House prices in three London boroughs have leapt by more than £100,000 since the start of the pandemic, new figures looking into Britain’s booming property market have shown.
Covid lockdowns created a house buying frenzy across the country, with the ‘race for space’ during lockdown pushing the average house price cost to an all-time high of £276,759.
And despite reports of homeowners fleeing the capital for the countryside, almost every London borough has seen growth in prices since March 2020 – now at an average £521,146.
Upmarket boroughs Islington, Richmond upon Thames, and Hammersmith and Fulham were the biggest ‘winners’, according to analysis of Land Registry data by firm Twindig.
Price rises were highest in Islington, up £113,314 (17.4%) since the first lockdown almost two years ago. Richmond upon Thames was close behind at £112,845 (17.1%), and Hammersmith and Fulham saw a rise of £105,512 (14.7%).
Anthony Codling, property analyst and chief executive of Twindig said the Stamp Duty Holiday between June 2020 and September 2021 led to the ‘unusual amount of home buying and selling’ in the capital.
But while the majority of homeowners were winners, property prices in two of the city’s 32 boroughs have fallen since March 2020.
Prices in Tower Hamlets are down by £35,942 (7.5%), while homes in Hackney saw a smaller drop of £5,370 (0.9%).
While growth is now expected to slow across London, the City of London saw a huge price rise in the last month of 8.0 per cent. There was also high growth in Camden with 4.2 per cent and Westminster and Hammersmith each with 3.8 per cent.
Surprisingly, growth has also been slow in the notably wealthy borough of Kensington and Chelsea, with an average price rise of just 2.7 per cent in the last year.
Mr Codling suggested stamp duty changes in December have put the brakes on soaring price growth for homes, but now core parts of London could lead a post-Brexit, post-pandemic recovery.
Mr Codling said: ‘Prices in these areas rocketed in the early 20-teens (2011 to 2014) and they are overdue a rise again. They have always been popular and the emergency stamp duty holiday encouraged domestic London buyers to try and purchase in these much-loved areas.
‘The stamp duty holiday played on people’s fear of missing out and pushed them to make the move in that window between the Chancellor’s emergency summer budget of July 2020 and September 2021, when the offer closed.
‘It exacerbated domestic buying behaviours – but was largely irrelevant to overseas buyers or investors who had left London during the height of the pandemic.
‘Despite the disruption, some people who worked from home in London during the lockdowns will have saved a lot of money and this is now feeding through to the property market as people continue to want to live in the best bits.’
The latest Office for National Statistics (ONS) house price figures released this week showed the average UK price increased by £27,000 last year, reaching record levels in the month of December.
Across the UK generally, house prices increased by 10.8% over the year to December 2021, accelerating from 10.7% in November 2021.
The average house price in Wales increased by 13.0% over the year to December 2021, accelerating from an increase of 12.6% in November 2021.
The latest increase pushed the average house price in Wales to a record level of £205,000.
In England, property values increased by 10.7% over the year to December 2021, up from an increase of 10.5% in the year to November 2021, with the average house price at a record high of £293,000 in December.
The average house price in Scotland increased by 11.2% over the year to December 2021. This was lower than a 12.1% increase in the year to November 2021. The average house price in Scotland reached £180,000.
In Northern Ireland, property values increased by 10.7% annually to reach £159,000. The ONS warned that data for Northern Ireland for the fourth quarter of 2021 is not yet available, and so it has carried forward figures from the third quarter, until the latest figures can be incorporated.
ONS head of Inflation Mike Hardie said: ‘House prices in the UK, England and Wales all reached record levels this month, with the average UK house price at £275,000 in December 2021, £27,000 higher than this time last year.
‘UK rental prices accelerated at their fastest pace since 2017, with increases across every region in England, including London.’
A separate ONS report also released on Wednesday showed that private rental prices paid by tenants in the UK increased by 2.0% in the 12 months to January 2022 – representing the sharpest annual growth rate since February 2017.
Excluding London, private rents increased by 3.0% year on year.
Rents in London have increased by just 0.1% annually, reflecting remote working trends as well as an increase in supply, the ONS said.
Nitesh Patel, strategic economist at Yorkshire Building Society, said: ‘A key challenge in the current housing market is the lack of supply of homes for sale whilst demand continues to remain strong – which perhaps explains the strong price performance in southern England.
‘For most of last year the stamp duty holiday had provided a boost but even after that ended prices have continued to rise. Low borrowing costs and a strong jobs market are key drivers but in the coming months a further deterioration in household finances may take some of the heat out of the market.’
Alan Fitzpatrick, from mortgage company Habito, said: ‘Mortgage applicants’ affordability is likely to decline in the coming months. Even though average wage growth picked up in January, it failed to keep up with inflation.
‘The Consumer Price Inflation report published this morning revealed that inflation has hit a 30-year high of 5.5%.’