The ‘Race for Space’ and house price inflation in 2020
House prices rose at the fastest annual rate in more than four years in October 2020 according to the Halifax
The property market has surprised many this year -- a change in homeowners’ aspirations and especially space is driving house price inflation in the villages and countryside in the South East.
Are rising house prices about more than just the normal supply and demand?
With so much talk of the Covid crisis, it’s almost possible to forget about the numerous economic hurdles that affect house prices.
The rising cost of debt resulting from Lockdowns 1.0 and 2.0, the struggling economy, the Brexit trade deal and startling job losses — so why are so many people moving home?
House prices rose at the fastest annual rate in more than four years in October 2020 according to the Halifax.
The average price of a UK home topped £250,000 for the first time, with prices up by 7.5% compared with a year earlier. It was the strongest rate of annual growth since June 2016 says the lender.
Working from home
The pundits call it the ‘Race for Space’ as lockdown buyers liberated by home working seek more room inside and out.
Let’s not forget the incendiary device that is Rishi Sunak’s Stamp Duty holiday adding rocket fuel to the space race as if further stimulus was necessary.
Why are home buyers not concerned with the so-called ‘Coronavirus stock market crash’ which began on 20 February 2020 and ended on 7 April? It was deemed the most devastating crash since the Wall Street Crash of 1929 signalling the beginning of a Covid-19 recession.
And what about rising inflation, the Consumer Prices Index 12-month inflation rate was 0.7% in September 2020, up from 0.5% in August 2020 according to the Office for National Statistics (ONS)
So are property buyers really just changing lifestyles and grabbing a discount on buying costs, or is something deeper going on when people choose bricks and mortar as their single largest financial investment in the middle of a global pandemic?
Property purchase is mostly funded by mortgage money and not hard cash, so rarely will a property buyer weigh up the pros and cons of a safe haven such as gold against property.
We are talking about equity, the cash hidden in the bricks and mortar of your home. The sale price minus the mortgage or for many people, the sale price plus an increase in the mortgage, in other words buying power.
So is consumer demand for homes really about a strategic investment decision or just relocation, space, environment, family and recreation?
The answer is all of these but above all it’s about trust
We develop our trust in bricks and mortar at an early age.
Most of us grew up with rising house prices – there were a few blips along the way maybe. I can certainly remember interest rates at 15% but my children can’t. Most of us were brought up to believe in the stability of homeownership and the notion of what a wise investment it turned out to be for our parents.
Steady the ship, invest in property when everything else is at sea seems like a wise mantra and particularly so in these unprecedented times.
What do I see in my crystal ball?
So with high demand likely to continue and a shortage of stock, will house prices continue to rise?
The simple economics of supply and demand would suggest so.
In my crystal ball, house price inflation will, in all probability, slow in the short term due to seasonal adjustment, lockdown and job insecurity but otherwise, continue an upwardly mobile trend.
The headwinds are numerous including a likely double whammy in March 2021 with the end of Furlough and the demise of the Stamp Duty holiday. Pressure will surely mount on the Chancellor to amend or delay.
House prices could respond even more strongly in the event of a better than anticipated Brexit transition, an effective vaccine roll out or signs of an economic recovery.
Only time will tell but one thing is for sure, property will continue to prove to be a wise long term investment as historical house price data shows.
And then there is the local ‘Netflix Effect’ to come!
Making the most of your property
Would you like us to send you a quick email when we publish our next article?
These will include tips and advice on how maximum your enjoyment and return on investement from you property.
Other Recent ArticlesView all
Post Stamp Duty Holiday: What next for the property market?
When Rishi Sunak announced a temporary Stamp Duty holiday on July 8th 2020 to counter the effects of the Pandemic, homebuyers celebrated the chance to save on buying costs. Was he right to do it? […]Find out more
Wye - Kent's Super Village
So what is it about the village of Wye that creates it’s extraordinary reputation? Unlike many villages in my part of Kent that are equally as pretty and have local facilities, it has a selection […]Find out more
Millie Green - A Review of Ashford
The Kentish town of Ashford is known for many things: the International Station, the Designer Outlet and a plethora of secondary schools. These are all great assets to the town, but at Hobbs Parker we […]Find out more
Stamp Duty Savings - are you buying a house with an Annexe?
“We sell many homes with accommodation that is separate to the principal home but very few buyers are aware of the Stamp Duty savings they may be entitled to.” Alex DaviesFind out more
Very small ski chalet for sale!
It's tempting to take snowing photos of your home when selling it. But is this a good idea?Find out more
How many Ashfords are there in the UK?
Our website contains a database of all the villages, towns and cities in the UK. We combined this data with Google Maps to created this interactive map of all the Ashfords in the UK.Find out more
The 50 Most Popular Villages
Our website is very busy — every day up to 6,000 people visit our website. Many are researching the ideal location for their next home and spend some time reading about the towns and villages […]Find out more
Tips to help you establish a great Wild Garden
If you’ve been watching TV nature and gardening programmes lately, you’ll have seen a lot of interest in wild gardens. There are many advantages to wild gardens: they cover the ground in a beautiful mix […]Find out more
Five Predictions for the Local Property Market in 2021
2020 was a tumultuous year for Hobbs Parker with our estate agency business up by 25% breaking all previous records. Despite the gloomy start to 2021, with further lockdown measures introduced, I anticipate sustained activity […]Find out more
Tips for buyers and sellers when dealing with properties from a bygone era
The first clue upon arrival is the general look of neglect. Tired net curtains hanging at the windows, peeling paintwork, stains from a leaking gutter, a rusty gate opening on to an entrance path overgrown […]Find out more
The 'Race for Space' and house price inflation in 2020
Are rising house prices about more than just the normal supply and demand? With so much talk of the Covid crisis, it’s almost possible to forget about the numerous economic hurdles that affect house prices. […]Find out more
Why Rishi cannot claim all the credit!
What a strange world we live in when sales of houses are going through the roof against a background of a global pandemic. Whilst the Stamp Duty holiday is welcome, this was happening before the […]Find out more
Stamp Duty cut has immediate impact!
The temporary cut is with immediate effect and therefore reduces the cost of a property purchase straight away saving an average of £4,500 for residential property buyers providing they take advantage of it before the holiday comes […]Find out more
Will Netflix and Amazon affect property prices in Ashford?
There has been talk of an Ashford metamorphosis for almost as long as I can remember. The opening of the ‘Missing Link’ of the M20 motorway between Ashford and Maidstone in 1991 would surely bring […]Find out more
Might Estate Agents open first to help rebuild the economy?
A recommendation is reported to have been made in a report written for the Government by Conservative peer Lord Gadhia and Sir Jonathan Symonds, chairman of GlaxoSmithKline. Along with coffee shops and restaurants, Estate Agents […]Find out more
Do virtual tours and viewings work?
While lockdown and movement restrictions mean that buyers are prevented from physically viewing homes for sale, evidence suggests that many buyers are spending more time on property websites and portals to pass the time and […]Find out more
Post-Coronavirus property market predictions
Savills research team recently offered some interesting analysis of what a UK property market recovery could look like post-Coronavirus predicting transaction volumes could be down by up to 45% for 2020 with the greatest impact […]Find out more
Bucking the national property 'downturn'
It is true that we agreed 35 sales during October which we think are good results by anyone’s standards but I can tell you it doesn’t come easily and not without a lot of hard […]Find out more
Why 2019 is the right time to invest in Ashford
“If you have ever wished you’d invested somewhere that has regenerated, you will know that you are already too late.” These are the words of Alex Davies, Managing Director for Hobbs Parker Estate Agents, an […]Find out more
How do you get the best price for your house?
How do you get the best price for your house? Answer: When you put your house on the market for the first time make sure it is at the correct market value — do not be tempted to ask for […]Find out more
Historic Property Auction Particulars -- Mersham 1878
These have been hanging on the wall in our boardroom for as long as I can remember. I recently happened to ‘bump into’ two of the current owners of the cottages when I gave a […]Find out more
Listed Buildings Advice
The market for period property is booming and the older the house or cottage, the more likely it is to be listed. By listing a property, it celebrates a building’s special architectural and historic features […]Find out more
Will your second home also be your pension?
Recent research suggests that the level of income people aspire to retire on each year has increased from £35,000 to £42,000 yet this would require a pension pot of more than £1 million. Evidence shows […]Find out more
Will solar panels increase the value of my home?
As the weather gets colder and darker, and the heating and lights stay on longer, there’s one thing I can predict with even more certainty than the Queen’s Speech broadcasting on Christmas Day. The arrival […]Find out more
Why do kitchens sell houses?
The party is in the kitchen! When we have a party at our house my wife and I spend hours making our living room look nice and then most of the evening trying to get […]Find out more