UK Buyers Wanting More Space Drive Larger-Home Prices to ‘All Time High’

Rows of larger houses are shown in London on Aug. 5, 2020. The UK's housing market reopened in May after months of pandemic-related restrictions that largely halted the showing and selling of homes. Dan Kitwood/Getty Images

More British homebuyers are buying larger houses amid the CCP virus pandemic, driving house prices for larger homes to an “all time high,” according to Britain’s biggest property buying website.

Average prices for larger homes have increased, largely due to buyers now wanting more family space and more space to work from home, Rightmove said in a statement on Monday.

The drive for more space is creating increased activity and competition in the housing market, according to Rightmove’s data expert Tim Bannister.

“Needing more space has always been the most popular reason for moving house, but now there’s a new urgency for extra space to be able to work from home, which means that there are different sets of buyers competing for the same type of property,” Bannister said.

Estate agents boards are seen outside a row of terraced houses in Manchester, England, on July 8, 2020. Phil Noble/Reuters

The British housing market boom has affected house prices for buyers at all levels of the larger-homes market, with the strongest sales being of four-bedroomed detached properties and larger, Rightmove said.

These “top of the ladder” housing sales were up 104 percent last month compared to the same period last year.

‘Second-stepper Homes’

Three- and four-bedroomed homes, described by Rightmove as “second-stepper homes,” have seen agreed sales up 55 percent on the same time last year and have reached a record average price of 291,618 pounds ($371,193).

Bannister said purchasing properties with extra bedrooms is being regarded as a necessity by more British homebuyers than before the national lockdown in March and April, enacted to slow the spread of the CCP (Chinese Communist Party) virus, also known as the novel coronavirus.

“At the start of the year a fourth bedroom was very much a luxury for buyers trading up, but it’s now emerging as a must-have for those who are able to take that step,” Bannister said.

Estate and rental agents' boards are pictured on a residential street in Hackney in East London on Aug. 9, 2019. Daniel Leal-Olivas/AFP via Getty Images

Two-bedroomed and smaller properties in the first-time buyer sector of the market were the weakest on sales agreed, but were still up 36 percent.

The boom in Britain’s house prices comes after the reopening if its property market in May following the easing of lockdown restrictions.

Overall house prices have kept stable, up by only 0.2 percent compared to July when the market peaked, Rightmove said, while annual growth rose by 5 percent, the highest percentage rise in four years.

Unprecedented Market Activity

Ben Hudson, managing director of Hudson Moody estate agents in York, North Yorkshire, said he has never been so busy.

“In the first few months of the market reopening I was saying that we were as busy as we’d ever been, but even that is now paling into insignificance when compared with how busy we are right now,”  he said via Rightmove.

“We are currently experiencing the busiest market I have seen in my 37-year career as an estate agent,” he said in a separate statement.

Following the March lockdown it seemed that “almost half the country re-evaluated where they were living,” Hudson added.

“During the lockdown people saw the benefits of gardens, outside space and working from home,” he said.

“Multi generations also wanted to be closer to family and on the 13th May, which was the day our industry was effectively allowed to re-open, the flood gates also opened.”

Potential Bottlenecks

Nick Leeming, chairman of estate agents Jackson-Stops, warned, via Rightmove, of potential bottlenecks for customers in processing sales amid the heightened market activity.

“When the property market experiences unprecedented demand, such as the UK has seen post-lockdown, you can understand how potential logjams can form throughout the transaction process,” he said.

To help mitigate this he advised sellers to prepare all documents, make pre-sale enquiries, and have contracts-in-principle agreed well in advance of contract exchange. He also advised sellers to consider online conveyancing services to avoid long waits for conventional service from solicitors.

Houses, not Flats

The British rental market has also been affected by the changing housing preferences and the desire for more space that has emerged since the lockdown.

“Interestingly, the pandemic has also changed many tenants’ requirements for a home. Since lockdown, a lot of people are now looking for bigger homes with gardens and a separate space to work from home,” Michael Cook, national lettings managing director at Romans estate agents, said in a statement earlier this month.

“Houses are also rising in popularity over flats,” he said.

Several factors have affected the recovery in Britain’s housing market, including dammed up demand from people who had already decided to move but whose plans were put on hold during the lockdown.

Also driving recovery is an upsurge in market activity from buyers who want to move house before the end of the government’s tax break currently in place in the form of a stamp duty holiday that is due to end in March 2021.

The British property boom is not expected to last, however, as labor markets manifest the impact of pandemic-related job losses going forward, Robert Gardner, chief economist at Nationwide, the world’s largest building society, said in an August report (pdf).

“Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the after effects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead,” he said.