Pent-Up Demand Turns Into Exchanges As UK Property Market Momentum Builds
Offers accepted hit all-time high in London during August
The UK property market saw the highest number of exchanges since the end of 2019 last week, as record-breaking numbers of offers in recent months translated into transactions.
UK exchanges were 69% higher than the five-year average in the week ending 29th August. Outside of London, the equivalent increase was 60%, and the weekly total was the biggest since December 2018. In the capital, where the housing market has taken longer to gain momentum since restrictions were lifted, the rise was 94%.
Pent-up demand has built in recent years against the backdrop of political uncertainty and tax changes, with the eight-week shutdown of the property market magnifying this trend and demand has been robust since the market re-opened in mid-May.
As a result, the seasonal slowdown that normally takes place in July and August has not happened this year. The weekly number of exchanges are therefore higher than previous years but also high compared to many periods during recent years.
The number of exchanges across the UK in the week ending 29th August was the 15th highest on record. Outside of London the number of exchanges for the period was 9th highest on record. Knight Frank records go back 20 years.
"We've been seeing competitive bidding and premiums paid on certain properties, and with prospective buyers wary of walking away from deals for fear of missing out, a high proportion of accepted offers are now transacting."
"We have seen higher levels of demand from Middle Eastern investors looking at London and the UK since the market re-opened" said Henry Faun, Partner at Knight Frank Middle East. Underlining how active the market has become, which has also been partly driven by a stamp duty holiday, the Bank of England this week said that mortgage approvals were 66% higher in July than June.
While activity in London initially lagged more suburban markets due to a focus on outdoor space and greenery, the capital has come back strongly over the summer. The number of offers accepted in London was the highest on record in August, suggesting that downwards pressure on prices in the capital will moderate.
Henry continues, "We have seen most sales being closed within 10% of the asking price if not closer and competitive offers have returned across all price bands. The pent up demand during lockdown is now translating into more offers and transactions agreed. For our Middle Eastern clients, the Stamp Duty holiday combined with an attractive exchange rate ensures the UK remains appealing for investment or the purchasing of a second home."
