This analysis is by Bloomberg Intelligence Analyst Industry Analyst Iwona Hovenko. It appeared first on the Bloomberg Terminal.
Homebuyer priorities are well-aligned with the mix of the UK’s largest homebuilders — Barratt, Persimmon, Taylor Wimpey and Bellway — based on our survey of those planning to purchase a home in the next two years. Most respondents want to buy in the next year, with Londoners in the biggest rush. Lower bills are the key reason for picking a new home.
Londoners in biggest rush to buy a home amid rental frenzy
In our survey of “committed buyers” who are looking to purchase a home in the next two years, about 60.8% wanted to buy in about 1 year, with 34.4% planning to do so within six months. Notably, when focusing on London, buyers in the capital had more urgency, with 65.3% wanting to move within a year, with 44.2% London househunters wanting to purchase their own property within the next six months. The need for more living (53.5%) and outside (39.3%) space has been cited as the key reason for most people.
In London, the desire to stop renting has been a significantly more important driver of looking to buy a property (35.6% of London-based respondents) vs. UK average (21.6%). It’s understandable, given the city’s frenetic rental market with significant shortage of rental properties, as well as double-digit rent rises.
UK homebuyers want space; Londoners look to stop renting
UK homebuilders’ mix plays well into buyers’ needs
Survey responses favor homebuilders with UK-wide operations, including Barratt, Taylor Wimpey, Bellway and Persimmon, given that most people prefer to live in towns (35.1%) or villages (28.2%), with London being the next choice (14.2%). Moreover, buyers strongly prefer houses vs. apartments, with three- (44.8%) and four-bedroom houses (38.6%) being most in demand. This, again, is strongly aligned with the product mix of volume homebuilders.
That said, the trend of “escape to the countryside” may not be entirely true among Londoners, with 52.4% of them wanting to buy in the city, and another 24% either in a town or a large regional city. Crucially for London-focused Berkeley, 26% of Londoners looking to stay in the capital would prefer to buy a newly built home.
New homes’ lower bills are key for UK buyers
The ongoing cost-of-living and energy crises may drive demand for new homes, which are more energy efficient and cheaper to run than older ones. This could support sales of UK homebuilders, such as Barratt, Persimmon, Taylor Wimpey, Bellway and Berkeley. In our survey, 17.5% of respondents would prefer a newly built home vs. a second-hand property, which is just above the share of new homes in annual transactions, rising to 23% among Londoners. Crucially, however, higher-energy efficiency was mentioned as a key reason for buying a new property (43.9%), followed by no need to refurbish (32.5%), lower maintenance cost (31.6%) and higher quality (30.7%).
A further 18.5% of buyers want to buy a home built within the last 10 years, flagging a slight skew toward newer properties, while 30% of buyers have no preference.