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London’s house price premium wanes

Published: 15/09/2021 By Tom Bloomfield

Recent data produced and published by Rightmove reveals a relative fall in the number of million-pound homes in the capital.

When compared to the twelve months before the pandemic, the most recent twelve months have seen a 7% drop in London’s share of the UK volume of million pound plus sales, with South East England being one of the areas seeing the biggest gains - so whilst house prices have risen everywhere, for the first time in a very long-time London is experiencing slower growth than its neighbouring counties.

This data supports what we have seen on the ground in Essex and Suffolk; In the years preceding the first lockdown the market for larger country homes was flat. This partly reflected uncertainties around Brexit, but was, in our view mainly driven by waning demand for large gardens, additional square footage and out-of-the-way locations.
However, lifestyle changes brought about by the pandemic, including greater freedoms to work from home, mean this trend has been put into reverse gear.

Looking ahead

Many city employers are still deliberating or experimenting with flexible work arrangements, so not all of London’s million-pound homebuyers will be able to confidently use their new-found freedoms straight away; as such we expect the re-balancing will continue for years to come.

Their desire to move will need to be underpinned by the continued availability of cheap money, but for now at least there seems to be plenty of it about; according to John Stepek of Money Week, the banks are engaged in a full-blown mortgage price war “which does not look like ending soon”.