Higher interest rates have already softened UK prime regional markets but cities are proving resilient, Savills claims.
Research by the agent shows average prime values across UK markets outside of London – broadly the top 5% to 10% of the market by value – slipped by 1.5% in the second quarter, leaving them -3.5% down annually, yet still 12.1% up since the first lockdown in March 2020.
In contrast to a prominent pandemic trend, city markets are proving more resilient than their more rural neighbours, Savills said.
Over the past year, high value housing markets in key regional cities saw price falls of just1.4%, while village and rural house prices fell by 3.7% and 3.9% respectively.
The impact of the work-life balance reset has been most keenly felt in the suburban and commuter markets – typically home to families and highly leveraged upsizers – where buyers have increasingly prioritised proximity to stations with direct links into London, Savills said.
The inner commuter belt, within a 30 minute train journey of London, has experienced the most significant price falls over the past year, with a 5.2% average decline.
In contrast, prime markets furthest from London including the Midlands an North of England, Scotland and Wales, where mortgage affordability is least stretched, have outperformed with less downward pressure on prices.
Across the UK’s prime regional markets, while down on last year, new buyer registrations are currently standing up well to pre-pandemic levels, Savills said.
In June, they remained 17% above June 2019, and while supply constraints have eased, stock levels are still 5% down, Savills reports.
Frances McDonald, director in 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.
“But the work-life balance has had something of a reset over the past six months, which has helped underpin values in prime city locations across the country which are now marginally outperforming.
“Ease of access to transport, work and amenities are once again priorities that trump lifestyle considerations for some buyers.”