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House Movers Pushing up House Prices
Coronavirus has had the biggest impact on the UK publics everyday lives since World War Two. Many of the UK’s most important sectors have taken massive financial hits, unemployment is increasing month on month and the country has been thrown into an era of uncertainty. With this in mind it is surprising that the UK property market and in particular UK house prices has proven particularly resilient post lockdown. Many areas of the UK have seen huge rises in house prices and this article aims to dissect some of the reasons this might be happening.
First and foremost, it is the increasing amount of house purchases post lock-down that is pushing up the prices of UK property. Interestingly, however, the number of first-time buyers has dropped with house movers accounting for the largest proportion of this number.
Although there are a few noticeable reasons for this sudden influx of house movers, one stands out the most. This is the change in the UK public’s perception of what they require from a home. On the face of it this seems unusual. Surely people bought homes they wanted to live in, even before lockdown. For many proud homeowners this might have been the case but for others who spent more time away from their property at work, social events or travelling, a house was somewhere to rest at night.
The unprecedented government measures during lockdown confined the UK population to the four walls of their house for up to 23 hours a day. People had no choice but to start working from home, eating at home and entertaining at home. During these months, many homeowners became more wary of what they need from a property they are spending more time in. They might feel they need more room, a garden, a nicer kitchen area for cooking, the list goes on. As the property market reopened, many of these homeowners began searching for property that would fit this new perception.
Are people moving out of London?
Another interesting factor in the surge of house prices outside of London is the sudden change of migration patterns seen post-lockdown. As people have become more accustomed to life working from home, and the lack of urgency shown by companies to get people back in the office, homeowners in London are considering life outside the capital.
According to research undertaken by Total jobs, Covid-19 is accelerating migration away from the capital, as 1.6m Londoners (26%) have been working outside of the city during lockdown and want to continue doing so.
A staggering 43% of respondents in the study have said that the new flexibility in working arrangements offered by their employer would encourage them to consider seeking new pastures outside of London. As businesses become more flexible and start offering workers increased opportunity to work remotely, people are becoming more interested in the prospect of moving to other areas of the UK. This is in part due to the value for money people can benefit from outside of the capital, with property prices considerably less.
A reverse ‘brain drain’?
Historically, many parts of the UK have suffered from what is often termed a ‘brain drain’. Simply put, this is the migration pattern seen from newly graduates moving from poorer areas of the UK to London in search of better job prospects and larger pay packets. In fact, of the 6.9 million working age adults in London, a third have come from elsewhere in the UK.
With the new flexible working arrangements offered by employers and the drop in appeal of living in the capital, this trend looks likely to change. Total jobs have reported that research they have undertaken post-lockdown shows that only 20% of Londoners see themselves remaining in London for the rest of their lives, compared to 27% only a few months earlier.
Jon Wilson, CEO at Totaljobs commented:
“Covid-19 has drastically impacted the way we live, what we want from our jobs, and how we strike the balance between home and work. The pandemic has affected jobs across many different sectors, and, as a result, people are increasingly expanding their job searches beyond their immediate location.
“With many younger workers reporting that they would be interested in moving out of London if flexible and remote working options were available, there’s a real opportunity for regional employers to attract highly skilled and experienced people looking to relocate. In fact, Totaljobs research found that 25% of workers have already requested to continue remote working long term, meaning location could become less of a barrier for attracting talent altogether. Embracing the potential of flexible working for roles that can be carried out this way helps to retain staff, even those with plans to move further away from cities. This means employers can widen their talent pools beyond the candidates they can find locally.”
Prices Soar in the North
With these changing migration patterns there has been strong performances in the UK property market outside of London, with the North of England doing especially well.
According to Zoopla, cities in the north, north-west and Yorkshire and the Humber are leading the way in terms of house price growth.
At the top of the list is Nottingham, where average values have gone up by 4.7% since last September. This is based on analysis of sold prices, mortgage valuations and data for agreed sales. Manchester follows closely behind with house price inflation of 4.2%. Leeds is next with a 3.9% increase, followed by Edinburgh (3.7%), Leicester (3.6%) and Liverpool (3.4%).
Opportunities for Investors
In terms of rental yields and house price growth, northern cities have long been the most attractive for property investors. This stranglehold over the investor market only looks more likely to strengthen with the changing migration patterns. As more workers look to move to cities outside of London, and graduates remain in their university cities, house price growth looks set to continue.
Investors should look to profit from the strong rental markets, high yields and expected capital growth of large cities outside of London such as Manchester, Birmingham and Leeds. Missing out on the low house prices now could see property investors having to fork out a lot more money in the near future.
If you are interested in investing in property but are not sure where. Contact CityRise today for professional and impartial advice on the UK’s property market.
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