Research by Halifax, released this week (February 28), showed the impact the Covid pandemic had on the housing market with the rate of house price growth varying significantly across the UK.
The research, based on Halifax’s house price index, found that on a national level between January 2020 and December 2022, the average house price increased by £48,620 to £286,515.
This growth of 20.4 per cent compares to growth of just 7.8 per cent over the three years previous, leading experts to say the UK’s property market is overdue a price correction.
A long overdue crash that will benefit not just first-time buyers but most homeowners too in the long run Graham Cox, Self-employed Mortgage Hub
Dimora Mortgages director, Jamie Lennox said the numbers come as no surprise given the “race for more space” during the pandemic.
“That combined with the stamp duty holiday and families having more surplus income due to lack of ability to travel and socialise heightened the demands further,” Lennox explained.
“With the cost of living crisis and more people being called back to the office, we could see this tip the other way with the rush of people selling up once their fixed deal expires.”
The effects of a slowdown are already starting to emerge.
In Zoopla’s latest house price index, the property platform reported that sellers have had to accept an average 4.5 per cent discount on the asking price to achieve a sale in the past five months.
Zoopla noted this is the highest discount seen in five years as a buyers’ market “takes hold”.
The research from Halifax explored how the rate of house price growth varied across different properties since the pandemic and described it as “an interesting story”.
In particular it noted the “surging” demand for larger homes.
Before the pandemic, the rate of annual house price inflation for detached properties was sluggish compared to other property types at 1.7 per cent in January 2020. This compared to 4.1 per cent for flats.
However by the start of 2021, annual growth for detached homes jumped to 9.2 per cent.
Fueled by cuts to stamp duty, the average price of a detached home rose by 25.9 per cent or £93,345 between the start of 2020 and the end of 2022.
By comparison, in the three years prior prices rose by 8.8 per cent or £28,757.