House prices have shot up in value by 5.2% in the last year, according to research by Halifax. This increase is welcome news to sellers, who have experienced a difficult few months due to the lockdown restricting house viewings and putting sales on hold.
Read on to find out what factors are driving the surge, and how the impact of coronavirus has changed the expectations of buyers.
House prices have broken the £245,000 mark for the first time
House prices saw a growth of 1.6% last month, the highest rate of growth since late 2016.
The average price of a UK house reached a new height of £245,747 in August, according to a report by Halifax published in the Telegraph. This is the first time the average price has risen above the £245,000 mark.
This mini-boom has helped the housing market to recover from the slowdown caused by the lockdown and the government’s freeze of the housing market in the spring. In hotspots outside of London, properties are selling at rates unseen since before the 2008 financial crisis.
Bidding wars have even begun in some areas, with many properties going for more than 10% over their asking price.
There are three main factors that have fuelled the property market to reach new heights, despite summer being a traditionally quiet time for sales.
- Stamp Duty holiday
One of the main factors driving the house price increase is the Stamp Duty holiday that Chancellor Rishi Sunak announced in his Summer Statement.
As of the 8th July, the tax threshold for Stamp Duty was raised to £500,000 for residential properties in England and Northern Ireland. People buying properties with a value below this amount do not have to pay Stamp Duty.
Buyers can now save up to £15,000 in tax if they buy a residential property before the holiday ends on the 31st March 2021, which has encouraged many people to take advantage of this opportunity and move.
- Pent-up demand
Another factor driving the house price increase is a pent-up demand from buyers who were unable to view houses during the lockdown.
According to property listing website Rightmove, more homes are now selling within the first week of being put on the market than at any time in the past ten years.
During the lockdown, many buyers and estate agents were unable to visit homes that were on the market. While virtual viewings were still possible, this did not satisfy many potential buyers. A report in the Guardian estimates that more than 500,000 sales were halted for this reason.
Now that the lockdown has been eased, buyers are rushing to make up for lost time and the surge in interest is driving up house prices across the country.
- Changing expectations
The third factor which is driving up house prices is the changing expectations of potential buyers for homes. While it took a trip to the Land of Oz to make Dorothy value her home, it took a pandemic to convince the British public.
Being home for longer periods of time has made many people reconsider what they want from their home, such as a larger garden. This change has led to a surge of interest in the housing market.
Furthermore, the shift from office-based work to working from home has led many people to value their surroundings more now that they’re spending the majority of their time there. A nicer house is a more pleasant ‘office’ environment if you’re now working from home.
These factors have led to a large shift in what prospective home buyers are looking for in the market.
Home offices and gardens are now the most important features for buyers
One of the biggest changes in what prospective buyers want from a potential home is the presence of a home office, as many people are now working from home.
A home office has become a hot commodity for many potential buyers. According to London estate agent Dexters, a dedicated extra room for homeworking tops the list of ‘non-negotiable’ demands from buyers.
Working from home has also changed many people’s commuting requirements, leading to a change in preference in house location.
Since they no longer need to commute every day, people are willing to live further away from their workplaces, moving away from cities and into suburbs and the countryside. Research shows that employed Brits are now willing to live an average of 56 miles away from their workplace, up from 23 miles pre-lockdown.
An increased number of buyers are also interested in the green space of a home, as well as its interior. According to research by estate agent Savills, the amount of buyers who say a garden space is important has risen to 62% in August, up from 49% in April.
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