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How is coronavirus affecting house prices?

Discover what the pandemic means for buyers, sellers and homeowners

How is coronavirus affecting house prices?

As we enter a new year, experts expect UK house prices to continue to rise due to a lack of homes coming on to the market.

Data from the Land Registry shows prices are up by 10% year-on-year, as buyers compete for properties.

Here, Which? explains what’s happening to house prices and provides advice on making an offer on a property in these uncertain times.

What happened to the property market in 2021?

The property market is open and active throughout the UK, with estate agents conducting in-person house viewings and buyers able to move home.

The market soared during 2021, with activity led by the government temporarily cutting stamp duty.

The biggest savings of up to £15,000 ended on 30 June, but buyers in England and Northern Ireland were able to save up to £2,500 if they bought a home before the end of September.

Transaction numbers peak around stamp duty deadlines

The number of houses being sold rose significantly during the tax holiday, with peaks in June and September as buyers sought to get transactions over the line in time to save on tax.

Provisional data from HM Revenue and Customs (HMRC) shows that 96,290 sales went through in November as the market bounced back from a quiet month in October.

The graph below shows the number of sales registered each month since the start of 2020.

How have house prices changed?

We’re getting a clearer picture of the impact that coronavirus has had on house prices, but continued uncertainty over what will happen next with the pandemic means figures could continue to fluctuate.

The most reliable barometer of house prices is the Land Registry’s UK House Price Index, which is based on sold property prices. It works on a two-month lag, so the latest available figures are for November.

The Land Registry says that the average price of a property in the UK rose by 10% year-on-year in November to reach £270,708, as shown in the graph below.

Rightmove’s house price index is more up to date, but it’s based on asking prices rather than sold prices. In January’s report, it found that average asking prices rose by 0.3% month-on-month and 7.6% year-on-year.

Nationwide’s index (based on mortgage lending) reported a 1% monthly and 10.4% annual rise in prices in December. Halifax’s index (also based on lending) reported a 1.1% monthly and 9.8% annual increase.

What will happen in the coming months?

There’s been a great deal of optimism around the property market of late, with an imbalance between supply and demand meaning properties are selling more quickly than before.

Research by Rightmove found the average time to agree a sale in December was 39 days, one of the lowest figures registered since the start of the pandemic.

Lack of supply could keep prices high

The recent rise in demand from buyers hasn’t been met by a flurry of new properties coming on to the market, and this imbalance could keep prices high.

The estate agent trade body Propertymark reported an average of 29 buyers for every available property in November, with competition resulting in 38% of homes selling for above their original asking price.

The estate agency Savills predicts prices will rise by 3.5% in 2022 and 3% in 2023.  The property portal Zoopla has similar projections. It forecasts a 3% increase in 2022, with 1.2m house purchases going through. Halifax predicts a slower market, with price changes of 0%-2%.

How do house viewings work at the minute?

During last year’s lockdown, estate agents began offering video house viewings, and these are continuing to play a part despite the lifting of restrictions.

The government’s latest guidance recommends that buyers ‘take advantage of any opportunities to view homes remotely before committing to view in person.’

If you then a house in person, you may find that the estate agent requests you wear a mask and sanitise your hands when entering the property.

Row of houses

Is it possible to get a good mortgage deal?

Mortgage rates fell consistently in 2021, with lenders battling to offer the cheapest deals for buyers with big deposits – but this could change in light of the Bank of England increasing the base rate to 0.25%.

Rates had already been creeping up from their historic lows, with sub-1% mortgages having now disappeared – and this trend could continue in the coming weeks and months. 

Despite the rises, rates currently remain very low across the board, so whether you’ve got a 5% deposit or a 40% deposit, you should still be able to get a good deal.

Which? Money Podcast: what will happen to the property market in 2022?

In a recent episode of the Which? Money Podcast, we took a look at what might be next for the property market in 2022.

You can listen to the full episode below.

Which? coronavirus advice

Experts from across Which? have been compiling the advice you need to stay safe, and to make sure you’re not left out of pocket.

Keep up to date on the latest coronavirus news and advice with Which?.

This story was originally published in March 2020. It is regularly updated with the latest figures from various leading house price indices. The last update was on 19 January 2022.

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