According to a new study by the Resolution Foundation, the stamp duty holiday – which came to an end in July 2021 – was not behind a record average increase in house prices over the last year. Prices have risen 13.2% over the last 12 months, with many pointing to the tax holiday as a key driver. The think-tank’s research, however, suggests that other factors including the ‘race for space’ has culminated into a frenzied search for properties with more living space, both inside and out, while low interest rates and forced savings pushed up prices.
New-found freedoms to work from home, as well as lockdowns causing a permanent shift of appeal towards cities, has meant that both houses and areas with more space have seen skyrocketing demand. For decades the pace of house price growth in cities has far outstripped that of rural areas. That was until 2020, where lockdown restrictions and new-found abilities to work from home saw the appeal of cities reduce dramatically. Data from a first of its kind study from property tax specialists Cornerstone Tax revealed that 44% of Brits now find living in urban areas less appealing.
This trend of a more attractive rural lifestyle looks set to continue for the long term, as further research from Cornerstone Tax shows that millions have already moved away and many more will not commute to a city post-pandemic:
- In the past year, 10% of Brits have moved away from a city or urban area (3,319,000)
- 44% of Brits feel that the impact of Coronavirus has made living in a city less appealing (16,468,000)
- 24% of Brits will no longer commute into a city for their job post-pandemic (4,297,000)
David Hannah, principal consultant at Cornerstone Tax, discusses deurbanistion post-pandemic and impact on property prices:
“The past year has been unprecedented in the UK housing market; prices have skyrocketed as buyers scramble for that extra bit of garden space or an extra room for a proper home office. It seems the impact of the stamp duty holiday may have been less than we expected in terms of activity but it seems likely that saving thousands on stamp duty has encouraged buyers to offer that little bit extra.
“The findings from our report confirm what we have thought for much of the past 12 months, that living in a city has undergone a permanent shift in appeal. The clients we have advised during the pandemic have almost exclusively been looking for more space, both inside and outside the property.”