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Britain is undergoing a regional renaissance. People have moved to Dorset from London and are holidaying in Suffolk rather than Spain. Call it the legacy of lockdown: Things are finally heating up outside of the capital.
Demand for property in outer regions of the UK has surged, as has interest in domestic tourism. With England’s reopening on June 21 looking uncertain and the prospect of a Mediterranean beach holiday rapidly fading, the country’s long overlooked areas are set to get busier over the next few months. That’s good news for UK-based hotels and restaurants, but it could be bad for consumers trying to secure a holiday cottage or a garden table.
For the clearest view of the rebalancing between London and the rest of the country, look no further than the property market.
According to the Nationwide Building Society’s latest quarterly regional house price statistics, the capital experienced the weakest growth in house prices in the three months to the end of March, compared with the year earlier. The strongest growth was in the Northwest.
This reflects the fact that prices in the north have long underperformed those in London and the Southeast. But it’s also likely driven by people relocating near areas such as the Lake District and the Peak District. If you’re working from home, why not score a view?
The trend is even more pronounced for properties costing more than 1 million pounds ($1.4 million). According to Savills and data provider TwentyCi, more families have left London or moved farther into the commuter belt, prioritising bigger homes over a shorter journey to work. This has inflated the number of agreed sales in areas such as Hampshire and Kent. North Yorkshire also experienced an increase, underlining the interest in the north of the country. Transactions have been helped by the tax break on property purchases Some people have also decided to relocate farther afield in anticipation of more permanent home working. Data show a rise in agreed sales in Cornwall and Gloucestershire.
This movement is making areas outside of London more vibrant. Before the outbreak of Covid-19, foot traffic in coastal towns lagged the national average. This has reversed since the start of the pandemic, with historic and market towns also outperforming in May 2021 compared with 2019.
But the rush of demand outside of the capital is causing some problems too — not least because smaller towns are having to accommodate holidaymakers as well as new homeowners.
In the short term, business outside of London will pick up further if existing WFH guidance and curbs on international travel remain in place.
—Bloomberg