How “The Race for Space” is Driving Up UK Property Prices

While lockdowns, for the moment seem to be a thing of the past, it’s certainly the case that, when it comes to UK property – more space is very much on the agenda for many homebuyers. 

The average cost of a UK property has rised by almost £31,000 since the start of the pandemic, to hit an average UK house price of £250,000 for the very first time. 

Findings from Nationwide Building society reported an increase of 0.7% for October, even despite the full end of the stamp duty holiday (while the full relief ended back in June, 50% relief was still available until the end of September). 

Nationwide stated that it took the cost of a typical property to £250,311, showing a 9.9% year on year increase. 

What’s driving the uplift in UK property prices? 

It has been suggested that the continued growth in house prices may be sparked, in part by a need for space. During the first national pandemic lockdown, a surge in buyers looking for properties with outdoor space saw larger homes outside of cities rise in popularity. 

However, as working flexibility becomes the “new normal” for many, both homeowners and tenants are looking for added indoor space too, in order to accommodate working space that is delineated from their “relaxing space”. 

It is also thought that household savings have risen over the course of the past 18 months, with many families able to save more than usual thanks to reduced commuting costs, combined with a lack of spend on disposable income as many social activities and foreign travel were off the menu. 

While the Stamp duty holiday no doubt added fuel to the fire of the UK’s property market – it seems that, so far, it’s ending has had less impact on property prices than had been forecast. 

Looking forward

The outlook for the future still seems uncertain with sharp increases in the cost of living – particularly when it comes to both food and energy. 

Nationwide’s Chief economist Robet Gardner stated “The outlook remains extremely uncertain. If the labour market remains resilient, conditions may stay fairly buoyant in the coming months – especially as the market continues to have momentum and there is scope for ongoing shifts in housing preferences as a result of the pandemic to continue to support activity.

However, a number of factors suggest the pace of activity may slow. It is still unclear how the wider economy will respond to the withdrawal of government support measures.

Consumer confidence has weakened in recent months, partly as a result of a sharp increase in the cost of living.”

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