Coronavirus and house price growth

"Tell a property expert two years ago that there is about to be an unprecedented world health pandemic and they’d tell you that house prices were about to fall off a cliff. The banks thought so, too, hence why they pulled their high loan to value products. But guess what, the experts would be wrong, again. Anything with extra space has shot up in value. Flats in central Manchester dropped in price last year and struggled to sell, while houses with just a modicum of outdoor space or an extra room saw their values shoot up, as what people wanted from their homes changed. Almost all of my clients are first time buyers. Many are finding they have many more options now than before the pandemic. This is due to them not having been able to spend any money for much of the past 18 months, meaning they have a bigger deposit, and mainstream lenders increasing what many first-time buyers can borrow to 5.5 times their income. Pre-pandemic, most would struggle to borrow more than 4.5 times their income with a 10% deposit."

"The sea is a cruel mistress and property prices in many coastal areas of the country, including south Devon, are running a close second. The pandemic has fuelled the popularity of coastal homes and as a result property prices are rising faster than a spring tide. The South Hams are no exception with the average value per property standing at the £730,000 mark. Given the local wage is lower than the national average, yet property prices are amongst the highest in the country, the housing market is out of reach for most first-time buyers and local families looking to upsize. Will the tide turn on property prices? I don’t think we will see a huge decline in the popularity of premium coastal properties for at least the next 12 months."

"The rapid change in working habits, coupled with lockdowns, has meant people have reassessed their housing needs at scale. The result is an exodus from city to suburbs and beyond in search of a larger house for the same money, a home office and outside space. This has seen an explosion in house prices for property and areas that can meet these new demands. While I doubt we'll see prices collapse, some of the key drivers of rising values over the past year will invariably wane as life returns to a relative normal and office life resumes, if not at quite the same level."

"Most areas of the UK have seen significant rises during the pandemic, however the East Midlands has seen a huge jump by as much as 12%. This means that, for people on the median UK wage, their property may have earned more than they did during the past 12 months. Thankfully there are still some areas in the East Midlands where property prices are well below the national average, making it one of the better areas for first-time buyers to take their first step on the property ladder. This coupled with the, now normal, working from home culture along with some lenders really allowing first-time buyers to push their borrowing capacity, means that the East Midlands is a very attractive place for young people. The age-old question is are prices going to collapse? No. Will they stop rising as fast? Yes."

"Buyer preferences have largely shifted away from city centre living to properties that are a bit more rural, with garden space and room to work from home. I believe this growth is sustainable and house prices that have rocketed up in value will not drop. Some city centre properties that have increased in value for so long have now plateaued and the growth they would usually have seen has been redistributed to other parts of the country. The good news is that, despite the increased values, they are still more affordable than city centre properties so first-time buyers have the chance to get on the ladder."

"Covid, more than anything, highlighted how an Englishman's home really is his castle. This became more important to people than ever before when you just might be stuck in it for months on end. The pandemic was weird. We thought the rationing or even turning off of small deposit deals would cause serious issues but, cooped up at home, would-be buyers were able to save larger deposits and we have been rushed off our feet as brokers for the past year. House prices seem like they will continue to grow. As long as we build fewer houses than we need as a country, demand will outstrip supply and house prices will grow in the long term. As a country we are nowhere close to solving that bottleneck."