Increasing demand for homes in UK cities has been the driving force behind the rapid house price inflation witnessed earlier this year, according to analysis from Halifax.

Property prices in urban centres have grown at a faster rate than their surrounding areas, data has shown.

Halifax suggested that the impact of the pandemic on people’s lifestyles has driven much stronger house price growth in suburban and rural areas over the previous couple of years, with buyers seeking larger properties with more indoor and outdoor space, and where homeowners have perceived they’d get “better value for money”.

By contrast, the same period has seen built-up urban areas become less popular, with their typically smaller properties located further from green spaces and the amenities so valued by homeowners.

However, since the start of the year, as people increasingly returned to the office and were once again able to make the most of leisure opportunities, Halifax’s analysis showed that property prices in cities have grown by 9.2%, while in surrounding areas the growth was slower, at 7.9%.

While the picture still varies significantly in and around individual cities across the country, Halifax said this suggests a “shifting” in homebuyers’ post-pandemic priorities.

“The pandemic transformed the UK housing market,” commented mortgages director at Halifax, Andrew Asaam.

“Homeowners wanted bigger homes and better access to green spaces, fuelling huge demand for larger properties away from urban centres. This accelerated house price growth in the suburbs and more rural areas, while in cities it was much slower.

“That trend didn’t disappear completely this year, as house price growth in these areas remained strong. But, as daily life started to get back to normal for many, the opportunity to live in cities became more attractive again, driving up demand. There’s evidence of this in locations across the country, with property price inflation in the majority of cities outstripping increases in their surrounding areas.

“Clearly the economic environment has changed considerably in the last few months, with the likelihood of more significant downward pressure on house prices, as the cost of living squeeze and higher borrowing costs limit demand. The extent to which such trends will continue to shape the housing market is therefore uncertain.”

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