11/02/2022
🏘Expected continued political and industry focus on how banks help more people access affordable and quality homes.
Making predictions is never easy. Back in May 2020, the Bank of England warned that house prices could fall by as much as 16% as a result of the coronavirus pandemic1. Following this news, home owners – already navigating their way through an unprecedented situation – braced themselves for even more uncertainty.
However, according to the latest figures from our Halifax House Price Index, the housing market is continuing to defy expectations. In fact, despite the impact the pandemic has had on the UK economy, average property prices were up 9.8% in 2021, an increase of over £24,500 – the largest annual cash rise since March 20032.
The questions is, can such growth continue on into 2022? Well, at the time of writing, coronavirus is still present in the UK, with the hospitality sector particularly vulnerable to the latest Omicron variant.
Put simply, despite significant developments in the vaccine rollout and fewer restrictions across the country, nothing can be taken for granted.
What’s driving house price growth?
Over the last 24 months or so, the UK Government has brought in a number of initiatives to help curb the devastating effects of the pandemic and support the economy.
For the housing market, the most significant has been the Chancellor’s introduction of the Stamp Duty Land Tax (SDLT) holiday – whereby buyers completing a property purchase for less than £500,000 on or before July 1, 2021, would no longer need to pay for the cost of stamp duty. Those buying homes with a value above the threshold, on the other hand, would only pay tax on amounts above £500,0003.
These measures, combined with pent-up demand created by periods of lockdown, would have undoubtedly helped to drive activity during 2020 and into 2021. We also saw a significant number of transactions driven by the ‘race for space’, as home-working and long periods at home in general prompted buyers to look for bigger properties with more space. We expect these kinds of pandemic-driven shifts in housing preferences to continue well into 2022.
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