House prices in cities and towns are being driven up as workers start to prepare for a return to the office, new research suggests.
Prime postcodes in Winchester, Oxford and Bath saw some of the biggest price rises at 4 per cent, 3.7 per cent and 3.2 per cent respectively in the first three months of 2021, according to research from estate agent Savills.
These were followed by Edinburgh and York, where prices increased 2.6 per cent.
The city of Bath, where house prices increased by 3.2% in the first quarter of 2020
On average, the value of prime property outside of London increased by 2.2 per cent in the first three months of 2020 – the highest quarterly increase since March 2010 – and by 5.1 per cent annually.
Even central London, where house prices have plummeted since the start of the pandemic, has seen house prices increase for the first time since 2019.
Values crept up by 0.4 per cent in the first quarter of 2021, although they are still more than 20 per cent below their peak.
‘It’s no longer just a story of the search for village or rural idyll that dominated 2020,’ said Frances Clacy, Savills’ residential research analyst.
‘This third lockdown has made some people more aware of what they’re missing and there is a real sense of urban revival.
‘We’re now seeing prime regional town and city markets keeping pace with their more rural surrounds in annual price growth terms.’
Woodbridge, Suffolk. The county is a rural property hotspot, according to Savills
Londoners pay for proximity to park – but not the tube
City buyers still want access to outdoor space, however, and the price of living close to a central London park has risen sharply.
Buyers should now expect to pay a ‘park premium’ of 15.3 per cent to live within 100 metres of one, up from 13.4 per cent in 2015, according to the Savills prime regional index.
This third lockdown has made some people more aware of what they’re missing and there is a real sense of urban revival.
Frances Clacy – Savills
In a Savills survey earlier this month, buyers said access to a tube station was less important.
Only 39 per cent of respondents ranked having an underground station close by as being essential, compared to 63 per cent a year ago.
East London districts such as Clerkenwell, Shoreditch and Wapping saw price increases as young financial services employees and those seeking a weekday pied-a-terre took advantage of lower values compared to this time last year.
In Canary Wharf, however, prices continued to fall, dropping 2.5 per cent and leaving them nearly 10 per cent below their peak.
Lure of country life remains strong
Alongside price growth in cities, rural areas are still going strong.
Factors such as having more space and a garden, which drove people to move to the country at the beginning of the pandemic, are still high on buyers’ priority lists, and many workers anticipate only needing to go to the office for part of the week.
Savills said that many of those relocating were being driven by a desire to live closer to their extended family.
‘Proximity to family is now also a very strong driver, with our city offices reporting buyers returning to their home towns,’ said Clacy.
Savills’ survey found that 48 per cent of buyers and sellers were motivated by moving closer to family, compared to 39 per cent before Covid-19.
Second home hotspots along the coast also continued to see strong growth, with average prime coastal values up by 6.8 per cent year on year.
This was most pronounced in Devon and Suffolk, which are both relatively accessible to second home buyers from London.
Country houses worth more than £2millon saw some of the biggest price increases, as wealthy movers sought a slice of the good life.
Prices in that market increased by 2.9 per cent in the past three months, and 8.8 per cent annually, with Savills saying there was ‘no sign of reduced momentum’.
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