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The pandemic has “almost overnight changed the UK property market”, driving average prices up by more than 20% and causing a “fundamental change in buying demand” across property types since early 2020, according to the Halifax House Price Index.
The study shows that the housing market was “largely closed” after the first lockdown in March 2020, but rose sharply in the months after restrictions were eased and the stamp duty holiday in July.
In the longer term, average house prices nationwide jumped 20.4% between January 2020 and December 2022 to £286,515.
For comparison, over the previous three years – from January 2017 to December 2019 – average house prices rose by only 7.8%.
Wales saw the strongest increase in house prices of any country or region in the UK over the past three years, up 29.3% to £217,328.
In monetary terms, the South East of England saw the biggest increase, climbing £69,224, or 21.3%, to £394,672.
The health crisis has also spurred demand for larger homes as buyers have realized the rise of working from home means they don’t have to live so close to their offices.
The median price of a detached home jumped 25.9%, or £93,345, from the start of 2020 to the end of 2022, according to the study. This compares with 8.8% three years earlier.
“This was driven by a number of factors, but chief among them was the ‘race for space’ as potential buyers looked for larger properties, often in rural areas,” the report says. “This was in response to the radical changes in lifestyle and work habits of people brought about by the lockdown.”
In monetary terms, across five regions of the UK – East Anglia, Greater London, South East, South West and West Midlands – the average price of individual property has jumped by more than £100,000.
By contrast, demand for smaller property in more urban areas has declined during the pandemic, with the shift most pronounced in London.
The average price of an apartment in the country from the beginning of 2020 to the end of 2022 increased by 13.3%.
But in the capital, the average price for an apartment grew by only 3.8%, which is the weakest increase in prices for any type of real estate in all regions and countries over the past three years.
The average cost of semi-detached and row houses increased by 23.1% and 21.1% respectively over the past three years.
In terms of the highest growth since early 2020 for semi-detached houses, it happened in the South West, up 30.8%, followed by Wales, up 28.4%. For townhouses, it was the North East, up 32.1%, followed by the North West of England, up 29.8%.
Halifax Mortgage Director Kim Kinnaird says: “The pandemic has reshaped the UK property market and while some of these effects have faded over time, it is important that we do not lose sight of the huge incremental changes seen in average house prices.
“Increased demand has created a much higher entry point for larger properties across the country, and buyers and sellers are feeling the impact today, even as the market as a whole is starting to slow down.
“Taking individual homes as an example, average prices remain about 25% higher than at the start of 2020.
“Even if these values fall by 10%, they will still be around £50,000 more expensive than they were before the pandemic.”
The post-pandemic has led to a “fundamental shift” in the housing market: HPI made its first appearance in Mortgage Strategy.
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