The Bank of England said Working From Home helped drive up house prices in the UK by making consumers willing to pay more for places.
Deputy Governor Ben Broadbent said the recent rise in property prices reflected a shift in preferences for larger homes, as he expected more consumers to need office space at home. Governor Andrew Bailey said the proliferation of loan-to-value mortgages was helping consumers pay more.
The revelations show that longer-term forces are supporting Britain's volatile property market as the UK economy recovers from its worst recession in three centuries. Much of the strength in the market is attributed to the tax cut on purchases, which is now starting to unwind, but BOE officials think structural factors are providing firmer support.
“People have worked harder at home and expect to work harder at home,” Broadbent said at a web event with regional representatives of the BOE on Friday. “The space in the house is becoming more valuable, and the space outside the city centers in the house in particular is becoming more valuable.”
Broadbent said the BOE had seen a similar trend in other countries after pandemic lock downs forced millions of office workers to work remotely for most of the past two years.
Wales made the strongest gains since 2005 in the Halifax report, while London outperformed all other regions with 2.5% annual growth. The east of England and the South East also had some of the slowest growth in the UK
Halifax said falling inventory of available-for-sale properties and historically low borrowing costs would likely support prices in the coming months.
“We are seeing much higher demand than supply, with owners nervous about putting their property up for sale if they can't find the right home to buy, leading to low stock for estate agents,” said Jan Crosby, head of UK building. and construction at KPMG . "This vicious circle will be difficult to overcome."