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Navigating the UK property market in the wake of the COVID-19 pandemic


By Kate Faulkner

Property Market Analyst and Commentator

From renters to first-time buyers, those trading up, downsizing or turning their backs on city life for country living, over the last 18 months many people have had to re-think their jobs, lifestyle and the home they live in.

This has had an incredible effect on the dynamics of the property market, especially for those nearing retirement who are keen to move to somewhere new or downsize their current home. Over the next few years, it will become clearer as to whether these changes are temporary or here to stay.

If you’re still working through your finances and options, and haven’t yet decided what to do and when, here are some of the key points worth considering to help make your next move the best one yet.

Latest property trends


When the property market re-opened in mid-May 2020, most expected the uncertainty caused by COVID-19 to collapse property prices. However, to most experts’ surprise, the opposite occurred.

One year on from the first lockdown, property prices are reported to have increased by double digits and rents have risen too. In London, for example, a 6% rise in prices year on year has been reported, while the North West is showing an 18.6% increase.

Although price and rents changes may be different across the UK, there are some general trends that are emerging or being amplified by the current climate:

1. Houses continue to increase in popularity and price versus flats
Whilst not a new trend, there is no doubt that the pandemic has increased people’s desire for outdoor space. That means a house is generally a better purchase choice than a flat, if that’s a viable option. Even if you’re downsizing, buying a house rather than a flat could provide you with more flexibility in the future. That’s also applicable to buy-to-let investors. It’s not just homeowners, but also renters that are now desperate for houses.

2. Moving out of cities to the countryside
While some people may be moving out of cities into more suburban areas, there doesn’t appear to be a big exodus from cities such as London to the South East or ‘the country’. Year-on-year moves from September 2020 to April 2021 vs 2018/19 show that, as a proportion of transactions, Wales actually fell from 5% to 4%, London remained the same at 9% and those moving in and to the South East increased from 14% to 16%. Latest reports suggest that people could be changing their plans as the country opens up.

3. People are more worried about securing the right home than the price they pay
Buying decisions over the last 12 months seem to have focused much more on finding the right home than on sticking to a specific price point, especially for downsizers and upsizers. And it’s these home mover types that are driving prices upwards. This means that you may benefit from current rises when you sell, but this might be cancelled out by the price you have to pay for your next home.

According to a new report from ReallyMoving, not only does the average price paid by each home buyer type vary dramatically, so does year-on-year house price inflation. First time buyers are typically paying just 2.5% more, while upsizers have been shelling out an extra 10% and downsizers a little over 5%.

Table: Average House Price and Quarterly Growth by Buyer Type 

 

First Time Buyer

2021 Q1 2021 Q2 Quarterly Change Annual Change
£246,000 £250,000 1.9% 2.5%
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Upsizer

2021 Q1 2021 Q2 Quarterly Change Annual Change
£398,000 £418,000 4.9% 10.0%
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Downsizer

2021 Q1 2021 Q2 Quarterly Change Annual Change
£301,000 £316,000 5.1% 5.1%
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Investor

2021 Q1 2021 Q2 Quarterly Change Annual Change
£194,000 £205,000 5.5% 14.9%
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Is it time to reconsider where you will live in the future?


Today, most of us are looking at life a little differently. Depending on your experience during the pandemic, you may be desperate to move; or you might want to stay where you are but adapt your home in some way.

If you want to move but like the area you live in, take your time to find your next home. The market is changeable at the moment. While we don’t yet know what the ‘new normal’ will be when it comes to people returning to the office or being able to work from home, it’s worth spending some time observing the changing trends.

If you’re keen to move to another area, again, it’s important that you get to know it well. Spend some weekends there, working out which streets you’d like to live on and looking at properties currently on the market to get a good idea of the price you’d have to pay for the home you want.

If you’re planning to sell, new industry advice requires you to instruct a legal company on the day you market the property and not wait until you have an offer. This is to help ensure a smooth and reasonably quick move and reduce the chance of your sale and/or purchase falling through.

Whatever you decide to do, it’s important that your decisions are not being entirely driven by the changes in the market and that you take your time to consider your next step. And whether you’re thinking of moving, paying off your mortgage or releasing equity to make improvements to your home, it’s well worth speaking to a mortgage advisor to see what financing options are available to you.


Any views or opinions presented here do not necessarily represent those of Ford Money, FCE Bank plc or Ford Motor Company Group and its affiliates.

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