The UK’s prime residential market has seen a remarkable recovery in activity levels since the surprise reopening of the housing market in England, according to global real estate expert Savills.
The latest Savills agent report exhibits expanded buyer appetites for the UK’s prime residential properties, with the number of agreed sales in the market above £1 million up 48 per cent when compared to the corresponding week in June 2019, according to recent data from TwentyCi, who recorded 22,893 total agreed sales in the first week of June 2020.
Zoopla data suggests that agreed sales from the first week of June were 12.6 per cent higher than in the week leading up to the UK’s lockdown, with demand for new build homes rocketing by 66 per cent since that period.
To many analysts, the expedience of this recovery is unsurprising given the ongoing presence of several long-term trends. Knight Frank, the global real estate consultant, reports that London’s 40.9 per cent prime price performance over a decade from Q3 2009-Q3 2019 can be attributed to infrastructure investments such as Crossrail Line (£18 bn), expected to open in 2021, as well as improved global connectivity having the potential to reshape second home markets. In November 2019, for instance, Qantas tested its new 19-hour nonstop flight from London to Sydney which may be operational by as soon as 2022. As travel restrictions ease these intrinsic drivers, infrastructure and global connectivity, will continue to create value for investors.
Savills prime regional index exhibits growth of 10.6 per cent from 2007 to Q2 2020 in prime urban locations. Over the long term, this outlook trends positively, as global wealth continues to rise and the cost of debt looks likely to remain cheap by historic standards. Given this context, Prime locations at this point in the economic cycle are perceived as extraordinary buying opportunities by sophisticated investors.
“Market activity has been buoyed by pent up demand, in part at least, but we have been surprised at the extent to which lockdown has made people reassess their housing needs and, more pertinently, act upon it,” says Lucian Cook, Savills head of residential research.