This summer’s property boom seemingly came out of nowhere, but after a period of relative inactivity brought about by the coronavirus pandemic and subsequent lockdown, tax breaks and buyers looking to escape to the country have led to property prices hitting record highs.
To put all of this into context: Rightmove’s September House Price Index has reported that the average asking price (£320,000) had increased by around 5% compared to the same time in 2019 (£305,000) – the highest annual growth rate recorded since September 2016.
Why have prices changed?
It’s hard to pinpoint a single reason for house price increases, but the ease of lockdown did lead to previously on hold purchases being completed. Stamp duty and other tax breaks provided a further boost once restrictions were eased.
The housing market has also recovered from lockdown more quickly than expected, partly due to movers putting more importance on their homes, with buyers needing extra space for their families and more room to work from home.
Which areas have seen the biggest increases?
The Northern regions have experienced the strongest demand – with Yorkshire and the Humber, the East Midlands and West Midlands, the North East North West, and Scotland seeing record increases in price growth.
What’s in store for house prices in the future?
With the market rebounding after lockdown, the pent-up demand and an increase in people deciding to move is likely to increase house prices even further in many regions.
Forecasts have reported that the overall price in the UK will rise 2% in 2020, up from 0.9% in 2019 and London will likely end 2020 with an overall increase of 2.5%.
Furlough-take up rate in London may contribute to a 1.0% house price fall in 2021, when combined with existing affordability barriers, lack of international buyers, the end of the stamp duty holiday and an increase in the number of households seeking to relocate elsewhere.
Wales is set to be the top-performing region in 2020, with house prices expected to continue rising at 3% this year. In Scotland, the market has indicated that house prices are likely to slow to 1.5% this year and remain flat in 2021.