The first lockdown started almost three years ago, and the housing market was expected to stall, but in reality, it didn’t stall for long.
House prices in the UK have increased by 20.4% over the last three years, compared to just 7.8% over the previous three years, according to Halifax.
It’s now nearly three years since the pandemic started, and many people predicted that the property market would stall while restrictions were in place. While the property market initially saw a substantial drop in activity during the lockdown when viewings were halted, there was a surge in transactions in 2020 when restrictions started to ease. In essence, the stalling of the market was only for a brief time. The property market opened up again in May 2020 when it was announced that socially distanced house viewings could take place. Two months later, the stamp duty holiday was introduced by then Chancellor Rishi Sunak, which boosted the market significantly.
House prices grew
House prices nationwide grew by an average of £48,620 between January 2020 and December 2022, up from an average of £237,895 to £286,515. By comparison, prices increased from January 2017 to December 2019 by just 7.8% – the equivalent of £17,158.
Wales saw the greatest house price growth of any UK nation in the last three years, with prices increasing by 29.3%, up from £168,101 to £217,328 – an increase of £49,227.
As a region, the South East of England saw the biggest jump, with prices up by £69,224 from £325,448 to £394,672 – an increase of 21.3%.
The race for space
The pandemic resulted in prospective buyers seeking more space – with ‘surging demand’ for larger homes, according to Halifax. Prospective buyers were seeking bigger properties, often in more rural areas, in response to lifestyle changes caused by the pandemic, like working from home. Demand for larger homes saw the average price of a detached house rise faster than other property types.
By contrast, demand for smaller properties in more urban areas fell, with the average price of a flat increasing by just 13.3% or £19,028 between the start of 2020 and the end of 2022.
Reshaping the property market
‘The pandemic transformed the shape of the UK property market, and while some of those effects have faded over time, it’s important we don’t lose sight of the huge change seen in average house prices,’ says Kim Kinnaird, Mortgages Director at Halifax. ‘Heightened demand created a much higher entry point for bigger properties right across the country, and that impact is still being felt today by both buyers and sellers, despite the market starting to slow overall.’
The prices of detached prices remain 25% higher than at the start of 2020. ‘Even if those values were to fall by 10%, they would still be around £50,000 more expensive than before the pandemic,’ adds Kinnaird.