Huge property price growth in prime coastal and rural areas after a race for space in the pandemic is beginning to cool, new data suggests.
After two years of runaway growth, typical home values in these areas dropped from 2 per cent growth during the first three months of this year to 1.2 per cent during the following three months.
However, it still means that a property costing £1million in March 2020, would have seen its price tag rise by £160,000 on average, or £319,000 for a home worth £2million.
Cornwall (pictured) was a popular destination for house hunters looking for a home near the seaside during the pandemic
It follows 16 per cent of growth in this upper end of the property market since the start of the pandemic in March 2020, according to the data by Savills.
Frances McDonald, of Savills, said: ‘Following two years of unprecedented growth in the UK’s prime regional markets, the market has started to readjust and price growth is softening.
‘However, the slowdown is driven by lower levels of price growth in markets which saw the highest level of buyer demand over the course of the pandemic, rather than price falls.’
The estate agent went on to say that the places where prices are increasing is changing.
It explained that while high demand for coastal and rural areas is easing, prices are growing more in urban areas.
It said that the reason for the property market ‘rebalancing’ in this way was due to workers returning to the office.
Pictured: Estate agents Savills claims that house price growth in different areas has changed during the first half of this year
Some English seaside location (Cornwall pictured) have seen house prices rise amid high demand and a lack of supply
For the first time since December 2020, annual growth in well-connected urban markets is higher – up 7 per cent on the year verses 6.7 per cent in surrounding areas.
Some of the strongest quarterly growth has been in Tunbridge Wells, where average values have risen 4.2 per cent, York increasing 3.1 per cent, and Loughton up 3.1 per cent.
McDonald added: ‘The lure of urban living is also becoming more popular with downsizers – who recognise the opportunity to sell into a market where demand hugely exceeds supply, and are keen to trade in country pads in exchange for properties in cities such as York, Bristol or Winchester.
‘As a result, we can expect to see regional urban markets perform more strongly over the second half of the year.’
Whitby is a popular North Yorkshire seaside town (scroll down for details of a property for sale in the coastal area)
There are also early signs that demand has softened among discretionary buyers in the prime coastal market – where prices have risen 24.3 per cent since the start of the pandemic.
Growth here has started to slow and values are up just 0.6 per cent on the quarter, but still 8.7 per cent on the year.
Despite slowing price growth, lack of stock remains an issue and is continuing to prop up prices in some locations.
Three in five agents – a total of 62 per cent – cited lack of stock to be the biggest issue impacting the market, followed by increasing interest rates – at 21 per cent – and the rising cost of living at 17 per cent.
House prices in affluent coastal and rural areas have eased this year following years of runaway growth, according to Savills
McDonald said: ‘Growing concern for the country’s economic outlook has seen the gap between seller expectations and buyer budgets narrow – and they are now more aligned on price point.
‘Demand is still strong, but buyers are acting with caution and are less willing to bid over the asking price to secure the right property.
‘How much buyer budgets will shift over the remainder of the year will largely depend on how far the Bank of England decides to increase interest rates.
‘This will have a more significant impact on markets which typically take on more debt – such as the South and the home counties – and as a result, we may see a further slowdown in growth towards the back end of this year.’
Three homes for sale in affluent coastal and rural areas
1. Five-bed house, Chipping Norton, £3.5m
This manor house in the Cotswold’s Chipping Norton is Grade II listed and has plenty of outdoor space and a swimming pool
The luxury property boasts five bedrooms and is being sold by Savills estate agents with a price tag of £3.5million
The Cotswolds property has plenty of outdoor space, including a separate area dedicated to an uncovered swimming pool
This five-bedroom manor house in the Cotswold’s Chipping Norton is Grade II listed and comes with plenty of outdoor space and swimming pool.
It is being sold by Savills estate agents and has a price tag of £3.5million.
2. Seven-bed house, Whitby, £925k
This seven-bedroom townhouse is in the popular North Yorkshire seaside town of Whitby and is within walking distance of the beach
The large property has a south-facing garden and is currently on the market for £925,000 via Hope & Braim estate agents
This seven-bedroom townhouse is in the popular North Yorkshire seaside town of Whitby.
It has a south-facing garden and is within walking distance of the beach. It is on the market for £925,000 via Hope & Braim estate agents.
3. Four-bed house, Polruan, £950k
This four-bedroom house in Cornwall has a price tag of £950,00 and is being sold by May Whetter and Grose estate agents
The seaside property has a cottage feel and boasts picture-postcard sea views, including from this pretty living room
The appealing property has four bedrooms and is in the Cornwall village of Polruan
Cornwall proved popular during the pandemic’s race for space, and this four-bedroom house is in the area’s village of Polruan.
It has a large balcony and a further terrace, with stunning views of the sea. It has a price tag of £950,000 and is being sold by May Whetter and Grose estate agents.