Average house price exceeds £500,000 in London after biggest price jump for five years

It has been painfully apparent for aspiring London property owners that house prices have been climbing drastically over the last decade. With the average house price nationwide also exceeding £250,000 now, buying a property is becoming more and more difficult as each year passes. House sales soured in December 2020 across the UK with over 125,000 sales being recorded. An increase of over 30% from December 2019 and it has now been recorded as the strongest December in the last decade. 

The stamp duty holiday has been noted as one of the key factors in fueling the demand for homes, an increase in desire to buy when thousands of pounds worth of savings can be made. There have been calls for the stamp duty holiday to be extended due to fears of mass offer withdrawals from buyers across the country loom. If sales do not complete before the stamp duty tax is reinstated, buyers may cut their losses of initial solicitors fees and withdraw their interest completely. The Office for National Statistics has stated that the interest from overseas buyers has also increased as people from all over the world are taking the opportunity to take advantage of the stamp duty holiday savings.

The pandemic has had drastic effects on people’s livelihoods and mental health which has only pushed people to ‘Escape to the country’. In some cases there has been a mass exodus from London as major companies are enforcing staff work from home indefinitely, closing centralised office space, not renewing rental leases and even beginning to market buildings for sale. Londoners have started to ask the question as to ‘Should we cash in whilst we can?’. 

Many Londoners who live in central locations with minimal/no outdoor space would have felt the full effects of lockdown. Many will be selling a small central London home to buy a larger home with additional garden space out of the city… or even multiple homes as an investment due to the appeal from the historically increase in prices. With the the luxury of cars being introduced with autopilot, general transport getting quicker along with being general more efficient - is the desire to live within London still as strong as it once was?

Human nature shows how we are social beings and for some the infectious buzz of the city cannot be matched when moving out into more rural areas. Some may return to the city but some may welcome the calmer approach to life that a rural environment can offer. The pandemic may have emphasised the benefits of the later. COVID-19 will have long lasting effects on our behaviour as people’s priorities and preferences may have changed. Individuals may find that they now prefer to work from home and love the absence of not having a busy commute each day which allows them to spend more quality time with family. With these key things in mind, people may be looking to upgrade their space - whether that be to increase their private space to work, amount of bedrooms or to increase the amount of living space. However you look at these facts, the trend seems to be during these times that ‘The bigger the home is - the better’.

The worry is as to what is going to happen when the furlough scheme ends. Are we heading for mass unemployment nationwide - which will likely send property prices crashing down? Will the end of the stamp duty holiday have irreversible effects on the interest from potential overseas buyers? 

Despite rising prices making it difficult for first time buyers to get a foot on the property ladder, the housing market - the backbone of the UK economy, holding steady during such uncertain times is extremely positive and we hope the chancellor continues to aid sales with additional stamp duty holidays.