The race for space has been the key trend of the pandemic, hugely raising the allure of the country. The rate of price growth in rural areas in the first 10 months of 2021 was 8% - double that of cities in England and Wales. More than a third of homes sold in the country in 2021 received three or more offers.
In 2019, only three local authorities – Elmbridge, St Albans and Three Rivers – had a higher average house price than London. There are now eight authorities with an average price higher than that of London - £507,300. Cambridge, Hertsmere, Mole Valley, Tandridge and Windsor & Maidenhead.
Despite the ending of the stamp duty holiday, the country market remains resilient. In the final quarter of 2021, the average seller of a prime home in the South of England received 99.0% of the property’s asking price, against 98.0% in Q4 2020. At the height of the country boom in the second quarter of the year the average seller received 99.3%.
Sellers in South West were mostly likely to achieve more than their asking price; in the fourth quarter 36% did so, against 25% of sellers in the East of England and 24% in the South East.
In 2022, there are few signs that the migration from London will slow. In the fourth quarter of 2021, 15% of homes in the South of England were acquired by a buyer from London, compared with 10% in the same quarter of 2019. The price gap between London and the country may have narrowed or even closed in some locations, but homes outside the capital still offer more space.
In 2021, there were record low levels of properties for sale in rural locations. More choice should be available this year, taking some heat out of the market.
Price growth in the Southern regions is set to outpace London until 2024, but the tempo will moderate in 2022. We forecast rises of 3.5% in the South West, 3.0% in the South East and 2.5% in the East of England.
The rental market in the country was lively in 2021. Demand was driven up by househunters unsuccessful in the search for their dream rural home. There were double-digit increases in rents between June and November, with the South West leading the UK rental growth league.
The rents on larger properties rose most strongly thanks to the race for space; smaller properties underperformed. Build-to-rent groups developing on sites in the South of England have also benefited from the willingness of young professionals to leave London.
Rental home stock levels in the country seem unlikely to improve in 2022. But the pace of growth in rents will moderate as affordability barriers emerge. We forecast that the average rent will increase by 3.5% in the South in 2022 and 2.5% in 2023.
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