The price of prime housing outside London surged at the strongest pace in more than a decade during 2021 as house hunters sought more space and made lifestyle changes because of the Covid-19 pandemic.
Growth across the prime housing markets outside the capital averaged 9.3 per cent in the past 12 months, the strongest annual growth since 2010, according to property consultancy Savills.
Homes in the prime price bracket make up the top 5 to 10 per cent by value and are typically the most desirable and most expensive in a given location.
Properties in coastal areas, the Cotswolds and commutable private estates were the strongest performers this year.
Cotswolds country houses in the £2 million-plus market typically rose in value by nearly a quarter, amid rising demand from local homeowners looking to upsize as well as those relocating from elsewhere and aspiring second home owners.
Prime coastal markets, particularly Devon and Cornwall, recorded average price growth of 15.6 per cent during the year, driven by high demand and shrinking supply, Savills said.
The rise in prices came as Londoners spent a record £54.9 billion on property outside the city in 2021 after the pandemic caused the largest wave of departures from the capital in a generation.
Home buyers based in London purchased more properties elsewhere in 2021 than in any other year since 2007, when £36.6bn was spent, figures compiled by real estate consultancy Hamptons show.
Only the capital’s very largest houses, with at least six bedrooms, have come close to the country markets for price growth, Savills said, with price growth in prime central London generally averaging 2 per cent in 2021 and 3.7 per cent in outer prime London.
“In these markets, the rarity factors: whether a rarely available type of property; the most sought after locations; or simply the very best view, have combined with high levels of buyer demand and wealth to create pockets of extremely strong market conditions,” said Frances Clacy of Savills.
“New buyer numbers over the past month are running 1.5 times higher than at the same time in the two years pre-pandemic, suggesting that these trends will carry through into the early part of next year, at least.”
Looking ahead, Savills expects growth of 6 per cent in prime London neighbourhoods in 2022, up from 3.2 per cent this year.
The consultancy emphasised, however, that renewed uncertainty over the Omicron variant of the coronavirus could push that growth into later in the year.
Savills said prices had started to rise again for flats in prime areas, as people began to return to the city or looked for a pied-à-terre to use while there.
In prime urban locations, price growth totalled 9.1 per cent year-on-year, compared with 9.4 per cent growth in the prime markets surrounding cities such as Bath, Bristol, Cambridge, Edinburgh, Winchester and York, according to Savills’ data.
“Since the summer we’ve seen the return of strong buyer demand in key prime city locations,” Ms Clacy said.
“But the value on offer in village and rural markets, because of their longer-term underperformance, will continue to drive demand in these areas.”