How the Pandemic Propelled House Prices

JaeVee Team

4 minutes

Covid-19, Housing Market, Property Market

Introduction

It was the big economic shock story of the pandemic. As we locked down, thousands of householders, stuck at home, started browsing property portals. Rightmove and Zoopla between them saw visitor numbers soar. And as we continued to lock down, they started buying.



‘Race for space’ changed top location spots

The ‘race for space’ saw the popularity for city centre living plummet in preference to green spaces in the country or coastal resorts. Houses with access to space and an additional room (for the home office) became the ‘must-haves.’ The hunt for three to four-bedroom detached bungalows was on. Prices in Norfolk, Cornwall and other seaside or rural retreats soared, owners of London apartments were watching horrified as families and couples sought to relocate in droves. 

For the first time in decades London houseprice rises (at around two per cent) were the lowest in the country.



Pandemic period saw record-breaking house prices

Halifax’s House Price Index recorded a rise of more £24,500 for 2021 – the largest annual cash rise since March 2003. Property portal Rightmove (whose data is based on asking prices) recorded a 9.5 per cent increase in house prices over the past two decades).

The latest figures from Nationwide show that Property in February 2022 was around 20 per cent more expensive than before the pandemic. With the average UK property now sitting at £260,000, that’s a jump of £44,000 compared to the February 2020.



Poor stock numbers and low interest rates keep property prices high

Despite there no longer being any lockdowns – and even restrictions in England – with people returning to city centre working and entertainment venues, property prices are still on the ‘up’. Economists say the reason for this is the shortage of stock (ie there is far more demand for housing than there is supply). In fact, property consultancy TwentyCi say it’s the lowest number of stock in the UK - for both sale and rental - since they started collecting data, back in 2008. To the extent that in January this year, there were 36 per cent fewer properties on the market than in January 2021.

“In my living memory, we’ve never been in this situation before,” said Colin Bradshaw, managing director at TwentyCi. “The lack of supply has broken the sale and lettings markets.”

This, mixed with the continued low mortgage interest rates, allows fortune to smile on those selling rather than buying. The current Bank of England base rate is 0.25 per cent, for instance. And even that was a jump from 0.1 per cent at the end of last year.

As for 2022, most property analysts and economists agree it’s not going to be the same buoyant market as last year. Steady and measured, rather than frantic appears to be the way ahead for house sellers and buyers this spring and summer.



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