What actually caused the UK property boom?
The recent Resolution Foundation research reveals the Stamp Duty Holiday as a secondary cause of the UK housing rush over the last 12 months.
Many think of tax relief as the primary factor for the heated activity in the UK property market. According to the data by Resolution Foundation, there are other more essential factors other than Stamp Duty Holiday that caused a record-high increase in average house prices in the country.
The research reveals drastic upward trends in demand for spacious properties, lowered interest rates, and forced savings as key factors for the real estate rush in the UK.
Since remote work became nothing but commonplace for us, and the pandemic caused a definite shift towards city appeal, suburban areas with spacious properties and greenery have experienced escalating demand. For decades, the property price growth pace in rural areas was noticeably slower than in cities. That changed in March 2020, when the pandemic hit and remote work affected the appeal of cities. Property tax experts at Cornerstone Tax reveal that almost half of the British currently think of living in urban areas as less attractive.
Research data also indicates that this trend of an appealing rural wholesome lifestyle is here to stay – millions have already moved from the busy city streets and many will not commute to a city after the pandemic is positively over.
Property buyers insights
- In 2020, around 10 per cent of the British relocated from a city to an urban area, which is 3,3m people.
- More than 40 per cent (almost 16,5m people) of the British feel that the pandemic has negatively affected the appeal of living in urban areas
- Almost 25 per cent of the British consider commuting to a city no longer relevant.
David Hannah at Cornerstone Tax highlights the post-pandemic deurbanisation trend and its impact on the real estate market. He thinks of the past year as «unprecedented» regarding the UK property market with skyrocketing prices and shifting trends towards greenery and work-from-home possibilities.
The Stamp Duty Holiday did cause heated market activity, but it didn't exceed expectations. However, the tax relief encouraged more aspiring buyers to step on the property ladder. Hannah says that the research confirms the assumption that has been on the table for the past 12 months – living in urban areas has become less appealing for good. During the pandemic, the vast majority of the company's clients have been looking for spacious new homes with extra indoor and outdoor space.