Eight factors shaping the top end of the UK’s property market
The UK’s prime real estate markets are set to continue to increase for the rest of this year at least, according to Savills research. Country houses and regional locations are likely to continue to be in high demand as lockdown lessons stay fresh in buyers’ minds, while London and city markets are due for a resurgence as hospitality re-opens and international buyers enter the market as travel resumes.
We anticipate the lifestyle drivers that have influenced the prime markets since they reopened a year ago will continue to do so through the remainder of 2021.
Lifestyle drivers will result in continued price growth across the prime markets beyond London, especially in the country house and coastal markets where there is the greatest imbalance in supply and demand.
The continued relaxation of social distancing measures and the rollout of the vaccination programme in the UK will underpin a return to price growth in the prime London markets during the second half of 2021.
Markets that have traditionally been dominated by those living and working in the capital’s financial and business districts, such as Canary Wharf, will begin to see demand increase more as workers start to return to the office.
As international travel gradually resumes, we expect to see a more pronounced recovery in prime central London prices from 2022 onwards, in a market that looks good value in both a historical and international context.
In more domestic markets, an increased requirement for space will continue to underpin demand in 2022, though we expect to see some rebalancing between London and the country as changes in buyer preferences, sparked by the pandemic, become less of a driver.
Longer-term price growth across all markets will be underpinned by a low interest rate environment, though this will be tempered by the prospect of higher taxes as the government seeks to restore public finances.
As has occurred in the past, a general election will slow the market in 2024. That could interrupt the pace of recovery in central London, which is most exposed to the risk of higher taxation in the event of a change in government.