Average house prices in the UK fell to £230,000 in March 2020, but currently stand at an estimated £263,000. Rental prices also reached a record high in August 2021, to a high of £1053 pcm. Here are the detailed drivers behind this growth.
Increased Savings due to UK COVID Measures
In March 2020, the UK COVID Furlough scheme was put into action, and paid over 9.5 million UK Residents 80% of their normal wages, mainly from March 2020 -June 2020. During the first UK Lockdown, expenditure was low amongst furloughed workers too. Travel costs were effectively cut.
Those people are now in a better financial position to purchase a house or rent.
The Stamp Duty Land Tax (SDLT) Holiday
In July 2020, The Government announced a holiday on Stamp Duty Land Tax to help buyers whose finances were affected by a COVID. With rates cut from July 2020 to July 2021, there was an added bonus of saving money by purchasing a property at this time.
This increased demand led to a rise in prices.
Sky-High Demand for Space
Family homes are the type of property most in-demand. The latest house index report from Zoopla suggested the number of buyers after a family home is up 114% compared to numbers from 2017-2019.
Furthermore, the number of properties for sale has decreased to its lowest level since 2015.
There is simply higher demand and a lack of supply, especially in family homes, causing prices to rise.
New Desire to Leave London
More people are looking to leave big cities in favour of moving into suburban/rural areas. This has led to London rent prices falling by 3% (in the past year), while rent rates outside of the capital are rising at their fastest rate in 13 years. Rent rates in Wigan and Greater Manchester have risen by 10% in the past 12 months.
People are also reported to be renting now as the property supply is at a noted low, waiting out the soaring demand before they make their step to buying their desired home.
Natural Forecasted Growth
Despite the artificial effects of the UK COVID measures, it’s arguable this growth was always coming. The 18 year Property Cycle theory depicts the UK in the explosive stage. The recognised author of the theory, Fred Harrison, believes this himself. He argues that COVID simply delayed house price growth, and it was arriving regardless.