UK regional prime property values experienced a slight decline in the second quarter of 2023, attributed to higher interest rates. Savills’ data indicates a price-sensitive market, with values dropping by 1.5% outside of London. Despite this, they remain 3.5% lower compared to the previous year but still 12.1% higher since the initial lockdown in March 2020.Â
In contrast, city markets show more resilience than rural areas, although the trend of moving to the countryside has slowed down. To achieve sales, sellers must consider prevailing economic conditions when pricing their properties. Frances McDonald, a director at Savills, emphasizes the need for sellers to adapt to buyers’ budget constraints.
“In recent months, there has been a notable readjustment in the work-life balance, which has played a role in supporting property values in prime city locations nationwide, resulting in a slight outperformance. Factors such as convenient transportation, proximity to work, and access to amenities have regained priority over lifestyle considerations for certain buyers.”
During the past year, high-value housing markets in key regional cities witnessed a modest decline of only 1.4%, whereas village and rural house prices experienced greater decreases of 3.7% and 3.9%, respectively, eroding some of the substantial gains observed in previous years.
According to the agency, the iIn contrast, prime markets located further from London, such as the Midlands, North of England, Scotland, and Wales, have shown stronger performance, benefiting from lower mortgage affordability pressure. These areas have experienced less downward pressure on prices compared to other regions.
Despite being lower than the previous year, new buyer registrations in the UK’s prime regional markets have maintained a robust level compared to pre-pandemic levels.Â
In June, registrations remained 17% higher than in June 2019. Although supply constraints have eased, stock levels are still five percent below normal, as reported by Savills.The country house market, which is more discretionary in nature, saw a 1.5% decline in values during the second quarter and a 4.4% decline year-on-year. However, it is important to note that there are significant regional variations.
In Scotland, the country house market offers favorable value compared to other locations, and notable property launches continue to attract strong buyer interest. Consequently, the market witnessed a marginal 0.5% price growth in the quarter.Â
This stands in stark contrast to the South East of England, where values declined by 4.9%. Impact of the work-life balance reset has been particularly significant in suburban and commuter markets, which are often populated by families and individuals looking to upsize. Buyers in these areas have increasingly placed emphasis on proximity to train stations with direct connections to London.
The inner commuter belt, encompassing areas within a 30-minute train journey of London, has experienced the most significant price decreases over the past year, with an average decline of 5.2%.
In these optional markets, personal preferences and lifestyle factors continue to hold more significance compared to practical considerations.
For instance, properties situated in coastal areas experienced minimal declines, with a decrease of only 1.0% in the quarter and 3.8% year-on-year. This implies that values have still risen by 20.2% since the initial lockdown in March 2020.
McDonald states, “The mortgage market stabilized faster than anticipated earlier this year, but with rates picking up again, we are witnessing an increased sensitivity to prices, particularly in markets closer to London, which rely more on borrowing.”
She emphasizes the importance of buyers and sellers reaching an agreement on price. Those sellers who adopt a realistic approach to pricing are attracting the most interest and ultimately achieving higher prices for their properties.
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