Yahoo Finance Space race: Property prices in least populated areas soar amid work from home boom
The COVID pandemic has prompted British households re-evaluate their housing needs, meaning demand for family houses with gardens, parking and extra space to work from home rose.
New data shows UK house prices in the least-densely populated areas rose almost twice as much as those in the most-densely populated regions over the past year.
This is fuelled by the coronavirus pandemic prompting people to choose to live and work outside busy cities, and the stamp duty holiday, according to Resolution Foundation.
The Foundation’s quarterly Housing Outlook, which assesses the impact of COVID on housing demand in Britain, shows prices jumped over 10% in the least dense tenth of UK local authorities, since February.
This is compared with 6% increases for the most populous deciles.
On average, house prices in outer London rose by 7% since February 2020, compared with 2% on average for those in denser inner London areas.
Similarly, house prices went up by 9% in small towns and villages, compared to 6% in Britain's 12 biggest "core" cities, including the capital, Birmingham and Manchester.
The analysis also indicates that buyers have been moving away from smaller properties, such as flats, when compared with more spacious homes.
The average price of a flat has grown by just under 6% over the last year, while houses of all types have increased by around 9%, it said.
According to the foundation, the stamp duty tax break has bolstered the purchasing power of second-steppers rather than first time buyers, who are more likely to be interested in, and able to afford, bigger homes.
Experts say it is "too early" to tell how long the "urban flight" trend will last.
"It’s too early to say whether this move away from cities will be a long-term trend. But for many families, escaping to the country is no more than a pipe dream, and the overcrowding that they have faced during the pandemic must be addressed,” Cara Pacitti, economist at the Resolution Foundation, said.
READ MORE: UK house prices see highest monthly rise since 2004 as property boom continues
Separate figures from Nationwide published on Friday revealed Britain's property boom is heating up as new figures showed April recorded the highest monthly rise in average UK house prices in 17 years.
According to its latest house price index, annual house price growth rebounded to 7.1% in April, from 5.7% in March.
Similarly, official figures from the Office for National Statistics (ONS) show UK house prices hit record highs and property transactions soared at the start of the year.
ONS said the average UK house prices increased by 8.6% in the year to February — the highest annual growth rate since October 2014.
The average house price was £250,000 ($347,400) in February 2021, which was £20,000 higher than February last year. The average home price now stands at a record high of £268,000.
Data from HMRC showed 180,690 transactions were recorded in March. This was double the total in March last year and the highest number since the government started publishing data in 2005.
While the coronavirus pandemic has had minimal impact on the housing market, as people spend more on housing due to changing needs, the "honeymoon" phase is expected to come to an end.
Guy Harrington, CEO of residential lender Glenhawk: "The honeymoon won’t go on forever, and the longer the current unsustainable levels of house price growth continues, the sharper and more painful the eventual correction will be."
"The stamp duty holiday and higher household savings because of the restrictions might paint a positive picture till Autumn, but we will see reality set in once the support schemes end and the scale of slowdown then might catch many by surprise.”
