Family DemandThe events of the past 12 months have had a significant impact on the housing market with the pandemic not only changing patterns of activity, but also buyers’ aspirations. In terms of supply, the pandemic has led to the number of new properties coming to the market down around -13% so far in 2021, compared to pre-pandemic levels. This lack of supply has impacted the number of sales being completed in the past year which was down -22% year-on-year. This reduced supply has combined with changing demand in the market.
The Newcastle City market (NE1-NE7) has seen the average house price in 2021 rise to over £170k as the composition of the market has moved towards family housing.
The number of sales in the 12 months to Q1 2021, during the pandemic, was down -22% compared to the 12 months to Q1 2020. The largest contraction has been for flat sales which were down -39% year-on-year.
Supply has been a constraining factor, with the volume of properties listed for sale in the first half of 2021 down -13% on pre-pandemic levels.
The pandemic has led to changing patterns, in work and in turn, lifestyle aspirations. Demand for family housing with outdoor space has been one of the clearest trends in the recent market. Contrasting this trend has been a more inconsistent demand for apartments. This has seen the number of apartment sales fall by -39% in the 12 months to Q1 2021, compared to a year earlier. By contrast, while detached homes have also seen fewer sales, this fall was lower at -18%. This change has impacted the market composition with apartments accounting for less than a quarter of sales, down from over 30% in the pre-pandemic market.
This shift has driven up average house prices in the city to £172,770, a new high for the city 9.2% higher than June last year. The average detached house price has experienced a high increase rising 11.8% year on year to reach just under £340k. Conversely, apartments in the city saw a weaker annual increase at 6.6% from June 2020 to June 2021. The highest average values in the city are in Jesmond (NE2) and Gosforth (NE3).
Looking ahead, we expect family housing demand to persist, especially in prime locations, as people continue to seek lifestyle living. The initial pent-up demand that returned to the market after the lifting of restrictions is expected to ease over the course of the year, before returning to more normal levels. While demand for apartments has weakened due to factors of economy, lending and lifestyle, as the market moves beyond the pandemic the draw of vibrant urban centres are likely to support a return of demand.