With COVID-19 restrictions easing, there is an increasing demand for flats in city centre locations. What does this mean for the UK housing market?
Throughout the past year, larger family homes were one of the strongest performers in the UK housing market. Throughout the successive lockdowns, buyers were looking for more space in quieter locations in the countryside and on the coast.
However, with COVID-19 restrictions easing, demand is growing for city centre properties, according to data from Rightmove. Demand is surging as more socialising is being allowed and more businesses can open their doors. This is naturally increasing the appeal of city centre living again.
When looking at all urban locations across Great Britain, the growth in buyer demand for urban spots is outperforming the growth seen in rural areas for the first time since before the pandemic began. However, in London, local areas further out are still seeing the strongest rise in demand.
Flats saw the largest increase in demand comparing April to January with an increase of 39%. Demand is measured by the number of people asking estate agents for more details about a property on Rightmove.
Tim Bannister of Rightmove says: “These are early signs but they certainly point to some good news for city centres across Great Britain, with a number of agents now telling me they’ve seen a marked uptick in demand from first-time buyers, and they’re managing to sell city centre flats more quickly than in earlier months of the year.
“People starting to venture in to their local high streets and once again experiencing the buzz of their city centres, along with greater mortgage availability for first-time buyers, means city centres are staging a much-needed comeback in the market.”
Spotlight on first-time buyers
In the past two months, first-time buyers in particular are returning to city centre locations in the UK housing market. Over a quarter of homeowners planning to move named a move to the coast or countryside as their motivation. However, for the first-time buyer category, this was only 10%, according to a study by Rightmove.
Demand is particularly high for two- or three-bedroom flats in city centres with home office space and a balcony. With competitive interest rates and a larger amount of mortgage deals available with lower loan-to-value ratios, there are a number of options for first-time buyers.
Rightmove’s study of more than 1,000 first-time buyers revealed one in five, or 17%, are planning to use the 95% mortgage guarantee scheme or are already using it. Just under two-thirds, or 60%, of first-time buyers said they’ve been able to save more money during the past year.
Additionally, more than half, or 53%, shared this meant they were able to put down a larger deposit. And over a third, or 37%, said this meant they could buy sooner than they were planning to. As first-time buyers will still be eligible to make stamp duty savings even after the tax holiday ends, this buying group will likely help keep the market moving throughout the year.
Tim Bannister concludes: “Right now some buyers are able to grab a relative city bargain compared to the heady price growth outside cities, but these early signs of demand could be the start of city prices rising again, so for those home-hunters who have their sights set on a city centre flat now is the time to see what’s available.”