0.4 per cent across the year, but stabilised in the final quarter.

“Given the practical implications of Covid-19, the prime central London market has relied on demand from domestic buyers and resident non-doms in 2020. In light of that, it has held up well but it simply hasn’t been able to match the performance of the regional markets or indeed the leafier parts of outer prime London” concludes Cook.

Meanwhile Knight Frank says the country house market finished 2020 with high-value properties proving to be the strongest performer during the fourth quarter.

Rural piles valued at more than £5m saw the strongest growth in the three months to December, rising 5.1 per cent. This pushed the annual rate of growth to 7.9 per cent in that price bracket.

Overall, the agency recorded an increase of 1.7 per cent for country houses in the three months to December. This took the annual price change during 2020 to 4.0 per cent, which was the best performance for more than six years.

This year’s Boxing Day bounce compares to a 61 per cent upsurge in traffic recorded on Boxing Day 2019.

Across the whole month of December 2020 – up to the end of the 26th – Zoopla has enjoyed a 33 per cent increase in searches for property compared to December 2019.

“Crucially, the Boxing Day bounce is not a one-off phenomenon; instead, it marks the start of the New Year uptick in traffic” claims Tom Parker, insurer spokesperson for the portal.

“This is set to intensify in January given the now imminent end to the stamp duty holiday, which is set to bring more hungry buyers into the market, keen to find and complete on their dream home before the stamp duty deadline expires at the end of March” he adds.

Zoopla says it saw the busiest run up to Christmas for over a decade with the market has recorded sales agreed on £62 billion more homes in 2020 than in 2019, with 100,000 sales expected to spill over from the last quarter of the old year into 2021.

“With more people spending more time at home this festive season, many are realising that their home falls short when it comes to delivering that Christmas magic – perhaps because the space is too small, the location is lacking or it is too far from loved ones.”

It says that in 2020 London leavers purchased 73,950 homes outside the capital, the highest number in four years, despite the seven-week spring closure of the housing market.

Collectively, Londoners bought £27.6 billion worth of property outside the capital this year, the highest amount since 2007 when London outmigration peaked.

This figure exceeds the total value of all homes sold in the North West last year.

But there has been a clear increase in the popularity of London outward migration since the onset of Covid-19.

In the first half of 2020, London leavers bought 6.9 per cent of homes sold outside the capital, equating to 24,480 sales.

However, in the second half of 2020, this figure rose to 7.8% and twice as many sales (49,470). In H2 2020 alone, Londoners purchased £18.4bn worth of property outside the capital, more than in any full year between 2008 and 2013.

Since the housing market re-opened in May, Londoners leaving the capital have travelled further than ever before.

The average distance moved by a Londoner buying outside the capital hit 40 miles for the first time in over a decade, up from just 28 miles during the first three months of the year.

This means the average person leaving London from May onwards travels as far as Cambridge to the north, Colchester to the east, Brighton to the south or Didcot to the west.

First-time buyers tend to retain more of their ties to the capital, moving shorter distances than anyone else. Since May, the average first-time buyer leaving the capital bought 26 miles away.

Conversely someone selling a home in London tends to sever their ties more deeply by moving much further. The average person selling their London home to buy outside the capital travels 41 miles, which is 57 per cent further than a first-time buyer.

These numbers are reflected in the sorts of homes leavers buy, with someone buying a two- bed property moving an average of 34 miles, while someone buying a four-bed travels 43 miles.

Sevenoaks recorded the biggest increase in the share of homes bought by Londoners. This year, 62 per cent of homes in the area were bought from a Londoner, 39 per cent higher than in 2019.

“While leaving London has been a rite of passage for many, often families reaching life stage milestones, the effects of lockdown and the desire for space seems to have heightened this drift” explains Aneisha Beveridge, Head of Research at Hamptons.

“The prospect of homeworking more regularly has also meant that London leavers are moving further than ever before. The average London leaver moved 10 miles further than in 2019 as buyers’ favour space over commutability.

“We expect this outmigration trend to continue into the first half of next year too. But usually as prices in the capital begin to flatline, which we forecast to happen in the second half of 2021, more Londoners decide stay put. Even so, given the housing market has been anything but normal since the onset of Covid, we expect to see the total number of homes bought by London leavers next year hit 2016 levels.”