House prices are a divisive topic. Many people stare at the telephone-number prices for houses and flats in the UK and feel that even the deposit on a mortgage will be difficult to find without the âBank of Mum & Dad.â Others talk proudly about their home as if it is an investment that can easily be cashed in at any time – which ignores that if you ever want to enjoy that increase in value then you still need to buy another home to replace it.
The latest house price index from Zoopla suggests that in the year to August 2022 UK house prices increased by around 8.3% – with theÂ average home value reaching ÂŁ256,600. Six months ago the rate of growth was 9.6% so some are pointing to a slowdown, but Zoopla suggests that if you look at the numbers over a five-year period then growth is still looking strong.
Demand for homes has declined a little since the immediate post-pandemic months, but it is still 25% stronger than the five-year average. This unexpected resilience in housing has led Zoopla to predict more sales and stronger price growth in 2022 than expected at the start of the year.
Commenting to Mortgage Strategy magazine, Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey says:Â âThe impact of the pandemic continues to be felt as the shift to flexible working makes people reconsider their living arrangements and maybe make the move to somewhere a bit further afield that is more affordable. The increase in people choosing to retire as a result of the pandemic is also fuelling activity and house prices growth remains well supported for the time being.â
These two trends are interesting. Although the UK is being buffeted by a cost of living crisis and high inflation, there are changes taking place in the housing market that are not just driven by people sitting back and watching their house grow more valuable.
People deciding to retire early because of the pandemic are downsizing and moving to less expensive areas, but perhaps more importantly, people are seeing their home as a workplace more than ever. This means that they are seeking homes in areas where they can afford more space and the home office is becoming an integral requirement during many home searches today.
The post-pandemic ability of many people to work-from-home (WFH) in the UK is fueling growth in sales. The Zoopla research suggests that those who expect to be WFH more often are now five times more likely to move home than those tied to an office. The UK Office for National Statistics has published data suggesting that the number of workers logging in remotely more than doubled over the pandemic, bringing the total of regular remote workers to around 9.7 million.
As the Zoopla research suggests, with a group of almost ten million people in the UK now regularly WFH, it is no surprise that what people want from a home is changing.This group of millions of people in the UK is more prepared to move home, they want to explore the suburbs or smaller towns so they can afford more space, and a home office is essential.Â
This creates many questions beyond exploring the growth in home value alone. Will new home developers respond quickly to this trend and how will new homes look, feel, and be marketed in the near future?
In the next year or two, it may not just be the cost of living crisis that changes the UK property market. This block of ten million remote workers could create more fundamental change than the property market has ever seen since the development of railways allowed the creation of suburbs.