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May 2021 | London

Things change and things stay the same

Robin Johnson is managing director, Kinleigh, Folkard and Hayward Professional Services

Until recently, I rather felt as though I’d been living the same day over and over again for the past year. Time has passed without it feeling like anything has happened – did that steak and Malbec we had for supper happen last week, or last month? Or was it yesterday? You know what I mean.

As I write, I have ventured back onto the office, and England is emerging from the strictest level of lockdown. We are now allowed to get back to restaurant terraces and pub gardens. The vaccine roll-out continues, and life feels as though it’s taking a tentative step towards a new normal. 

March brought the Budget’s extension to the stamp duty holiday – I have mixed views on the double cliff-edge, but that’s another column for another day – and April brought the 95% Mortgage Guarantee Scheme. 

First of all, nothing is perfect and this scheme conforms to that tenet. It is, however, a powerful influencer on buyer behaviour and market sentiment. Together with the extended holiday on stamp duty – albeit tapering back from July – we have seen the market in London and the South East explode.

Statistics pulled together by independent property analysts LonRes show new instructions in the prime London market surged by 72% in March year-on-year. Transactions were 40% higher than a year ago. 

New listings were also up at 24% over the five-year average for March. 

The housing market is moving. Transactions beget transactions, and that activity is being fuelled by the market for homes under the £1m mark.

This sector was the busiest of any, with 52% more properties sold in the first quarter of this year than in the same period of 2020. 

So much of this activity is being driven by the effect that successive lockdowns have had on our relationships with our homes.

People like myself are going out to work five days a week, while others are socialising again, but being locked in a room for more than a year is likely to have changed most people’s tolerance for a confined space.

Our expectations of what we need from a home have changed – possibly forever – as they become an ever more essential part of our working lives.

We are seeing houses with gardens become even more popular with buyers – even those without children or pets. Pets, that’s another thing – with everyone stuck at home, demand for puppies and kittens has gone through the roof. 

It’s impossible to walk through a London park without tripping over frantic puppies flinging themselves on top of each other. Young professionals living in flats with small animals are discovering that outside space is not just a ‘nice to have’ anymore. 

Families are also growing, I’ve even heard people talking about ‘lockdown boomers’ – babies born as a result of lots more people getting pregnant. Growing families need bigger homes. 

The inevitable rise in the number of people working from home, even where they may return to the office a day or two a week, is also rejigging the need for home office space.

Whether this is in the garden, a box room or a spare bedroom, space is now a premium. 

Many people are moving out of London, realising that they can achieve a different balance between work and life as a result of companies being forced to let them work more flexibly. That is in turn freeing up homes in the city for those desperate to start working and rising up the career ladder after an impossibly awful year. 

For several decades now, London property market stock levels have been relatively low, prices have been high, and stamp duty bills made it a better financial prospect to extend homes instead of moving. 

The coronavirus pandemic has sparked huge social change. Those stock levels are changing, and this injection of property liquidity has meant that, with the right level of government support, housing transactions are climbing again.

Many of us enjoy the benefits of higher house prices, but as a market we need transactions. 

It might sound counterintuitive to hear me wax lyrical about people moving out of London, but the market has always been a numbers game.

Transactions are what counts. One person moves out and another moves in. Things change, and things stay the same.