The space race: house prices jump 10.9% over the past year

Record price growth driven by city exodus – 44% of Brits now find living in a city less appealing.

According to new data from Swindon-based Nationwide Building Society, average house prices have risen 10.9% over the last 12 months, the most in nearly seven years.

Almost seven in 10 homeowners considering a move said they would be doing it even without the extension of a tax incentive by finance minister Rishi Sunak, Nationwide said, citing a survey it conducted in late April.

These figures are the latest to show the scale of the surge in house prices which hit a new record high at an average of £242,832, according to Nationwide.

The bank’s research also shows how a ‘race for space’ has culminated in a frenzied search for properties with more living space, both inside and out.

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:

10% of Brits have moved away from a city or urban area in the past year

44% of Brits feel that the impact of Coronavirus has made living in a city less appealing

24% of Brits will no longer commute into a city for their job post-pandemic

David Hannah, principal consultant at Cornerstone Tax, says: “Many experts are questioning the long-term stability of the market, but right now, it is certainly a sellers’ game. Although, due to restricted supply, there are not many sellers – and prices have risen by an incredible amount.”

“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.”

Nationwide said there was scope for annual house price growth to accelerate further in the coming months, given how weak the housing market was in the early stages of the pandemic. But if unemployment rises sharply later in 2021 - when Sunak's jobs protection programme is due to expire - there was scope for activity to slow, perhaps sharply, it said.