U.K. Property Price Surging Due to Work from Home

The Bank of England said, "Working from home is helping lift house prices in the U.K. by making consumers willing to pay more for space." Deputy Governor Ben Broadbent said, "The recent surge in property prices reflects a shift in preferences for bigger houses, since

BY Realty Plus
Published - Monday, 09 Aug, 2021

U.K. Property Price Surging Due to Work from Home

The Bank of England said, "Working from home is helping lift house prices in the U.K. by making consumers willing to pay more for space." Deputy Governor Ben Broadbent said, "The recent surge in property prices reflects a shift in preferences for bigger houses, since more consumers expect to need office space at home. Governor Andrew Bailey said a proliferation of high loan-to-value mortgages also is helping consumers afford to pay more." The remarks suggest longer-term forces propping up Britain’s red-hot property market as the U.K. economy recovers from its worst recession in three centuries. Much of the strength in the market has been attributed to a tax break on purchases that’s now started to unwind, but the BOE officials see structural factors as providing firmer support. They noted that banks have also become more open to offering riskier mortgages, with supply ramping up and interest rates on loans falling as fears about household finances eased. The average quoted price for a mortgage with a 90% LTV has fallen by 85 basis points since the beginning of the year, according to the Bank of England’s Monetary Policy report released on 5th August. Underlying demand is expected to remain solid in the near term driven by elevated consumer confidence, a shortage of homes for sale and continued low borrowing costs, a separate report by Nationwide said on July 28. That lender said the annual pace of price growth dropped to 10.5% in July from a 17-year high of 13.4%. Halifax’s data offers tentative evidence that elevated prices will persist after total expiration of the Stamp Duty holiday in September, said Martin Beck, senior economic advisor to the EY item club. “Overall, the odds of a significant correction in house prices anytime soon looks small”. Wales saw the strongest gains since 2005 in the Halifax report while London lagged all other regions with 2.5% annual growth. Eastern England and the South East also had some of the slowest growth in the U.K. A drop in the inventory of properties available to sell and historically low borrowing costs will probably support prices in the coming months, Halifax said.