“Heightened demand created a much higher entry point for bigger properties right across the country, and that impact is still being felt today by both buyers and sellers, despite the market starting to slow overall.”
Elsewhere, the demand for flats or smaller properties in more urban areas fell during the pandemic, with the shift most noticeable in London.
At a national level, the average price of a flat increased by 13.3 per cent or £19,028 between the start of 2020 and the end of 2022.
Flats
However, in London the average price of flats only grew by 3.8 per cent - the weakest price rise of any property type across all of the UK over the last three years.
Semi-detached and terraced houses saw their average value rise by 23.1 per cent - £55,361 - over the past three years.
According to Halifax, in both cases Greater London saw the biggest increase in cash terms, but in percentage terms they were among the smallest increases for the property types in the UK at 15.8 and 14.4 per cent respectively.
Self-employed Mortgage Hub director, Graham Cox said near-zero interest rates along with the stamp duty holiday are to blame for fuelling house price inflation.
“It lured the unwary, particularly first-time buyers, into purchasing property at over-inflated values by borrowing up to the hilt. It's unsustainable and a disaster waiting to happen,” he said.
In Cox’s view, property prices will fall by 25 to 30 per cent of the next couple of years before reaching a plateau in 2025.
“A long overdue crash that will benefit not just first-time buyers but most homeowners too in the long run,” he said.
Someone with first hand experience of the rapid rise in property prices is Gary Boakes, director at Verve Financial.
Boakes explained to FTAdviser that he bought his home four years ago for £370,000 and sold it a month ago for £485,000.
However his profit is not as eye-watering as it first appears given that the new home he is purchasing comes at a price of £477,000 - an increase from the £365,000 the current owner bought it for two years ago.
“These are massive increases in such a short period of time and luckily we have benefited from the growth and increase,” Boakes said.
He added: “However, if I was a first-time buyer, that £112,000 increase in two years is an income increase of £24,888 - that is huge. It’s not a surprise average-income to average-house price peaked at 7.1 times income last year.”
jane.matthews@ft.com
