First-time buyer demand and stalled price growth help city centres bounce back

  • City centre locations and flats are staging a comeback in the housing market, with the easing of restrictions and the 95% mortgage guarantee scheme in particular helping drive demand:
    • Flats have seen the biggest jump in buyer demand since January, up by 39%
    • Buyer demand in city centres is up by 35% compared to a 32% jump in demand for villages, with the biggest jumps in York, Norwich and Sheffield city centres
  • On average city centres have seen price growth remain flat at 0% since the start of the year, helping some buyers find a relative city bargain
  • A new study shows that just under one in five first-time buyers (17%) say they are already using or are planning to use the 95% mortgage guarantee scheme
  • Over a quarter of homeowners (28%) are hoping to move to the countryside or coast, compared to just 10% of first-time buyers

There are signs of buyer demand in city centres and for smaller properties bouncing back, according to analysis of over 1.6 million properties from the UK’s biggest property website Rightmove.

Over the past year bigger family homes were the strongest performers in the market, but this has now shifted to flats, which saw the biggest jump in demand when comparing April with January, an uplift of 39%.

Buyer demand is measured by the number of people contacting estate agents to request more details about a property for sale on Rightmove.

Urban overtakes rural demand

The easing of covid restrictions has increased the appeal of living in a city centre, leading to some cities seeing buyer demand jump as high as 76% in York city centre, followed by a 62% jump in Norwich and a 57% rise in Sheffield.

Looking at some of the biggest city centres across Great Britain the average jump in buyer demand in April compared to January of this year was 35%. This compares to a 32% increase in prospective buyers looking to move to a village.

Similarly, if you look at all urban locations and all rural locations across Great Britain, the growth in buyer demand for urban locations is now outperforming the growth in rural areas for the first time since before the pandemic started.

In London the local areas further out are still seeing the biggest increases in demand, but overall the Inner London boroughs are only slightly behind the Outer London boroughs. Inner London saw a jump of 30% in buyer demand compared with January, while Outer London is up by 34%. Also Highbury in Islington is in the top ten, with a jump of 66% compared with January. Flats in the capital have also seen a jump in demand, up by 33% and coming in second place just behind bungalows (+41%).

First-time buyer opportunity

The introduction in April of the government’s 95% mortgage guarantee scheme coupled with a virtual standstill for prices in many of these city centres has combined to help more first-time buyers get onto the property ladder.

On average across some of the biggest cities in the UK prices are unchanged when comparing January with April, at 0%. This compares to an overall national average jump in prices of 3.4% for the same period.

A new study by Rightmove among over 1,000 first-time buyers has found that just under one in five (17%) are planning to use the 95% mortgage guarantee scheme or are already using it.

Just under two thirds of first-time buyers surveyed (60%) said that they have been able to save more money towards their deposit over the past year due to the various lockdowns. Over half of them (53%) said this meant they were going to put down a bigger deposit, while over a third (37%) said it meant they could now buy sooner than they were originally planning to.

The study also found that the desire to move to a quieter location that has been a trend driving a number of local markets over the past year is not as appealing to first-time buyers.

While over a quarter of homeowners planning to move in the next 12 months cited a move to the countryside or coast as their motivation (+28%), this was just 10% for the first-time buyer group.

Rightmove’s Housing Expert Tim Bannister says: “These are early signs but they certainly point to some good news for city centres across Great Britain, with a number of agents now telling me they’ve seen a marked uptick in demand from first-time buyers, and they’re managing to sell city centre flats more quickly than in earlier months of the year. People starting to venture in to their local high streets and once again experiencing the buzz of their city centres, along with greater mortgage availability for first-time buyers, means city centres are staging a much-needed comeback in the market. Right now some buyers are able to grab a relative city bargain compared to the heady price growth outside cities, but these early signs of demand could be the start of city prices rising again, so for those home-hunters who have their sights set on a city centre flat now is the time to see what’s available.”

Agents’ Views

Andy McHugo, Associate Director at James Laurence Estate Agents in Birmingham, says: “The fear caused by the announcements of further lockdowns at the beginning of the year was that the need to live in the city, close to your workplace and close to the bustling financial district would be affected, something Birmingham experienced back in 2008 with the market downturn when the city got hit harder than most. Nothing could be further from the truth now. Not only are enquiry levels fantastic, committed residential buyers are now returning. The dynamic may have changed slightly, so apartments with balconies or terrace are proving popular, as are those with room for a home office, a second and third bedroom for example.

“The government incentivised higher LTV mortgage opportunities has created intrigue and more uptake in such city apartments, as there has been an increase in first time buyers since January. Birmingham has seen a hive of positive activity from large company relocations, such as the BT group and previously HSBC headquarters, to entrepreneurial start-ups, and whilst the pandemic has slowed down the rate of growth, Birmingham, and the city in particular, is an exciting place in which to invest, and indeed live.”

Steve Pymm, Managing Director of Pymm & Co in Norwich says: “Flats are selling a lot quicker now than they were during the first quarter of the year. For example we recently launched Castle House, a new site opposite Norwich Castle in the city centre and they have proven very popular indeed. The market has been crying out for 95% LTV mortgages for years, so since the release of these lower deposit-based products the first-time buyer is back and they’re snapping up apartments and starter homes.”

Increase in buyer demand by property type, April 2021 versus January 2021

Property type

 

Change in buyer demand April 2021 vs Jan 2021

Flat +39%
Bungalow +30%
Detached house +26%
Terraced house +24%
Semi-detached house +23%

 

Asking price change in City Centres, April 2021 versus January 2021

City centre

 

Average asking price

April 2021

 

Average asking price

January 2021

 

% change

Leeds City Centre £159,972 £166,760 -4%
Sheffield City Centre £124,097 £128,606 -4%
Nottingham City Centre £178,390 £183,542 -3%
Cardiff City Centre £209,130 £212,521 -2%
Southampton City Centre £206,637 £209,586 -1%
Liverpool City Centre £161,860 £163,900 -1%
Birmingham City Centre £215,604 £217,524 -1%
Norwich City Centre £226,354 £228,258 -1%
Manchester City Centre £230,796 £231,766 0%
Newcastle City Centre £170,512 £170,148 0%
Hull City Centre £127,208 £126,776 0%
London (first-time buyer prices) £477,001 £474,950 0%
Glasgow City Centre £172,425 £170,291 +1%
Bristol City Centre £338,441 £333,734 +1%
Chester City Centre £240,413 £234,170 +3%
Oxford City Centre £532,957 £518,245 +3%
Edinburgh City Centre £315,400 £306,616 +3%
York City Centre £294,756 £285,505 +3%
Durham City Centre £359,992 £346,098 +4%
Leicester City Centre £135,363 £129,455 +5%

 

Increase in buyer demand, April 2021 versus January 2021

 

City centre

 

Change in buyer demand April 2021 vs Jan 2021

York City Centre +76%
Norwich City Centre +62%
Sheffield City Centre +57%
Southampton City Centre +55%
Leicester City Centre +53%
Newcastle City Centre +51%
Nottingham City Centre +39%
Leeds City Centre +39%
Birmingham City Centre +39%
Inner London +30%
Oxford City Centre +28%
Glasgow City Centre +28%
Liverpool City Centre +28%
Chester City Centre +24%
Edinburgh City Centre +23%
Hull City Centre +22%
Durham City Centre +17%
Cardiff City Centre +11%
Manchester City Centre +11%
Bristol City Centre +5%

 

ENDS

Notes to editor

The survey was conducted by Rightmove between 1st April and 12th April 2021. There were 7,803 respondents in total, 4,633 respondents were expecting to buy a property in the next 12 months, and of those 1,066 were first-time buyers.

All other Rightmove data compares April 2021 with January 2021.

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