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 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."

"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."