One million homes in the UK have seen their value increase by 50% or more since the pandemic five years ago, an average increase of £117,400, according to new analysis from Zoopla.
Eight in ten homes have increased by over 5% with these homeowners sitting on average gains of £60,800.
House values have increased gradually by an average of 20% since the 2020 pandemic, with some areas experiencing more significant value increases than others. This is despite a drop in buyer demand in 2023 caused by higher borrowing costs since 2022.
Homes see biggest increase in value in northern England and Wales
Over half of the homes that have seen their value increase by 50% or more in the last five years are in the North West, Yorkshire and the Humber and Wales, with these areas seeing average value increases of £77,100, £86,200 and £90,700 respectively.
This significant growth can be attributed to a combination of factors, including pandemic and lifestyle-led changes in buyer requirements that have prompted interest in previously overlooked areas that offer excellent value for money. Additionally, substantial rental growth in cities across these areas has encouraged first-time buyers to purchase in more affordable areas where buying can be a cheaper alternative. Over the last five years these markets have continued to benefit from above-average buyer interest even as mortgage rates increased in 2023 due to better value for money.
Two hotspots that have seen significant value increases over the last five years have emerged within the analysis. South Wales presents a compelling picture where excellent value for money converges with good proximity to Cardiff and the surrounding countryside. This has driven substantial growth in home values off a low base, with areas like Blaenau Gwent and Merthyr Tydfil seeing three in ten homes increase in value by 50% or more over the last five years, an average of £49,900 and £51,100 respectively.
Similarly, urban areas within the North West, particularly around key cities like Liverpool and Manchester and their adjacent areas, have also seen significant growth. Homeowners in Rochdale, Oldham (both bordering Greater Manchester) and Bolton are more likely to have seen their property's value surge by 50% or more over the last five years, an average of £64,300 , £62,900 and £64,300 respectively. In these areas, even smaller monetary gains can translate into high percentage growth figures due to their generally lower initial house values.
Homes in southern England see moderate value gains
Whilst homes in the south have seen moderate value increases since the pandemic, particularly as the London ‘virtual’ commuter belt has expanded, a combination of high values and high mortgage rates has seen demand impacted in the last three years, causing house value falls in some areas.
As a result, the sizable value increases observed in the north are less common in southern regions. Half (51%) of homes in the south increased in value by less than 20% with the average increase ranging between £47,700 in London and £62,000 in the South East. Just two% saw their value rise by 50%, averaging at over £200,000 or more. A significant proportion of homes in the south that did experience substantial value growth tend to be concentrated in desirable coastal destinations and areas of natural beauty, such as the Isle of Wight where homes with 50% gains have seen average value changes of £182,400 in the last five years.
London's housing market has faced significant challenges over the last five years, with 13% of homes experiencing a value decrease of 5% or more, an average value fall of £34,000. These losses are primarily concentrated in inner London boroughs, particularly Westminster and Kensington and Chelsea, where close to half of all homes are now valued below their June 2020 estimates.
This trend reflects the many challenges facing the capital, including exceptionally high prices that impact first-time buyer demand, elevated mortgage costs and tax changes that have discouraged landlords from buying property.
Similarly, Aberdeen has also seen over half of its homes fall in value, by an average of £25,700, a decline largely attributed to a decline in the size of the oil and gas industry in the North Sea.
Richard Donnell, executive director at Zoopla, commented: “Our latest analysis clearly shows there is no single housing market and that house price trends vary widely across the UK. One million UK homes have seen their value increase by 50% or more over the last five years as higher mortgage rates and rising rents encourage home buyers to seek out value for money in localised markets across northern England and Wales.
“Home value growth has been weaker across southern England and particularly in London. A combination of high prices and higher mortgage rates have reduced buying power and this has been reflected in flat prices and modest price falls in inner London.
“The UK currently has the most homes for sale in seven years. Its critically important serious sellers fully understand the local market dynamics impacting the value of their home and seek the advice of agents on where to set the asking price for their home in order to achieve a sale."
