Short and Mid-Run Effects of Covid-19 on Residential Housing Prices in the UK

Abstract

House prices are affected by epidemic crises. This study analyses the impact of Covid-19 on the UK housing market in the short- and mid-run using secondary data on house prices, real estate and economic variables from January 2005 to August 2021. The periods of time examined are short-run, mid-run and post-Covid. Comparisons are drawn between rural house prices and urban house prices, as well as between owner-occupied house prices and rental house prices. Secondary data was analysed using a variety of statistical tools. The multiple regression results reveal that prices declined in the short-run (March- May 2020), quickly recovered in the mid-run (Jun-Dec 2021) and surged in the post- Covid period (Jan-August 2021). House prices increased on average by £14,089 or 5.8 percent in the mid-run recovery period and by £21,956 in the post-Covid period when compared with the short-run pre-Covid period (Jan 2019 - Feb 2020). Rural house prices increased by 8.1 percent and urban house prices by 4.9 percent in the post-Covid period between January 2021 and August 2021, revealing that house prices in rural areas are increasing faster than those in urban areas. Rental prices decreased by 8 percent in the short-run, while prices for owner-occupied homes rose in the mid-run and post-Covid periods by 5.8 and 8.6 percent respectively.