UK housing market frenzy shows no signs of slowing
It took less than a week to sell a two-bedroom garden flat in north London, with a guide price of £950,000. Featuring a large patio, garden, oak floorboards and underfloor heating, it is in a mixed area on the outskirts of Islington and Camden.
“We’ve been inundated with people wanting to see it,” says Andrew Groocock, a regional partner at the estate agents Knight Frank, which helped organise 23 viewings. “It ticks the boxes of exactly what’s hot in the market at the moment. It’s still an incredibly buoyant market. The last two years have been remarkable.”
UK inflation has hit a 40-year high of 9%, the cost of living crisis is worsening as food and energy bills soar while real wages are falling, and UK interest rates are on their way up – but the housing market is still exuberant. House price growth may well have peaked, but the “race for space” that started during the Covid pandemic continues. Many people have embraced hybrid working and spend more time at home, driving up demand for bigger properties with a garden.
Andrew Perratt, the head of country at rival estate agent Savills, says commuter belts around big cities remain property hotspots – and the commuter zone has been stretched because people who do not need to be in the office every day are prepared to travel further.
Estate agents say demand is far outstripping supply as many properties get snapped up within a week or two, while it takes new sellers longer to put their homes on the market. Agents talk of bidding wars, and would-be buyers sending personal letters with pictures of their children and pets to market themselves to sellers, in a desperate effort to secure a purchase.
Lucy Joerin, a joint managing director of the Oxfordshire-based Stowhill Estates, says large family homes that took six to nine months to sell before the pandemic now sell within two to three weeks, with one coming under offer within four days of being launched.
“It’s not always the highest offer,” she says. “A lot of our buyers are putting together CVs, almost like a pitch to sellers … A key thing is that families are going to participate in village life.” She recounts that two buyers who were successful in recent days made a “lifestyle pitch” – sending letters about their families, with photos and promises that the children would go to local schools.
Jeremy Leaf, an estate agent in north London, says when he was keen to buy a particular flat 30 years ago, he also put personal notes through the door. “Why not?” he says. “Do whatever you can to get a property, particularly when it’s in such short supply and you want a particular road or catchment area.”
Several large family homes in Dulwich, an affluent neighbourhood in south London, on the market for between £1.2m and £2m, have just had sales agreed “well above” the guide price, Groocock says.
Two of them sold within a week – a three-bedroom house, priced at £1.5m, had 47 viewings and 23 offers, while a five-bed house, on the market for £2m, had 46 viewings and 29 offers. Some go to sealed bids – where all bidders simultaneously submit offers to the agent without knowing what rivals are prepared to pay.
About 40% of properties being marketed by Knight Frank across London are under offer at the moment, which is unusual. For the first time since the Covid pandemic struck, Middle Eastern buyers are returning – with a number booked in over the next two weeks to look at modern apartments in Kensington and Notting Hill.
The frenzy may be short lived. With a deepening cost of living crisis and interest rates rising as the Bank of England struggles to tame inflation, there are some who fear the housing market could go into freefall, though others believe a crash can be avoided.
This week’s labour market data showed “there are more jobs, more vacancies than unemployed people, so that’s going to give confidence that people can meet their obligations in terms of repayments,” says Leaf.
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