UK’s prime regional city residential markets more resilient than rural neighbours
Average prime values across UK markets outside of London – broadly the top 5% to 10% of the market by value – slipped by -1.5% in the second quarter, leaving them -3.5% down year on year, yet still 12.1% up since the first lockdown in March 2020.
In contrast to a prominent pandemic trend, city markets are proving more resilient than their more rural neighbours, though while the ‘move to the country’ trend may have slowed, it has not stalled, the firm reports.
| Q2 2023 | Suburban | Inner Commute | Outer Commute | Wider South | Midlands/ North | Scotland | Wales |
| Quarterly growth | -1.3% | -2.0% | -2.2% | -1.4% | -1.2% | -0.1% | -1.2% |
| Annual growth | -4.5% | -5.2% | -4.8% | -2.9% | -1.5% | -0.7% | -1.7% |
| Growth since Mar-20 | 12.5% | 8.9% | 10.1% | 15.4% | 11.6% | 16.2% | 7.3% |
Source: Savills prime regional index, Q2 2023
“With increasing pressure on buyers’ budgets, committed sellers need to price in a way that reflects the prevailing macroeconomic conditions to achieve a sale,” says Frances McDonald, director in the Savills residential research team.
“But the work-life balance has had something of a reset over the past six months, which has helped underpin values in prime city locations across the country which are now marginally outperforming. Ease of access to transport, work and amenities are once again priorities that trump lifestyle considerations for some buyers.
Over the past year, high value housing markets in key regional cities saw price falls of just -1.4%, while village and rural house prices fell by -3.7% and -3.9% respectively, eroding some of the sizeable gains of the past few years.
The impact of the work-life balance reset has been most keenly felt in the suburban and commuter markets – typically home to families and highly leveraged upsizers – where buyers have increasingly prioritised proximity to stations with direct links into London. The inner commuter belt, within a 30 minute train journey of London, has experienced the most significant price falls over the past year, of -5.2% on average.
By contrast, prime markets furthest from London including the Midlands/North of England, Scotland and Wales, where mortgage affordability is least stretched, have outperformed with less downward pressure on prices.
Across the UK’s prime regional markets, while down on last year, new buyer registrations are currently standing up well to pre-pandemic levels. In June, they remained 17% above June 2019, and while supply constraints have eased, stock levels are still -5% down, Savills reports.
Country house market – all about best in class
The more discretionary country house market saw values slip by -1.5% in the second quarter and by -4.4% year on year, but the averages conceal significant regional variation.
In Scotland, the country house market represents great value relative to other locations and significant launches continue to attract strong buyer interest. As a result, the market recorded marginal 0.5% price growth in the quarter, in stark contrast to the South East of England where values fell by -4.9%.
In these discretionary markets, lifestyle considerations continue to trump more practical concerns. For example, properties in coastal locations recorded the smallest falls, down just -1.0% in the quarter and by 3.8% year on year, meaning values remain up 20.2% since the first lockdown in March 2020.
Wider market uncertainty leaves market price sensitive
“The mortgage markets settled much quicker than expected at the start of the year, but with rates accelerating again, we are starting to see increased price sensitivity, particularly, though by no means exclusively, in markets closest to London which are more reliant on borrowing,” says McDonald.
“It’s vital that buyers and sellers align on price. Sellers who are realistic on pricing are continuing to command the most interest, and are ultimately achieving a higher price.”
