UK house prices have clawed back their lockdown losses to hit a new record high, with homeworkers demanding more space, a release of pent-up demand and a stamp duty cut all playing a role in the rise.
Nationwide building society said August brought the highest monthly price rise for 16 years, defying the economic crisis caused by the coronavirus pandemic as the average price of a property rose 2% from the previous month to £224,123.
The lender cited “behavioural shifts” as a possible factor, as prospective buyers reassessed their housing wants and needs due to remote working.
Over the past 12 months prices have jumped by 3.7% despite the UK suffering the deepest recession since records began after unprecedented restrictions on movement. That same 12-month period also included prolonged uncertainty over when and how the UK would leave the EU, as well as a general election.
However, a number of factors have come together to prevent major house price falls since the market was allowed to restart in May, including pent-up demand and Rishi Sunak’s stamp duty holiday affecting properties up to £500,000 in England and Northern Ireland.
Robert Gardner, Nationwide’s chief economist, said there had been an “unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions”.
Gardner added that “behavioural shifts” may have boosted activity, referring to the UK’s sudden conversion to homeworking. As well as a bigger garden, some had talked about the need for a quiet space to work from home, said Nationwide.
This was echoed by many estate agents and property agents.
James Forrester, the managing director of estate agent Barrows and Forrester, said that while location was previously the most important factor for buyers, this “has started to play second fiddle” to more space, both inside and out.
“A home office has become a hot commodity,” he said, adding that buyers were using the current low cost of borrowing and the savings on offer via the stamp duty holiday “to stretch for that extra bedroom where they may have previously settled for a smaller home in a different location”.
Jonathan Hopper, the chief executive of Garrington Property Finders, said extra space had moved from being a “nice to have” to a “need to have”.
He added: “Coastal and country properties are the most in demand, but the space race is universal. A home office – or at least an extra bedroom that can be used as one – has become a fundamental requirement for thousands of househunters.”
The upmarket estate agent Savills said its own analysis of figures from data firm TwentyCi suggested the number of house sales agreed in August was 91% higher than in the same month last year. Research issued by Savills on Wednesday found 62% of the buyers and sellers it surveyed said that garden or outside space had become more important, rising to 71% for those in London. Meanwhile, 57% said a separate space to work from home was more important than pre-lockdown, rising to 70% in the capital.
Lucy Pendleton, a property expert at estate agent James Pendleton, said that in many cases the box room that was previously a guest bedroom was now a home office.
“Vendors aren’t bothering to dress them as bedrooms for viewings, and we recommend that they don’t. The conversation has moved on, and office space is the order of the day,” she added.
Jeremy Leaf, a north London estate agent and a former Royal Institution of Chartered Surveyors residential chairman, said the Nationwide data showed that more buyers and sellers were shrugging off concerns about rising unemployment and the unwinding of the furlough scheme. He added that he believed the recovery would be given another lift by schools and more businesses reopening.
