Update: February 2026 – The Long-Term Fallout

While the immediate shock of the pandemic has passed, the ‘2026 Market’ is still living with its legacy. We are now seeing the ‘return to office’ mandate causing a slight cooling in those coastal areas that boomed in 2021, while the ‘Race for Space’ homes remain the most resilient asset class. If you bought during the 2021 peak and are worried about a 2026 valuation dip, read our historical analysis below to see how we got here.

When the reality of the Covid-19 pandemic and news of a national lockdown hit the UK in March 2020 the impact was felt right across the country, not least in the property market.

While the doom and gloom predictions offered by some pundits did not come true, the pandemic still caused substantial disruption to anyone trying to buy or sell a property.

Beyond this, the pandemic also altered buyers’ priorities, with many looking to buy in rural areas, rather than the previously dominant cities.

Covid-19 caused lasting changes in the property world with these impacts still being felt in the market today.

01 | The initial panic

Following the announcement of the first national lockdown in March 2020 the property market froze, with the property website Zoopla predicting demand would drop as much as 70%.

This freeze was partially caused by the UK Government urging people to not move house as part of the guidance to stop the spread of Coronavirus.

Experts predicted that this halt in the market would remain the case for at least three months and advised people to not move home unless they “absolutely had to”.

Others, including the Daily Express, who based their estimates on a report by the Centre for Economic and Business Research (CEBR), reported that house prices would fall by 13% by 2020, knocking £38,000 off the value of the average UK property.

The Mortgage Market also became more difficult during the first lockdown, with banks rapidly reducing the range of products available, making it hard to find any mortgage deal with a minimum deposit smaller than 40%.

According to figures from the Bank of England, the number of mortgages approved dropped dramatically in April and May 2020, to less than 20% of what it had been in the previous year. The British investment magazine Money Week reported that this caution was partly caused by a shortage of bank staff as people were put into the UK Government backed furlough scheme.

However, in reality, UK property sales only dropped by 55% in April 2020 compared to the same period in 2019. While still a dramatic fall, this was not the total collapse experts were predicting, with the number of properties for sale per estate agent only dropping by one between 7 March and 7 April.

This was partially because people did not take their houses off the market, and instead waited to see what the outcome would be.

Property values were even less dramatically affected: the UK House Price Index shows that while prices wobbled a bit during the first lockdown and were stagnant throughout April and May 2020 they began rising again in June, increasing by 2.7% that month alone.

This was paired with an increase in the number of sales— while still 34.7% lower than in the previous year it was a substantial 28.4% increase over May, which in turn saw a 14.5% increase in sales over April.

The Mortgage Market also started to wake up in June 2020, with the number of mortgages approved increasing by 400% compared to May.

UK Government initiatives to help the housing market, including a Stamp Duty holiday (a period when a tax paid on the sale of houses was removed) were put in place in July 2020.

This likely played a role in the UK housing market getting back in full swing by late 2020 with the number of sales in October 2020 exceeding that of October 2019.

02 | Longer term impacts

Once people grew accustomed to the “new normal” of living with Covid-19, its impacts on the property market changed.
Rather than the substantial fall in property prices predicted by experts, British houses increased in value by an average of 10.2% between March 2020 and March 2021 with the price of the average UK home increasing by more than £35,000.

Unusually, this increase in house prices was concentrated outside London and the South-East, areas which previously had shown the fastest increase in property value.

This was caused by changes in buyers priorities brought on by the pandemic. The rise of flexible working, and the desire for more space with easy access to the countryside led to large numbers of city dwellers leaving for the North of England, East Anglia and the West Country

Attractive, rural, and coastal areas particularly benefitted from this increase in house prices. One example is the historic seaside town of Aldeburgh in Suffolk. Popular with tourists and London emigrees, Rightmove reported that between 2019 and 2022, house prices in the town increased by 20% in just a year.

Further showing this trend, the BBC reported that Cornwall overtook London as the most popular search destination for buyers, and said that “the popularity of a rural or coastal life, confidence in improving broadband, and the attraction of indoor and outdoor space” had all played a role in the changing property landscape.

Rightmove’s director of property data Tim Bannister said that this was to some extent caused by an increased demand for larger properties, which are more widely available outside London. He added that this was partially due to the rise of home working leading to people desiring a permanent office in their home.

The UK House Price index also showed this, with flats also falling out of favour, only experiencing a 4.4% rise in price between March 2020 and March 2021, compared to terraced and detached houses prices which increased by 12% in the same period.

03 | What is happening now?

Instability struck the British property market in March 2021, when the original expiry date of the UK Governments Stamp Duty Holiday was set to come into effect.

The Office for National Statistics believes that this led to slightly inflated house prices in March. However, following the announcement of an extension to the holiday, prices then substantially rose again, with the month of June 2021 seeing a 4% rise in average house prices.

Following the end of the Stamp Duty Holiday in July 2021, house prices fell back by 3.7%, readjusting to the slower market brought on by the return of the tax. A final readjustment could be seen in September of that year, when the last of the tax holidays came to an end in England.

After October 2021 prices slowly rose until March 2022— when Russian President Vladimir Putin launched his full-scale invasion of Ukraine.

While UK property prices rose a steady 1% a month between the start of the invasion and June 2022 many still feared that the invasion could lead to a collapse in UK house prices.

Rising inflation, partially caused by increases in the wholesale price of food, gas, and electricity caused by the Ukraine war has led to the Bank of England repeatedly increasing their base interest rate from 0.1% in December 2021 to 2.25% in September 2022. A rate of increase we have not seen in a long time.

This has had an impact on the property market making mortgages more expensive and reducing buyers motivation, willingness and ability to invest into the property market. Again mortgage lenders have become very wary and have been pulling all their best deals in recent weeks.

National newspapers are reporting that this “mortgage crisis” is causing property sales to collapse at the fastest rate since the pandemic. This could leave a lot of sellers with difficulties in obtaining a successful and speedy sale.

In addition, the number of mortgages available for buy to let (BTL) landlords is also decreasing fast, with the Telegraph reporting that the number of fixed rate deals on the market has dropped by 70%.

With buy to let properties potentially becoming no longer viable, landlords may soon start selling up on mass, potentially even with sitting tenants, and as the market is seemingly more unstable than ever, it may make sense for some sellers to consider companies that quickly buy any house for cash.

If you need to sell a property quickly you should contact one of our experts at National Property Buyers. Our experienced team will be on hand to answer any questions you may have.

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