What’s been driving house price growth in the past year?
One influential factor pushing house prices higher throughout the pandemic is changing property preferences.
Buyers are increasingly moving out of cities and moving into more spacious homes in the suburbs.
Based on their House Price Index between March 2020 and June 2021, a new analysis from lender Halifax shows house prices in major cities grew by an average of 8.9%.
By comparison, in the areas surrounding those cities, average house prices rose by 10.8%.
Since the easing of lockdown restrictions last summer, homebuyers have been looking for larger properties with more indoor and outdoor space.
A change in work-life priorities during the pandemic, and fewer days spent in a traditional office environment, mean that larger homes were very much in demand.
Also fueling this desire to move up the ladder was the stamp duty holiday, with no stamp duty to pay on homes purchased up to the temporary threshold of £500,000.
In those areas outside of large cities, buyers perceive they will get more home for their budget, although that reality varies around the country.
For example, in Plymouth, the city experienced house price growth of 5.8% on average between March 2020 and June 2021. However, average price growth in the surrounding areas stood at 16.1%.
Faster house price growth in the areas surrounding Plymouth was driven by towns in the South Hams, including Salcombe, the most expensive seaside town in Britain, where prices rose by an average of 26.3%.
In Leicester, average prices in the city rose by 6.5% during the period, but they rose by 12.1% in the surrounding areas. Prices in Rutland and Melton were up 22.5%.
Further north in Newcastle, there was a different story where city prices rose by 6.5% compared to 4% for prices in the surrounding areas.
And in North Tyneside, there was a fall in average prices during the pandemic, with prices dropping by 5%.
Andrew Asaam, Mortgages Director, Halifax, said:
“The pandemic has had a huge impact on the housing market right across the country. This has been shaped by buyers’ demand for more space, a desire to move from the centre to more suburban locations, and the trend for more home working both now and in the future.
“It’s clear from speaking to our mortgage customers that many have prioritised space over location as a result of more time spent at home over the last year and a half. As consumers look for value in the market, that inevitably leads people to look further afield from major city centres, where you tend to get more property for your money.
“We’ve seen evidence of this in areas right across Britain, with house price growth in the vast majority of cities now being outstripped by increases in their surrounding areas.”