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Value of average UK home has risen by £48 a day since February 2020 – equivalent to £38,000

Housing market remains resilient, says Zoopla

Originally posted: 21st September, 2022

Plenty of people who want to move haven’t yet taken the plunge

Zoopla has reported that the value of the average UK home has increased by £48 a day since February 2020, which is the equivalent of £38,000.

Considering whether a housing crash is on the way, Zoopla says not and explains why the UK housing market is on track to avoid any major drops in house prices.

It explains that the main reasons for this are that house prices are not as overvalued as in previous economic cycles; value has spread over the country, giving more people the ability and motivation to move house; more people are working from their home, retiring or taking a fresh look at the lifestyle, which is resulting in sales and purchases, and almost a quarter of people said they wanted to move home since the pandemic, but just 1 in 17 privately-owned homes changed hands in 2021.

Housing market remains resilient, says Zoopla

While it’s a fact that the housing market is slowing down with fewer sales and slower house price growth, the housing market remains resilient despite economic uncertainty, reports Zoopla, and says it does not see a housing crash on the horizon.

Explaining why not, it says a massive amount of change following the Covid-19 pandemic has “opened up the housing landscape in the UK”.

Zoopla says it’s given us more choice about where we live, highlighted the relationships we have with our homes, and changed our reasons for moving.

It also points out that the housing market is in a very different position to the last time we saw house prices drop, following the global financial crisis of 2008.

“House prices tend to fall when they get too high and out of kilter with incomes,” says Richard Donnell, Executive Director of Research and Insight at Zoopla.

“In the past, this has gone hand-in-hand with more relaxed mortgage lending.

“In 2007, more than a third of buyers taking out a mortgage didn’t prove their income to the bank. And almost a fifth were getting mortgages when they had small deposits of less than 10%.

“This led to house prices shooting up. Then, when mortgages dried up and the economy went into recession, prices fell back.

“The difference now is that there are much tougher rules to get a mortgage.

“You must prove a lot more about your income and outgoings. People usually have much more than 10% deposits so they are less vulnerable to possible negative equity.

“In short, we don’t have the scale of over-valuation of housing that we’ve seen before.

“This puts the market in a much better position to weather high mortgage rates and the increased cost of living.

“The housing market is not immune from these pressures and some will already be feeling the squeeze. But the likelihood of big price falls is much lower than in the past.”

Zoopla says that when you’ve seen your house price rise, it’s another incentive to sell. Many people want to release equity or take the chance to upgrade their home.

22% of people keener to move since pandemic

It also says that more people want to move due to the pandemic, with a recent survey finding that 22% of people were keener to move house since the pandemic. Only 6% were keener to stay put.

Of existing homeowners, 19% were keen to move because of the pandemic.

When just 4% to 6% of owner-occupiers move house each year, that’s a massive proportion.

Zoopla asked consumers the same question in 2022, and for those who wanted to move home, they’re even more certain it’s the right choice.

“The data suggests that attitudinal changes have matured,” says Richard. “They’re both more considered and more embedded within households.

“And when you have buyers with their mind set on a move, the market will keep moving too.”

Plenty of people who want to move haven’t yet taken the plunge

Just 1 in 17 privately-owned homes changed hands in 2021. This means that plenty of people who want to move haven’t yet taken the plunge.

Zoopla reports another factor to consider is hybrid working, which it says is “here to stay”.

It reports that in February 2022, 42% of people plan to work mainly from home, according to the Office for National Statistics. That’s a rise from 30% in April 2021.

That’s about five million more workers now able to work from home when they choose, and a total of 9.7 million people.

“We’ve seen a strong trend between home working and the desire to move home,” says Richard.

“Our consumer survey found that home workers are five times more eager to move than those with more traditional working patterns.”

54% of those who anticipated working from home more said they were keener to move, against 13% who expected to do less working from home in future.

Working from home patterns have been a main contributor to the demand to move home in the last two years. Zoopla expects this influence to continue in the years to come.

Zoopla says the trend of working from home has granted a huge amount of opportunity for first time buyers.

“In our survey, renters were the most keen to move house out of anyone” says Richard.

“25% of renters said they were more eager to move because of the pandemic.

“With less of a need to live close to the office, first time buyers can look further afield for their home.”

Zoopla has seen a significant rise in the radius that first time buyers are looking in since the pandemic.

“A first time buyer in London now considers homes in an area 33% bigger than pre-pandemic,” says Richard.

“And first time buyers outside of London stretch their search by a further 20% since the pandemic.”

“This shows that many first time buyers would rather get on the ladder now in a cheaper area using their current savings, than wait until they can afford a more expensive area.”

We are still keen to change city life for country living

Zoopla says we are still keen to change city life for country living, and that its research shows this trend is even more pronounced a couple of years on.

“Back in July 2021, people living in major cities were far more likely to want to move house (36%) than those in rural areas (3%),” says Richard.

“Fast forward to spring 2022, and 44% of city dwellers want to move to a more rural location.”

“Interestingly, more rural homeowners fancy a move this year, too (8%).”

“This is typically older homeowners looking to downsize. The influx of demand to rural areas has created more opportunities to relocate closer to family or take equity from their current home.”

More people are retiring, says Zoopla, reporting that neatly half a million older workers have left the labour market since the pandemic.

A huge 63% of adults aged 50 to 70 left their job before expected, according to the Office for National Statistics.

Leaving work to retire was the most commonly stated reason (47%). However, 15% of retirees said they left due to the Covid-19 pandemic, and 13% listed illness or disability.

Retirement is a common reason for selling

Retirement is a common reason for selling your home, as you may choose to be nearer family and friends, look for a new lifestyle, or perhaps downsize or release some equity. Perhaps you need to have good public transport or healthcare close by.

Government data shows that 75% of older households (65+) owns their home outright, so this group has the means to make a move which suits their lifestyle. They are keeping the market moving by offering homes for sale while also buying a new home.

Zoopla reports that half of all homeowners have a mortgage, while the rest own their properties outright.

Of the homeowners with mortgages, 90% are on fixed rate deals for up to 5 years. Many of these homeowners are on low rates of sub 2%.

So, says Zoopla, most homeowners with mortgages will not be affected by interest rate rises due to their fixed rate.

Also, if they got their mortgage before 2015, they will have had to show they can afford a mortgage rate of up to 7%, meaning that many homeowners will be able to absorb any extra cost pressures on their budget.

Rising interest rates can also encourage homeowners to move. For example, if they’re nearing to the end of their fixed term, a move of home could help them lock in a rate they may not see again for a number of years.

As most mortgage offers last just six months, this impact will go soon. However, Zoopla says it expects it to be one of the factors that keeps the market buoyant in late 2022.

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