The latest analysis from Savills reveals that prime city residential markets in the UK have proven more resilient to interest rate hikes compared to their rural counterparts.
The research shows a continued softening of UK prime regional house values, which slipped by -1.5% in the second quarter, leaving them -3.5% down year on year, but still 12.1% up since the first lockdown in March 2020.
Savills noted a shift from the pandemic trend of increased interest in rural properties, with city markets showing more robustness. However, the firm also stated that the ‘move to the country’ trend has not stalled completely.
Frances McDonald, director in the Savills residential research team, said: “With increasing pressure on buyers’ budgets, committed sellers need to price in a way that reflects the prevailing macroeconomic conditions to achieve a sale.” McDonald also highlighted a shift in priorities, with ease of access to transport, work, and amenities again taking precedence over lifestyle considerations for some buyers.
According to Savills, over the past year, high value housing markets in key regional cities saw price falls of just -1.4%, while village and rural house prices fell by -3.7% and -3.9% respectively. The trend has been most visible in suburban and commuter markets, where buyers have increasingly prioritised proximity to stations with direct links into London.
Prime markets in Midlands/North of England, Scotland, and Wales, where mortgage affordability is least stretched, have outperformed with less downward pressure on prices.
Despite a dip in new buyer registrations compared to last year, numbers remain 17% above June 2019 levels. However, Savills reports that stock levels are still -5% down due to supply constraints.
The country house market, considered more discretionary, saw values slip by -1.5% in the second quarter and by -4.4% year on year, with significant regional variation.
Coastal properties recorded the smallest falls, down just -1.0% in the quarter and by 3.8% year on year, meaning values remain up 20.2% since the first lockdown in March 2020.
