What's ahead for the prime UK housing market? - 17th March 2021 Welcome and thank you for joining - Savills
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What’s ahead for the prime
UK housing market?
17th March 2021
Welcome and thank you for joining.
You are on mute for the duration of this
webinar.
We will begin shortly.
The Research Perspective
Market Backdrop, Survey Results & Forecasts
Lucian Cook, Director
Frances Clacy, Associate Director
2
Market backdrop
3
State of the market in the run up to a budget
Net agreed sales v same period in 2017 – 2019
Under 200k £200k-£300k £300k-£500k £500k-£1m £1m+
250%
200%
150%
100%
50%
0%
Source: Savills Research using TwentyCI 4
State of the market in the run up to a budget
Net agreed sales v same period in 2017 – 2019
Under 200k £200k-£300k £300k-£500k £500k-£1m £1m+
250%
200%
150%
100%
50%
0%
Source: Savills Research using TwentyCI 5
During February
-16% More stock under offer awaiting exchange
+37%
Less stock available to buy than at the same time
last year
Source: Savills Research using TwentyCi 6
Meaning stock shortages for larger homes
Detached Semi-Detached Terraced Flat
30%
August February
2020 2021 20%
Stock available v the same time last year
10%
Flats +16% +12%
0%
Terraced +3% -17% -10%
-20%
Semi +5% -22% -30%
-40%
Detached 0% -31%
Source: Savills Research using TwentyCI 7
In the market above £1m
Outside of London Within London
40%
of stock advertised on the web
22%
of the stock advertised on the web
was already under offer was already under offer
Source: Savills Research using TwentyCI 8
Key Questions
To what extent did the lockdown put home-movers plans on pause?
How much will the stamp duty extension boost activity?
What does the roll out of the vaccine do to lifestyle drivers?
And what does that do to buyers priorities?
9
Between 4th and 11th March 2021 we
surveyed 1,100 prospective buyers and
sellers of prime property to find out the
answers to these questions…
10Commitment to
moving
11How has the latest lockdown impacted moving plans?
Of which:
15%
Less committed to move
35%
37% 63%
Delayed plans but are still committed
No change Plans changed
in some way
26% 24%
Delayed plans but more
More commitment to
committed once
move in the short term
lockdown ends
Source: Savills Research Client and Applicant Survey March 2021 12Vaccine & relaxation of lockdown looks to boost confidence further
Net balance of opinion on commitment to move
Greater commitment to
move in the short, medium &
longer term
+25%
+23%
+20%
+19%
Suggests demand is likely to
remain strong throughout all
of this year and into next
Over the next 3 months Over the next 6 months Over the next 12 months Over the next 24 months
Source: Savills Research Client and Applicant Survey March 2021 13As does the stamp duty holiday extension
22% 19% 1.0% 1.1%
Significantly Somewhat
more more Somewhat Significantly
committed committed less less
committed committed
Source: Savills Research Client and Applicant Survey March 2021 14With greater urgency from specific buyers
How has the extension of the stamp duty holiday affected your commitment to
move prior to 30th June?
Somewhat more committed Significantly more committed
60% London
based buyers
50% 48%
More
Proportion of respondents
40% committed
27%
24%
30%
19%
Second
20% 22% home buyers
10%
24%
20% 18%
54%
More
9%
committed
0%
Below £500k £500k - £1m £1m - £2m £2m+
Source: Savills Research Client and Applicant Survey March 2021 15Buyer priorities
16One year on – have priorities changed?
More attractive April 2020 March 2021
Working from home more 49% 52%
Accessibility to Wi-Fi 48% 41%
A separate space to work from home 44% 40%
Garden or other outside space 49% 38%
Village location 39% 33%
Countryside location 41% 35%
Source: Savills Research Client and Applicant Surveys, April 2020 & March 2021 17The importance of locality
Now Prior to Covid-19
60%
Proportion of respondents who ranked as 1 or 2
50%
42%
39% 39%
40% 36%
30% 27%
20%
17%
10%
0%
Park/ open space Family Shops/ local amenities Train/ tube station School(s) Place of work
Source: Savills Research Client and Applicant Survey March 2021 18The importance of locality
Now Prior to Covid-19
60%
Proportion of respondents who ranked as 1 or 2
50%
40%
30%
55%
48%
20%
37%
28%
10%
17% 15%
0%
Park/ open space Family Shops/ local amenities Train/ tube station School(s) Place of work
Source: Savills Research Client and Applicant Survey March 2021 19Outlook
20Drivers in the mainstream markets
Continuation
With price
Less risk of a of lifestyle
growth
mid year lull in drivers over
unpinned by
the market 2021 for those
low interest
given… Speed of the looking for
rates
vaccination more space
A return to the
programme &
economic
roadmap for
fundamentals
easing of And a return
from 2022
social to the patterns
Extension of distancing of house price
furloughing Extension of growth
scheme to the stamp duty normally seen
protect jobs holiday at this stage in
the housing
market cycle
21Mainstream Housing Market Outlook
2020
2021 f
Actual
UK House Price Growth
+7.3% +4.0%
Transactions (m)
1.05 1.40
GDP Growth (whole year)* -9.9% +5.5%
Unemployment (at Q4)* 5.5% 5.8%
Bank Base Rate (at Q4)* 0.10% 0.10%
Source: Savills Research, Oxford Economics* 22Mainstream Housing Market Outlook
2020
2021 f 2022 f
Actual
UK House Price Growth
+7.3% +4.0% +5.0%
Transactions (m)
1.05 1.40 1.25
GDP Growth (whole year)* -9.9% +5.5% +6.0%
Unemployment (at Q4)* 5.5% 5.8% 4.8%
Bank Base Rate (at Q4)* 0.10% 0.10% 0.10%
Source: Savills Research, Oxford Economics* 23Mainstream Housing Market Outlook
2020
2021 f 2022 f 2023 f 2024 f 2025 f
Actual
UK House Price Growth
+7.3% +4.0% +5.0% +4.0% +3.5% +3.0%
Transactions (m)
1.05 1.40 1.25 1.20 1.20 1.20
GDP Growth (whole year)* -9.9% +5.5% +6.0% +2.2% +2.0% 1.8%
Unemployment (at Q4)* 5.5% 5.8% 4.8% 4.3% 4.1% 4.0%
Bank Base Rate (at Q4)* 0.10% 0.10% 0.10% 0.10% 0.25% 0.5%
Source: Savills Research, Oxford Economics* 24Mainstream Housing Market Outlook
2020 5 years
2021 f 2022 f 2023 f 2024 f 2025 f
Actual to 2025
UK House Price Growth +21%
+7.3% +4.0% +5.0% +4.0% +3.5% +3.0%
Transactions (m) n/a
1.05 1.40 1.25 1.20 1.20 1.20
GDP Growth (whole year)* -9.9% +5.5% +6.0% +2.2% +2.0% 1.8% +19%
Unemployment (at Q4)* 5.5% 5.8% 4.8% 4.3% 4.1% 4.0% n/a
Bank Base Rate (at Q4)* 0.10% 0.10% 0.10% 0.10% 0.25% 0.5% n/a
Source: Savills Research, Oxford Economics* 25Differences in the prime market
Prices looked
More driven Demand is
good value in
by wealth and likely to
the prime
equity as remain strong
central
opposed to throughout all
London
mortgage debt But more of this year
markets pre Vaccine &
exposed to tax and into next
pandemic relaxation of
rises and any
lockdown
political
looks to boost
uncertainty
confidence
over the And pent-up
Generally less further Lifestyle
medium term demand
exposed to the factors and
end of the remains given
locality remain
stamp duty international
important
holiday travel
drivers
restrictions
26Prime Market Forecasts
2020
2021 2022 2023 2024 2025 5-year
actual
Prime central London +22%
-0.4% +3.0% +7.0% +4.0% +2.0% +4.0%
Outer prime London +15%
+1.6% +2.0% +5.0% 3.0% 2.0% +2.0%
Prime regional +21%
+3.6% +5.0% +4.0% +3.5% +3.0% +3.5%
Source: Savills Research Note: These forecasts apply to average values in the second hand market. New build values may not move at the same rate. 27Thank you
28Q&A
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