Increasing demand for homes in British cities was the driving force behind the rapid house price inflation witnessed earlier this year, according to new analysis from Halifax.
According to Halifax’s research, property prices in cities have grown by +9.2%, while in surrounding suburban areas it was much less, at +7.9%.
Andrew Asaam, mortgages director, Halifax, said: “The pandemic transformed the UK housing market. Homeowners wanted bigger homes and better access to green spaces, fuelling huge demand for larger properties away from urban centres.
“This accelerated house price growth in the suburbs and more rural areas, while in cities it was much slower. That trend didn’t disappear completely this year, as house price growth in these areas remained strong.
“But as daily life started to get back to normal for many, the opportunity to live in cities became more attractive again, driving up demand.
“There’s evidence of this in locations across the country, with property price inflation in the majority of cities outstripping increases in their surrounding areas.”
The impact of the pandemic on people’s lifestyles had driven much stronger house price growth in suburban and rural areas over the previous couple of years, as buyers sought larger properties with more indoor and outdoor space, and where homeowners perceived they’d get better value for money.
In contrast, built-up urban areas became less popular, with their typically smaller properties located further from green spaces and the amenities so valued by homeowners.
However, since the start of the year, as people increasingly returned to the office and were once again able to make the most of leisure opportunities, property prices in cities have grown.
While the picture still varies significantly in and around individual cities across the country, this suggests a shifting in homebuyers’ post-pandemic priorities.
Asaam added: “Clearly the economic environment has changed considerably in the last few months, with the likelihood of more significant downward pressure on house prices, as the cost-of-living squeeze and higher borrowing costs limit demand.
“The extent to which such trends will continue to shape the housing market is therefore uncertain.”
