The property market in England and Wales continues to grab headlines on the back of near-continuous increases in house values. For instance, proprietary analysis of HM Land Registry data by private bank Hampden & Co has found the average price paid for properties in England & Wales has grown 15% to £355,288 over the five-year period between 2017 to 2021.

However, if we look at higher value segments of the market – such as properties valued over £2m and £5m, the data analysis shows that average prices paid have either remained flat or even fallen. The average price paid for properties bought at between £2m and £10m has gone from £3.84m to £3.51m, for instance.

While some of this trend could be down to the impact of Covid-19 over the past two years, socio-macro influences such as Brexit, generational factors and changes to how people are maximising their capital could also be playing a part.

The growth of self-build

One of the major trends we have seen at Hampden & Co is an increase in people self-building properties – buying new plots or knocking down existing homes and building new, often hi-tech and upmarket homes in their place.

This has gone from being a relatively niche option a few years ago to an increasingly mainstream choice for wealthy people. Around 12% of new builds are now self-builds (c.£4.7bn pa) - and this is growing annually – with much of this growth being driven by wealthier individuals.

The economics can be highly attractive. If someone buys and then knocks down a property to build a new one (or two), the value created can be significant. In addition, any increase in value would not be registered by Land Registry, which could affect the prices paid data.

We see this as a major trend, with more people improving and increasing existing homes by buying plots and building out.

Hampden & Co is helping a growing number of families and wealthier individuals to achieve this aspiration and to bring about a significant lifestyle shift. Loans are available to people building a new residential property in the UK, on land which is either already owned or is being purchased, or those looking to significantly refurbish an existing residential property.

New dynamics from changing working patterns

Another trend we are seeing is more people moving out of London and the Southeast and either buying a smaller property to free up capital, or maintaining a small asset in London as well as one in a more rural setting. Covid-19 and the desire to work more effectively from home has played a material part in this trend.

A third, perhaps surprising trend, is for more and more wealthy people to rent rather than buy, particularly in upmarket areas such as London and Surrey. Whether they are highly paid workers from overseas on short- to mid-term contracts or just people that prefer the flexibility that comes with renting, the numbers are certainly on the up.

Helping family on to the property ladder

Finally, as house price inflation has outstripped salary inflation, many people have chosen to help their children onto the property ladder, rather than to buy a more expensive property themselves, and this could also be playing a part. Hampden & Co has seen strong demand for family and guarantor mortgages, which offer an effective way to help family members make a property purchase. Borrowers who are unable to demonstrate affordability on their own can use this vehicle to receive support from a family member.

While prices are likely to fluctuate up and down as we look ahead, what is clear is that property remains a highly valuable and valued asset that will continue to be at the centre of people’s lives. How best to optimise that value will very likely drive further lending and innovation in the market.

Duncan Buchanan is a Banking Director at Hampden & Co

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Source of all data: HM Land Registry, 31 December 2021

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