Covid pandemic & its influence on the UK house prices in London & sales

The property market in the UK is constantly changing. With the recent situation with Covid-19, it survived great shakes. With a significant boom in real estate prices in recent years, the pandemic provoked even bigger changes making our house the whole world. Thus, we can see the biggest rise in house prices in modern history.

The greatest changes on the market in London

When Covid first hit Britain in spring 2020, a shutdown shook the whole property market. Just for two weeks, the situation changed because of the fear of a crash. Since that time, the prices have increased by 6.2%. It appeared to be the fastest growth since 2016.

The real estate market turned virtual. Many people hurried up to buy a property, some of them did it on the Internet (evading physical presence and examination). August, which used to be a super calm month in all previous years, was record-breaking in 2020 by the volume of property deals on the market. Although the majority of markets fell in total, deteriorating their volumes by 10% or less due to the lockdowns, the real estate in London is still a yummy cake. UK house prices in London made the issue of housing even sharper considering the increase in unemployment rates.

If we look at 2008 (which suffered from the hammer of the global financial crisis), the property prices downgraded by around 18 percent because many property owners wanted to get rid of homes and apts. in the promptest possible manner to evade paying high taxes and due to loss of their jobs. Thus, from the economic point of view, the pandemic of 2020-2021 has no signs of a financial slump.

The current situation is as follows: London’s real estate market is estimated as high as £1,800 billion. As the Savills analyst claims, they did not expect such a rapid expansion of the market, especially given harsh times from the point of view of falling employment rates. The pandemic made people reassess their housing preferences, provoking a massive market heating in July-Dec 2020.

House improvements

People should have used to their new lifestyle. Due to this, many of them started renovating their homes to make them suitable for their new needs in the conditions of a lockdown & hazy future. According to the statistics, during the pandemic, about 70% of British people spent up to £5,000 on various improvements.

British residents began adding square meters to their houses, choose glass instead of brick walls & add more light. In addition, they wanted to create a tiny copy of the real world, organizing a place for:

• gyms
• gardens (in a courtyard)
• studies
• even bars!

People went further by buying fire pits, hot tubs & diverse garden furniture to make their space as comfortable as possible. According to the official data, the insurance for hot tubs alone increased by three times in 2020!

How much is London worth?

Many house owners are now concerned about the cost of their property. In fact, today we can see the increase in the sales of detached & semi-detached houses. In addition, people are more interested in property having gardens due to the lockdown. It’s connected with the fact that they want to have more space to live & more air to breathe without leaving their homes (especially should they be locked in again). As a result, the way real estate is valued also changed.

For example, the houses without a garden & flats without a balcony became less popular. London apartment prices decreased by 10%. As the representatives of Jennifer Hancock of Property Acquisitions Ltd. report, the costs of houses without a separate reception room also became lower. Earlier, people were more interested in an open-plan area, while now they want more privacy. Due to this fact, many owners are now trying to sell their houses or add extra walls to correspond to modern wants.

The location is now less important for people looking for a suitable property. Many of them think about the future & are likely to work from home. Thus, they want to have a pleasant view from their window & are not as rigidly selecting homes close to facilities & main roads as before. As a result, London flat prices for properties situated in front of a park are becoming higher compared, for instance, to houses next to the Tube. The research demonstrated the fall of prices for the houses near the Tube by 2%. An impressive fact is that before the pandemic, such a location was preferable because it was very comfortable to get to work & come back home.

It’s also important to mention general flat prices in London. There’s an oversupply of apartments in the capital but their cost fell by 0.1% so far – not so significant. The costs of newly built apartments survived an even greater decrease of 0.7%. Such a situation opens slightly bigger opportunities for those who look beyond the pandemic & are getting ready for a normal life in some years to come. Today it’s possible to find & purchase a good apartment in London at a comparatively low price. Thus, one woman moved from Birmingham, where she was renting a flat, back to her parents. In a search of her own household, she thought about shared ownership first. However, it appeared to be too expensive. Finally, she found an attractive offer & bought a flat in West Green Place from Pocket Living (PL). This company builds houses & sells them for 20% below the market rate. It’s a perfect chance for purchasers with an income of less than £90,000. The firm offers one-bedroom flats with 409 sq. ft. Not much but it’s more than the UK minimum square, which can be of ridiculous 398 square feet.

The smallest cost of an apartment offered by PL totals just £194,000. Their complex is situated in Barking & has all the important amenities including a fitness center, bike storage & a nice garden with on-site allotment-style planting beds.

Housing inequality

The current situation with Covid-19 dictates its own rules to the British people. As a result, the divide between something recommended having & something, which it’s better not to buy, becomes greater.

P. Brown, a regeneration specialist, is now responsible for the special project of dealing with housing inequality. She used to be CEO and director of several major housing consultancies and development agencies, becoming an expert in this area. One of her social projects was the pedestrianization of Trafalgar Square.

She calls upon to pay more attention to regeneration & not just development. According to her, some parts of London are well developed while the others didn’t become better after the development. Thus, many people still can’t feel the benefits. And there are not enough houses. As she assures, it’s better to concentrate more on social regeneration than on physical improvement.

The key aims of the new project are less polluted areas & a better transportation system. It’s promised that the capital would become easier to walk around. In addition, the plans include advanced housing of various types & a wide range of products, which can guarantee more affordability in housing.

London is going to become technology-enabled. Technologies will be used in a way to make the city more comfortable for people. The interests of both the private & public sectors (as well as of the authorities) will be taken into consideration.

The project was initially aimed at supporting purchasers, who buy a property for the first time. However, the pandemic changed everything. Thus, stamp duty holidays (SDH) deprive those buyers of the tax advantages. Just compare the previous thresholds, which were 300 thousand pounds & 125 thousand pounds for the first-time purchasers & other buyers correspondingly. Now SDH changed the threshold, which reached 500 thousand pounds. As a result, people buying bigger houses got a benefit saving up to 15 thousand pounds on taxes. The costs of houses reflect such a shift. Thus, we can see the sales of properties worth 200 or 300 thousand pounds have fallen by over 10% during the pandemic.

Conclusion

To sum up, we say that the property market keeps developing & positively changing even during the pandemics.

Life became somewhat different. This is why people have different requirements for their properties. Even though now it's possible to find an affordable flat in London, for some social layers, it has remained difficult to impossible. It's also hard to sell certain types of property because people have other preferences in the organization of their living area. Certain improvements might be necessary to change the houses or apartments to sell them after the pandemic to meet buyers’ needs.