Amazing real estate rally: British housing market is growing despite Corona

Saturday, February 06, 2021

Amazing real estate rally
British housing market is growing despite Corona

The pandemic has hit the UK economy hard. But not all industries suffer equally. The real estate sector, for example, is surprisingly resilient. That could change soon, however.

Contrary to the general trend, the UK real estate sector grew strongly during the corona pandemic. "Because people work so much from home, they have invested in their homes and bought larger houses with gardens," said Anna Leach, vice chief economist at the British industry association CBI.

This was supported by the suspension of stamp duty – similar to the real estate transfer tax – for the first 500,000 pounds (567,000 euros) in real estate purchases. Therefore, the industry has proven to be more resilient than initially expected, said Leach.

According to the ONS statistics agency, UK house prices rose 7.6 percent year-on-year through November 2020. The development continues: According to the Halifax House Price Index of the research company IHS Markit, prices also increased significantly in January, by 5.4 percent compared to the same month last year.

The development in Germany was very similar. Craftsmen and home and office decorators also benefited from the trend in the UK, Leach said. Many people would have bought doors, desks, chairs and work tools to spruce up their homes. "IT companies have also done very well," said the economic expert.

As a result of the pandemic and home office, more and more people are moving from large, expensive cities like London to the countryside. "Housing activity outside of the city centers can be seen increasing," Leach said. Many people adjusted to no longer commuting to work, or only rarely. "They invest the extra time in a bigger house, a bigger garden," said the specialist.

According to a study, London alone lost up to 700,000 residents during the pandemic. This included many foreigners who became unemployed and returned to their homeland. But many people have also moved to the suburbs or further into the country. "This is going to be a huge change," said Leach. Economic activity will be more evenly distributed across the country.

But not the entire real estate industry has benefited: Because of the trend towards home offices, prices for commercial real estate have suffered. In London, rents fell over the full year by 7.6 percent, as the real estate group CBRE determined. And the boom in the private sector could soon be over. Stamp duty has to be paid again from April onwards. In addition, experts fear a further rise in unemployment if a state support program that has so far secured many jobs expires.