(Bloomberg) — Surging demand pushed U.K. house-price growth to the highest level in four years as city dwellers sought homes with bigger backyards.
Inquiries, sales and new listings all rose in August, according to the Royal Institution of Chartered Surveyors. Its measure of price gains was the highest since 2016, and property agents said they expect homes with outdoor space will become even more desirable as more people work remotely.
The report comes amid concerns that the bounceback from the coronavirus is under threat from renewed outbreaks, the end of government subsidies and a disorderly Brexit transition at the end of the year. The Bank of England is expected to lay the groundwork for further easing in the fourth quarter when it meets next week.
The residential property market has so far defied the economic fallout from Covid-19 after the spring lockdown brought activity to a halt. That’s largely due to a temporary tax reduction on purchases designed to stimulate activity.
That government stimulus effort has done little for the longer-term outlook, with concerns about the economy pushing down sales expectations over the next year, RICS said.
On top of that, the pandemic has weakened the finances of many Britons.
New recipients of the government’s Universal Credit have seen their net income drop by 40% on average and, of those with mortgages, over half stopped repaying before their money came through, separate research by the Institute for Fiscal Studies the Standard Life Foundation showed.
Households with a furloughed worker, for whom the government paid up to 80% of wages, saw an average income slump of 13%. About of quarter stopped paying their mortgages as banks offered loan holidays, it said.
The situation is likely to worsen as the state’s support for wages ends in October and a ban on evicting tenants unable to pay rent finishes this month. Homelessness charity Shelter says 230,000 private tenants in England have fallen into arrears since the pandemic started.
The situation risks fueling a mental health crisis, according to clinic Paracelsus Recovery.
“We need to be aware that the economic fallout from coronavirus lockdowns could be as serious for health as the virus itself,” said Paracelsus Chief Executive Marta Ra. People who are worried about their jobs, incomes and homes “are at greater risk of suicide.”
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