London house price growth: asking prices rise as upsizing home workers head to the suburbs for houses with gardens

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Average asking prices for homes across London are continuing to grow despite increasing uncertainty about the spread of Covid-19, as upsizers dominate the capital’s post-lockdown property market.

Helping to keep prices firm is an influx of home buyers heading to the suburbs in search of more space for family life and working from home, before the stamp duty holiday deadline.

In London the average property price now stands at £633,000, up 0.6 compared to a month ago, and up 4.8 per cent compared to August last year.

The average starter home in the capital costs £481,000, up 1.2 per cent year on year.

Table: the price of a first, second and a “forever” home in London

Market sector Average price (Sept 2020) Average price (Aug 2020) Monthly change Average price (Sept 2019) Annual change
First-time buyers £481,281 £482,584 -0.3% £475,578 1.2%
Second steppers £706,444 £704,308 0.3% £677,744 4.2%
Top of the ladder £1,453,872 1.3% 1.3% £1,332,123 9.1%

Source: Rightmove

A “second stepper” property – defined as a three- to four-bedroom home, excluding detached houses – comes in at £706,000, up 4.2 per cent during the same period.

But the biggest annual growth is in “top of the ladder” properties – large homes with four or more bedrooms, which have seen annual price growth of a resounding 9.1 per cent in the past year and now cost an average of £1,454,000.

Nationwide, the average price of a home is £320,000. This is 0.2 per cent down on last month but a five per cent increase compared to August last year – the highest annual growth Rightmove has recorded for four years.

The strongest-performing property category nationwide is the “second stepper” home, with price increases of 5.7 per cent year on year. Large family houses and starter homes have both seen annual price increases of more than four per cent.

The race for more space

Tim Bannister, director of property data at Rightmove, said the main buying activity in London is going on in the suburbs, with the volume of sales in Zone 1 down 14 per cent compared to last year.

“Needing more space has always been the most popular reason for moving house, but now there’s a new urgency for extra space to be able to work from home,” he said. “At the start of the year a fourth bedroom was very much a luxury for buyers trading up, but it’s now emerging as a must-have for those who are able to take that step.

“We know that some people are now choosing to move out of London altogether, but these latest figures show that there’s still plenty of activity in the outer areas of the capital. The market remains challenging in Zone 1, as the benefit of living within walking distance of an office in the City has dropped down buyers’ wish lists for now.”

Jeremy Leaf, principal of Jeremy Leaf & Co estate agents in Finchley, said he is seeing a two-tier market developing in his part of north London, with demand strongest for family-sized houses and weakest for starter flats.

“Buyers are upsizing locally and we have also noticed a continuation of the trend of people living in smaller properties in Zones 2 and 3 – such as Islington, Kentish Town and Tufnell Park, moving out to Zones 4 and 5.

“Further out, they get better value for money and meet their aspirations in terms of additional space and home working, plus the proximity to parks and better walks.

“Many are not spending as much or any time in the office, so the commute is less of a factor in terms of living close to a station. They can cope with the longer journey to work, particularly if it is undertaken less frequently.

“Pent-up demand and the stamp duty holiday have helped bring forward many moving decisions that might have been put into practice late in the year or early next year.”

In south-east London, Lea Hudson, sales manager at Lovell Homes, said there has been a “flurry” of interest in larger three-bedroom homes at the Trinity Walk development in Woolwich in the past month. Buyers are moving from more central locations and spending £550,000 to £560,000 on a 1,000 sq ft three-bedroom flat. “They are looking for a third bedroom for an office or as a guest room which has been triggered by the stamp duty window,” she said.

Fastest-moving market: London

Today’s report also reveals that it now takes an average 49 days for a home to sell in the capital – making London the fastest-moving market anywhere in England or Wales. It is only beaten by Scotland, where homes are selling in a speedy 35 days on average.

Rightmove estimates that there are now almost 40 per cent more homes going through the buying process than during the same period last year, and warns of “congestion of sales in progress”, leading to delays with mortgages and solicitors.

Narendra Gandhi, director of Winkworth’s Ealing and Acton offices, said there has been a “notable increase” in owners selling flats without outside space, and moving further out of London in search of square footage, inside and out.

“Most still want to be within commuting distance of town to access their workplace if required,” he said. “The lure of what can be purchased at a similar level, house-wise and with a garden is becoming increasingly tempting. The overriding factor has been lockdown, as it has given homeowners real time to think about life in general and their futures.”

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