Pent-up demand turns into exchanges as UK property market momentum builds

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 translate into transactions.

UK exchanges were 69% higher than the five-year average in the week ending 29 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 built in recent years against the backdrop of political uncertainty and tax changes. The eight-week shutdown of the property magnified 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 29 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.

“There are also few signs of the high levels of demand we’re been experiencing since the market reopened abating,” said Edward Rook, head of Knight Frank’s Country Department.

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.

James Clarke, head of London sales at Knight Frank, said most deals were being struck within 10% of the asking price if not closer, and competitive bidding had returned, with activity across all price bands.

“People are bored and want to get on with their lives. This pent-up demand is now delivering hard and fast results,” he said.