Improvements in the UK's real-estate market
The United Kingdom’s real-estate market is making a comeback following the pandemic and the rise of work from home opportunities. House prices have been rising well particularly outside central London including Richmond and Islington. Since the pandemic, a significantly higher proportion of home buyers have been considering larger homes with office space and gardens. In this blog, we will explore what the data shows regarding the recent changes in the UK’s property market and the factors that have impacted this change.
According to data from Nationwide, UK house prices have been rising rapidly with the average property price being over £254,000 in December 2021 which was up £24,000 over the year and has been the largest annual increase since 2003. In 2021 alone, house prices went up by 10% and the number of transactions in 2021 included a total of 1.5 million home sales.
What factors have impacted this change?
The stamp duty holiday was one of the key reasons for the rapid increase in house prices. This was because home buyers were able to save up to £15,000. Additionally, the low interest rates were a key benefit for the UK’s real-estate market. The bank of England increased rates to 0.25% to tackle rising inflation as prices increased at the fastest rate. However, increasing inflation and further rate rises expected this year may lead to a decrease in cheap mortgage deals. Despite this, interest rates will continue to be low based on historic standards and property prices will continue to be supported due to limited availability of properties.
Other factors increasing homebuying included the greater number of savings that people had during the pandemic. Furthermore, people had more time to reflect about their property situation during lockdown. Many people began viewing their house and space differently, for example, their house was no longer simply considered a ‘house’ but it was also considered their workplace as they had to shift to flexible, remote working. Since the majority of individuals were spending more time at home during lockdown, they recognised and felt the need for more space and additional requirements at home including the demand for a home with a balcony and garden.
There are also great improvements in London’s real-estate market since the lifting of restrictions. This is because more people are having to return to office for work and therefore, it appears that demand for a home or space is increasing within London. Similarly, as travel restrictions are also easing, more people are travelling to London from abroad and can therefore invest in properties within London.
There have been significant changes to the UK’s real-estate market since 2021 as there has been a higher demand for larger homes with office space and gardens and more people are willing to relocate due to the huge flexible work changes. It is possible that house prices may continue to increase depending on inflation, interest rates as well as the impact of covid-19.
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