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16 July 2021

UK real estate market retains its lustre

A renewed buoyancy to the UK’s residential property market has taken many by surprise given the backdrop of both Brexit and COVID-19. But a frenzy of buying and selling activity across the UK in 2020 and the first quarter of 2021 saw house prices grow more than 10% annually.

This exuberance is attributed partly to the stamp duty holiday that was introduced in mid-2020. However, any analysis of 2020 has to factor in the effects of the pandemic on the economy - by extension households - and the property market.

And if you’re wondering whether terms like ‘semigration’ and ‘Zoom towns’ are here to stay, the unfortunate news is that it’s still too early to say.

School-year activity

Take the latest research report from Knight Frank, one of the world's leading independent real estate consultancies, on the UK property outlook.

Its June 2021 report notes that a fair degree of last year’s activity was centred around popular universities and schools.

Its research shows that the top 10 local authorities with the strongest third-quarter transfer completion numbers was dominated by south-east England, where in-demand schools support property values.

The Knight Frank report notes that these top 10 localities hosted 29% of outstanding-rated secondary schools, compared to 11.3% in the ten least-busy summer markets. For primary schools, the equivalent figures were 24.6% and 15.9%.

“It is no surprise that many of the areas with the highest numbers of summer completions are close to the capital,” said James Cleland, head of Knight Frank’s Country business. “So many family buyers are driven by both having a reasonable commute to London and having their children in their next school for the start of the academic year."

The longer-term trends will be revealed in the third quarter of 2021, Knight Frank predicts, once schools are back and the stamp duty holiday has lapsed. “This will reveal more about the longer-term trajectory of the UK property market than the preceding nine months,” the report concludes.

Prime Central London

These property shifts are encouraging signs for property investors looking for fairly-priced deals. Particularly in light of Prime Central London prices recovering strongly over the past year.

Knight Frank’s UK property analyst, Tom Bill, said Prime Central London recorded annual house price growth for the first time in five years. This, he suggests, shows that the narrative about an exodus from the area and lack of international buyers doesn’t ring true.

Tom participated in a recent webinar hosted by Standard Bank  that explored the state of the market and the opportunities this presents for international buyers.

“It’s also a reminder that the period of price growth in Prime Central London had been long overdue,” he said. “This is a return to growth that was interrupted by the pandemic. So, in effect, it feels like we’re picking form where we left off in the early months of 2020 after the all-important general election results of 2019. This reduced political uncertainty that had been a feature of the market for years.”

He added that the initial ‘race for space’ when lockdowns hit appears to have reversed, with buyer interest shifting back to south-east England and London. Our sense is that the initial drive to be more rural has slowed down, and that expectation of a structural shift away from London was probably premature.

“Instead, that race for space has taken on a more urban flavour over the last six months. In the first six months after the market reopened in May 2020, the biggest jump in the number of properties sold was in north Devon which is a very rural part of the country. In the following six months, the biggest jump was actually in the London Borough of Brent,” Tom said.

This shift is unsurprising given London’s enduring appeal to professionals, academics and international buyers alike.

The London Report

Another research report produced by Knight Frank in 2021 sheds some light on the city’s qualities that have underpinned its appeal over the ages.

With specific reference to the residential market, the London Report delves into the changes wrought by the pandemic and how that will impact how we live and work.

More than 160 leading developers worldwide were polled on how they expect to respond to a world in which living and work space could meld together more seamlessly than we’d needed before.

A key finding was that developers don’t believe homes will necessarily be built to survive further lockdowns, but rather to be flexible and adaptable to changes in circumstances.

This could influence investors to focus more on mixed-use, mixed-income, walkable places, especially in high-density central London locations, the Knight Frank report suggests.

This, it is believed, could spark the evolution of the 15-minute city. The 15-minute city is a residential urban concept that endeavours to allow all city residents to meet most of their needs within a short walk or bicycle ride from their homes.

What does the rest of 2021 hold?

No matter how close or far we are from this vision of a future city, investors need to make decisions today on where tomorrow’s returns will come from.

In the meantime, Tom Bill predicts that the UK’s house price growth will slow as demand peters out toward the end of 2021. That could produce average annual growth of 5%.

An area like Prime Central London, he suggests, could see lower growth in 2021 of around 2%, followed by 7% the next year and then modest single-digit growth for next 5 years.

While the UK market’s stability has long been a strength, events of the past year have also shown that it is equally resilient. These are qualities that any investor values in any form of asset.

UK Property Insights (from The London Report)



The average monthly BTR rent collections as a percentage of rent due between March and November.

Three in ten

The number of London-based home buyers looking to buy in London in the immediate aftermath of lockdown, down from seven in ten previously.


Of London graduates plan to stay in the capital after they graduate


Is the number of research institutions in London – the highest level in the world


London was the top city for cross-border investment in 2020

London is the world’s most innovative city


London has the highest number of green-rated buildings in the world


The proportion of respondents to the Knight Frank Global Development Survey who said they were more likely to include “advanced technology” in future developments.]