The first is the race for space, a pandemic-induced desire to find a property which has a garden and a room from which it is possible to work from home. There is a limited supply of these sorts of houses and in a sellers’ market prices are heading in only one direction: up.
The second factor is that borrowing money is cheap and likely to remain so. Dave Ramsden, one of the Bank of England’s deputy governors, says Threadneedle Street is closely monitoring house prices for signs of a more generalised inflationary threat, but there is no immediate prospect of borrowing costs being raised.
With official interest rates at a record low level of 0.1%, lenders have some tempting offers for potential buyers. It is not hard to find three year 60% loan-to-value mortgages at just below the current inflation rate of 1.5%, which means people moving to a bigger home are effectively borrowing for nothing.
The final factor helping to…