The latest British property market figures show that house prices outside of London are surging but that they remain depressed within the capital.
During December UK property prices rocketed at their quickest pace in over six years. However, the official figures show that price growth in London actually slowed, reversing a long-term trend of above-average growth, and helping buyers to better afford the costs of moving, such as conveyancing costs, solicitors fees and moving costs.
During 2020 the average price of a British property grew by 8.5% to December. This compared to a 12-month rolling average of 7.1%. The new average figure stands at a high of £252,000 – a new high.
The Office for National Statistics, which compiles the data, said that annual property price growth had not been seen at such a level since October 2014. However, analysts have pointed out that the upward trend is likely to be short-term in nature.
The UK’s region of lowest annual growth was in London, which recorded a 3.5% growth during the year to December, against the 7% figure recorded for November. London’s houses dropped by an average of £5,000 in value between November to December of last year. In the previous period for 2019, their value jumped by an average of £10,000.
Goodmove, the property agency, commented on the figures, saying that the Covid pandemic had led to large numbers of buyers reassessing their living accommodation and moving away from flats and into larger properties. Certainly, huge numbers of office workers have spent much of the past year working from emergency home offices.
With higher demand, higher average property prices followed. This trend may well continue in the short-term as people adjust to a future with more homeworking, but agents expect that prices will once again begin to fall after the government’s emergency Stamp Duty Holiday scheme comes to an end.
The Stamp Duty Holiday scheme
The scheme was put into place to help support the UK’s housing market during the pandemic and to act as an incentive for nervous buyers unsure about completing during the national lockdowns. By removing the tax, it also meant that conveyancing costs, moving costs and other costs associated with moving house became more affordable, encouraging people to consider a jump up the property ladder. Find out more about conveyancing costs.
Agents and market analysts also expect that prices in London and other key British cities will start to rise once again, as people begin working and studying in the cities once again. It is expected that the current lockdown restrictions will have ended in full by this summer, at which point overseas students and workers should be in a position to begin living in the UK again, further driving up demand.
EY Item Club’s chief economist, Howard Archer, said that higher than usual market activity and strong prices would rapidly prove to be sustainable, and predicted a 5% drop during the year.