Critical Overview
The COVID-19 pandemic has had a significant impact on the UK property market, with buyers looking for larger homes after being confined to smaller spaces during lockdown. Property website Zoopla suggests that this trend will continue well into 2022, as the search for additional space has pushed up the average house price by 7.3% over the past year, reaching a new high of £230,700. However, the demand for flats has declined, resulting in a disparity in average price growth across different types of properties. Despite the surge in demand, properties of all kinds are in short supply, which has contributed to the severe shortage of homes for sale.
Demand for Houses and Flats
Zoopla reports that demand for houses has increased twice as much as it typically would during this time of year, creating a disparity in average price growth between houses and flats. The average house price has grown significantly, while the growth in flat prices has lagged at 1.4% over the past year. Zoopla’s head of research, Grainne Gilmore, highlights the rise in demand for houses during the first lockdown, indicating a reassessment among many homeowners of where they want to live. With the rise of working from home, many people seek a spare room that can become an office, while others want garden space.
House Prices in Different Regions
The pandemic has led to regional variations in the housing market. People are taking the opportunity to move out of big cities, resulting in the highest house price growth in Wales at 10.2% and the North East at 8.8%. Conversely, house price growth is weakest in London at 5.6%. Similarly, for flats, prices have risen the most in Scotland at 5.2% and the Midlands at 3.7%, but in London, flat prices have fallen by 0.5%.
Shortage of Homes for Sale
Zoopla’s report also highlights the severe shortage of homes for sale, with stock levels down 25% in the first half of the year compared to 2020. While house prices are surging, the growth in flat prices is lagging at 1.4% over the past year. The demand for family houses has eroded the supply of such properties, putting upward pressure on house prices compared to flats.
Conclusion
In conclusion, Zoopla predicts that the surge in demand for houses will continue into 2022, driven by the search for additional space and regional variations. However, the shortage of homes for sale remains a significant challenge, with demand for houses twice as high as typically seen during this time of year. This demand is likely to lead to a steep increase in house prices, putting pressure on the government to address the shortage of supply. Zoopla suggests that further relaxation on the restrictions around global travel will result in a firmer pick-up in demand, which will reverse the downward trend in pricing.
