The rise of £1m homes out of London: A pandemic keeper?

By Harry Brown

Many things have changed since we were plunged into lockdown almost precisely a year ago. Since the pandemic began, we have seen our desires, priorities, and needs shift.

It’s long been reported over the past 12 months that house buyers, existing and new, have seen a shift in their priorities as well. Cheaper, larger homes and access to the outdoors have seen an influx of buyers gracing different corners of the British countryside. 

This poses many questions for London’s housing market. Historically, both the most desired and expensive region of the UK, the capital has seen increasing competition from not just the commuter belt but areas far and wide. Recent data from Savills, which suggests property prices in Yorkshire and the north-west could rise by as much as 30%, nearly double the forecasts for London, illustrates this well.

However, this should be caveated. London has a population of 7x that of Birmingham, the UK’s second city. It is also worth noting that the starting point for this growth analysis forgets to mention that London property is already significantly more expensive than that in the rest of the country. 

Nonetheless, the statistics are significant. Accountancy firm PwC reports that for the first time in 30 years, 2020 saw London’s population decline by 300,000 as the impact of Covid began to resonate with Londoners. In particular, wealthy Londoners.

Furthermore, there are now 563,240 homes worth more than £1 million in Britain – but only 6,657 of the 39,629 new property millionaires created in 2020 were in the capital. The South of England, The Cotswolds  and Cornwall proving particularly fruitful destinations.

It seems then, encouraged by the pandemic, there has been some form of a wealthy exodus to rural retreats. However, a closer look at the data and beyond the headlines, London is still in a strong position. House prices in the capital do still continue to rise. 

It is worth stressing similar trends were seen and forecasted in 2017 in the pre-Brexit Britain frenzy; they eventually fizzled out. My view is more in line with Knight Frank’s recent Wealth Report, which predicts a strong return for the capital. 

We may have forgotten the allure of the city for now, but analysts still predict the capital’s property market will grow by 12.5% in the next five years. 

So whilst house prices in other regions in the country grow (and may continue to do so), I expect once we get back to normality, London will remain the destination of million pound plus properties.