Since the start of the Covid-19 crisis, the UKs housing market has continued to exceed expectations. Nationwide has reported that housing prices are now 13% higher than they were prior to the pandemic and have experienced a monthly increase in price that has exceeded the previous 14 years. Furthermore, on average the value of a UK home has risen by an incredible £30,000.
According to both Halifax and Nationwide, October was the fourth consecutive month that saw housing prices increase despite previous predictions that they would fall this autumn. According to Nationwide’s building society index, the average price of a home within the UK is currently over £250,000 with the average cost of a home in the UK reaching £270,000 as of October 2021.
The initial, predicted drop in the housing market prices resulted from the end of the government’s stamp duty holiday. The stamp duty holiday began in July 2020 and came to a tapered end between June 2021 and September 2021. This has allowed buyers purchasing properties below the value of £500,000 to avoid paying stamp duty. However, despite the return of stamp duty the housing marketing prices are yet to take a noticeable hit.
The continued inflation of property prices is dependant on a variety of external factors. These include, but are not limited to, consumer confidence, employment levels and supply and demand. Consumer confidence has been negatively impacted by the end of the government’s furlough scheme. As of September 2021, around 11.6 million jobs were being furlough costing the government close to £70 billion. This scheme saved many workers from being made redundant. Now that furlough has ended, many businesses will not be financially ready to bring back full bodies of staff and redundancies are still anticipated. This instability has effected consumer confidence and is predicted to impact a possible drop in housing prices.
However, supply and demand is currently and successfully countering the possible weakening of the housing market due to reduced consumer confidence. The pandemic has altered the way we view our homes. This has naturally impacted the prices of housing within the UK. Two bedroom and three bedroom semi-detached homes have flown of the markets as families have craved more space. Many people who have previously resided in cities are opting to move to more rural areas. The lockdowns have triggered a third of buyers to be looking to relocate and close to 30% are seeking outdoor spaces and large gardens. This sudden rise in demand to escape city centre locations and head towards the countryside hasn’t been met by an influx in available property. As a direct result, there has been a natural spike in housing prices in these areas.
As we head into 2022, Zoopla predicts a continued increased of +3% within the UK housing prices with a potential for 1.2 million people move or selling their homes next year. A continued low supply of properties will encourage inflation and as a result more potential sellers. The UKs housing market is far from slowing down.