Soaring buyer demand as a result of the pandemic-led ‘search for space’
The total value of residential homes in the UK has crossed the whopping £9 trillion mark. According to Zoopla, the total value of 28.6 million residential properties in Britain is currently £9.2 trillion, which is a £550 billion increase from the last year itself! As per Zoopla, the reason for this massive increase in values is the soaring buyer demand as a result of the pandemic-led ‘search for space’.
Of course, other factors such as the stamp duty holiday, the after-effects of Covid-19 on the property market and the change in buyer preference also play a big role in increasing buyer demand.
According to letting agents in Aylesbury, the average price of homes in Britain has risen by £50,000 in the last 5 years. In order to understand the post-pandemic market reaction a little better, let’s talk about the various factors that played a role in increasing buyer demand and the consequential ‘search for space’.
The multiple lockdowns in the UK
The UK government was quick to react to the Covid-19 pandemic and it went into lockdown almost instantly. During the first lockdown, there were no estate transactions allowed, which meant buyers, sellers and estate agents had to put their buying and selling activities on hold.
During the second and third lockdown, the UK government did allow estate transactions but there was a sense of uncertainty around the Covid-19 pandemic. While some buyers took the leap of faith, others stopped looking at houses altogether.
While some sellers decided to delay the process of selling, others were forced to make distress sales during the pandemic. As the pandemic started coming closer to an end, real estate activity in the UK started to boom.
The need for space
Due to the multiple lockdowns in the UK, people got tired of sitting indoors. Since most employees and professionals lived in the city centre, staying locked up inside an apartment became almost intolerable. It is due to the lockdowns and the strict restrictions that the need for space came about.
In the UK, homes with private gardens, outdoor spaces and even balconies were the most sought after properties during the pandemic. Many people decided to move out of their city centre homes and chose to move into properties in the suburbs and boroughs instead.
Keep in mind, the average price of a property in the city centre is higher than the average price of a property in the outskirts and suburbs, which is what made this move the most logical one for most homeowners and tenants. First-time buyers and potential buyers also started looking at bigger properties in the boroughs, as those were just as affordable as smaller properties in the cities.
The convenience of working from home
Due to the pandemic, most employees were working from home. This meant they no longer needed to worry about communicating to work and spending hours on public transportation to get to their workplace.
This is another important factor that led to the popular ‘search for space’ trend in the UK. Since people could work from the comfort of their homes, they no longer needed to live close to their place of work.
So, instead of living in a two-bedroom apartment in the city, young professionals decided to move into three and four-bedroom homes in the outskirts, which were actually more affordable.
According to most estate agents in the UK, properties with additional bedrooms or garages were highly sought after as these spare rooms could be converted into home offices.
The impact of the stamp duty holiday
In order to boost sales and revive the property market, the Chancellor of the Exchequer, Rishi Sunak, announced a stamp duty holiday. Basically, the stamp duty holiday was a temporary suspension of the compulsory stamp duty that every buyer had to pay on the purchase of property in the UK.
By removing the stamp duty, buyers could now save thousands and thousands of pounds on their purchase, which was a pretty big incentive for first-time buyers. Not only did the stamp duty holiday reverse the property market slump but it actually led to a surge in property prices.
In fact, the demand to supply ratio increased to a point where new constructions started popping up to make the most of this increase in demand.
The change in buyer preference
Due to the pandemic, the demands and preferences of the buyer changed completely. Potential buyers who were earlier looking at city centre properties close to their place of work were not looking at bigger homes with home offices in the boroughs.
Buyers who were looking to upgrade their lifestyle chose to buy bigger and better homes in the outskirts with private gardens and garages as these homes were more affordable and definitely more spacious. Many homeowners were also looking to move out of the city and move into community-centric towns in the suburbs.
