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The pandemic and the housing market: a British story

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  • Paul Cheshire
  • Christian A. L. Hilber
  • Olivier Schöni

Abstract

When Covid-19 struck, the British housing market went into free-fall. Land Registry data show prices, transactions and construction all tumbled. But demand was boosted both by the general measures taken to support the economy and specific housing market actions such as the Stamp Duty Land Tax holiday. Given the endemic lack of housing supply, by November prices had surged to an all time high. As widely discussed, the demand for home working gave a particular boost to the price of larger houses. Less remarked was that the biggest price increases were for such houses very close to the centre of London, although prices also increased up to 25 miles out. Prices for flats fell everywhere. People who rent and work in central areas were least protected from the economic impact, so rents there fell. The analysis suggests, as temporary boosts end and the costs of Covid-19 and Brexit finally come to be paid, there will be a significant housing market correction, especially in London and its wider region. Because incomes will also be lower this will not make housing more affordable. In the long term there will be a recovery, probably led by London, and while some of the living and working innovations induced by Covid-19 will stick, cities will adapt and reassert their dominance in our patterns of life.

Suggested Citation

  • Paul Cheshire & Christian A. L. Hilber & Olivier Schöni, 2021. "The pandemic and the housing market: a British story," CEP Covid-19 Analyses cepcovid-19-020, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepcvd:cepcovid-19-020
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    File URL: https://cep.lse.ac.uk/pubs/download/cepcovid-19-020.pdf
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    References listed on IDEAS

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    Cited by:

    1. Max Nathan, 2023. "Critical Commentary: The city and the virus," Urban Studies, Urban Studies Journal Limited, vol. 60(8), pages 1346-1364, June.
    2. Esma Aksoy Khurami & Ö. Burcu Özdemir Sarı, 2022. "Trends in housing markets during the economic crisis and Covid-19 pandemic: Turkish case," Asia-Pacific Journal of Regional Science, Springer, vol. 6(3), pages 1159-1175, October.
    3. Steven Bond-Smith & Philip McCann, 2022. "The work-from-home revolution and the performance of cities," Working Papers 2022-6, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    4. Namin, Aidin & Dehdashti, Yashar & Ketron, Seth C., 2025. "Critical mass in a crowd: A predictive model of online crowdfunding of public goods in the U.S. vs. U.K," Journal of Business Research, Elsevier, vol. 186(C).
    5. Haschka, Rouven E., 2024. "Examining the New Keynesian Phillips Curve in the U.S.: Why has the relationship between inflation and unemployment weakened?," Research in Economics, Elsevier, vol. 78(4).
    6. Bertholet Nicolás & Montes Rojas Gabriel & Toledo Fernando, 2024. "Estimación de curva de Phillips y cociente de sacrificio en Argentina. Un análisis empírico para el período 2003-2022," Asociación Argentina de Economía Política: Working Papers 4711, Asociación Argentina de Economía Política.

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