UK House Prices Surge Through 2020 Despite Pandemic-Driven Downturn
Despite the coronavirus pandemic driving the UK’s economy into the worst downturn since at least World War II, house prices across the nation posted a surprising surge over the past year. Data released by the Office for National Statistics (ONS), average house prices in the UK rose by 10.2% YoY to £256,000 in the year ending March 2021.
This was the fastest pace of increase seen in home prices in nearly 14 years. There was an increased demand for detached homes during the pandemic, causing their prices to rise by 11.7% while the price for flats and maisonettes saw a 5% rise over the year.
With the surge in prices, there are fears of a possible bubble in the UK housing market, especially with the government offering stam duty holiday to drive up consumption. Meanwhile, savings generated by citizens over the past several months of lockdown are also increasing interest among consumers to make big ticket purchases, with homes being on top of this list.
The ONS observes that the reduction in taxes paid on housing transactions could have driven up asking prices by sellers even as they drove down overall costs for buyers. The stamp duty holiday is expected to end on October 1, 2021, following which economists expect house prices to return to normal levels by the end of the year.
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