A reversal of the escape to the country trend, which peaked during significant portions of the pandemic and ensuing lockdowns, is a key feature of the housing market’s readjustment over the final quarter of 2021. Further drivers, including the end of the stamp duty holiday and a rise in second home ownership, are facilitating the property market’s progressive reclamation to normal economic conditions.
Many left town centres and cities in search of green, outdoor and office space during successive lockdowns over the course of the pandemic. With lockdown measures now ceased, restrictions alleviated, and amenities returned; the escape to the country trend reversal is now accelerating. In London, this started in the rental market, with tenants moving in to capitalise on low rents. It is now occurring with buyers, faced with long commuting times.
Second-home purchases have also risen in popularity as an alternative to a wholesale return to towns and cities. Knight Frank data indicates that many buyers outside London are specifically attracted to flats as a ‘bolt-hole’ in the capital. Of all new prospective buyers registering for flats, 9.5 per cent were in search of flats in the third quarter; this is up from an average of 3 per cent over the duration of the pandemic.
The three per cent surcharge levied for stamp duty on second-home purchases achieved a record proportional contribution to total residential stamp duty collections in the second quarter of 2021. The £485m of the £2.06bn figure reported by the government, was 24 per cent of the total and the largest in terms of value since the fourth quarter of 2017.
Buy to let investors in the capital are also looking for affordable second homes with appealing credentials outside the capital in commuter zones such as Luton. Knight Frank research indicates that second home purchases are up 83 per cent relative to the five-year average. Moreover, the Knight Frank Global Buyer Survey reveals that a third of global buyers are more likely to purchase a second home as a result of covid-19.
In London, demand continues to surge this autumn as supply plays catch up. Excluding 2020, the number of new prospective buyers registering in London was 27% above the five-year average in the third quarter.