HOUSE PRICES in the least densely populated areas of the UK have risen almost twice as much as those in the most densely populated areas over the past year, which reflects both the pandemic prompting people to choose to live and work outside of busy cities, and the Stamp Duty Holiday, according to new Resolution Foundation research. 

The Foundation’s quarterly Housing Outlook examines the impact of the Covid-19 crisis on housing demand across the UK and considers what might be driving the disparity in house price growth between different types of areas.

The report finds that, while average house prices have risen in the UK since the start of the pandemic, it has been the least densely populated areas of the UK which have seen the biggest price increases.

Since February 2020, prices have jumped by over 10 per cent in the least dense tenth of local authorities in the UK, compared to rises of ‘only’ six per cent for the most populous deciles.

The Outlook also finds evidence of so-called ‘urban flight’ (in which workers opt to leave the UK’s biggest cities such as London, Manchester and Birmingham) in favour of more rural locations in their hinterlands.

In London, for example, house prices in Outer London rose by an average of seven per cent since February 2020, compared to just two per cent on average for those in denser inner London.

Similarly, house prices have risen by nine per cent in small towns and villages, compared to six per cent in the UK’s 12 biggest ‘core’ cities. However, the Foundation cautions that it far too early to tell whether this pandemic trend will prove be a long-term one for the UK.

The analysis also suggests that smaller, more limited properties – such as flats – have become less attractive to buyers when compared to more spacious homes. The average price of a flat has grown by just under six per cent over the last year, while houses of all types have increased by around nine per cent.

While this is part of a longer-term trend, it seems likely that repeated lockdowns, during which many people were confined in their homes for long periods of time, have fuelled a desire for space, access to gardens, and less crowding. These attributes are typically easier (and often less costly) to find away from city centres, says the Foundation.

Equally, the temporary stamp duty holiday has boosted the purchasing power of second-steppers rather than first time buyers, who are more likely to be interested in, and able to afford, larger properties. However, the Foundation adds that for the growing number of families, choosing a spacious home in a less dense area is not an option.

One in five children in low income households spent the first lockdown in an overcrowded home and people of all age groups are more likely to live in overcrowded conditions today than they were 20 years ago, with the largest increases among families with children. Ensuring that all families have access to the space they need should remain a priority going forwards says the Foundation.

Cara Pacitti, Economist at the Resolution Foundation, said: “House prices have risen throughout the UK during the pandemic, but prices in less densely populated areas have seen much bigger increases than those in dense urban areas. This suggests that workers are choosing to move away from crowded cities, and into more rural areas.

“The impact of repeated lockdowns, during which people were confined in their homes for long periods of time, also appears to be turning buyers away from smaller, more crowded properties and setting their sights on spacious family homes.

“It’s too early to say whether this move away from cities will be a long-term trend. But for many families, escaping to the country is no more than a pipe dream, and the overcrowding that they have faced during the pandemic must be addressed.”

* Read Housing Outlook Q2 2021 here.

* Source: Resolution Foundation