Since the financial crisis, house prices in the United Kingdom have been steadily rising. The most recent official data for March suggest that this pattern is accelerating.
Property prices were 10.2% higher than a year ago, marking the highest yearly increase rate in 14 years.
The sharpest increase has been concentrated in the UK's core regions and Wales. Cornwall, for example, has surpassed London as the most preferred search location for home purchasers, according to property sales search engine Rightmove.
Why are housing prices increasing during the Coronavirus pandemic?
Official data indicate that the average cost of a home in the UK climbed by £25,000 in the year to August, with increases across the board. In today's market, an average house costs £248,742.
As of now, there are not enough properties on the market to meet the rising demands of those looking to purchase properties which inevitably causes housing prices to rise.
Prices have risen in places where the supply of properties for sale does not meet the demand. The average number of homes on estate agents' books is near record lows, according to the Royal Institution of Chartered Surveyors (RICS).
The Coronavirus pandemic has also hastened the move to remote working, which has resulted in significant cost reductions for several sectors. When government assistance is included in the form of stamp duty holidays and historically low mortgage rates, it increases the growth in the number of purchasers.
Has the Coronavirus affected people’s housing preferences?
People's expectations of their homes and communities have altered, and for many, this transition will be permanent. The term 'home' now refers to a lot more than it did before the lockdown. It is now a multidimensional place, and location may be even more important to individuals.
According to Nationwide, many purchasers are competing for space. They prefer larger houses with plenty of space for living and working, as well as a yard and easy access to the seaside or countryside. People have evaluated their priorities during Covid lockdowns and it seems that family houses are now increasingly desirable. The only problem is that there are only a few such properties left on the market.
Additionally, people are more hesitant to relocate to flats and apartments in the city due to the cladding issue with the current buildings; cladding refers to the process of adding another layer of material to the exterior of the building with the purpose of providing insulation and creating better visuals of the overall building aesthetics. On the contrary, many buyers find these buildings with cladding to be less attractive.
Research provided by Professor Philip Hubbard at King’s College London also shows how housing prices are significant in the context of COVID-19. For starters, with an increase in the number of people spending long periods of time at home, the house is more important than ever as a sanctuary for personal and domestic life.
Data from the Office for National Statistics found that two out of every ten adults is still working from home. This statistic was four out of ten in June. The key question will be whether or not this is still the case for many UK employees. This might also influence whether individuals choose to stay in London or prefer the better work-life balance that pulls people to other parts of the country.
Will housing prices in the UK continue to rise in the near future?
Nationwide Building Society, the UK's second-largest mortgage lender, predicted that home prices will continue to increase this year when the stamp duty holiday ends but cautioned that increasing expenses might make it more difficult for first-time buyers to get on the housing ladder.
After the pandemic, which ushered in a home-working boom and fueled interest in larger houses with gardens outside city centres, the building society chief claimed demand was backed by a "structural shift" in the kind of homes purchasers were seeking.
As a result, once government incentives such as the stamp duty holiday expire, the rise in home buying – and property prices – is expected to continue.
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