Both house prices and the home ownership rate vary depending on the type of property and location. For example, in Leeds, London and Manchester, between 21 and 33 percent of the population in each city own their home, which is a number significantly lower than the average home ownership rate of 65.5 percent. To a large extent, this could be attributed to the higher asking prices of properties in these regions. As of the fourth quarter of 2019, for instance, the average asking price of a property in London was 698.7 thousand British pounds, while in the North East it was 164.1 thousand British pounds.
Both house prices and rental costs in the UK have been increasing in recent years, indicating a strong demand for housing, dictated by economic growth, employment and access to credit. Between 1992 and 2019, the Halifax house prices index grew from 100 points to over 412 points, meaning that house prices quadrupled. As of August 2019, the Index of Housing Rental Prices (IPHRP) in Great Britain (excluding London) reached 108.2 index points, showing an 8.2 percent increase in rents compared to 2015.
While it is early to predict how exactly the coronavirus pandemic will affect the UK housing market, it is safe to say that the overall rise in market uncertainty due to business disruption, falls in the stock market and the decrease in employment and earnings will cause a temporary delay in transactions. In the longer run, stagnant construction activities and cash flow might pose challenges to developers in meeting targets, and ultimately a fall in new housing delivery and sales of newly built properties are to be expected.
