Omicron Covid-19 Variant – Will it Affect the Property Market?

Omicron, otherwise known as B.1.1.529, is a new strain of the Covid-19 virus that has been classified as a “variant of concern” by the World Health Organisation.

How Many Cases of Omicron Are There in the UK?

At the time of writing, there have been 22 confirmed cases of Omicron in the UK, according to a report in the Guardian.

What Happened Last Time?

To help illustrate the potential impact of Omicron on the UK property market, we’re going to look back at house prices and reports that appeared during each of the three reported waves of the Covid-19 pandemic.

How Have We Defined a Covid Wave?

Before we get into the data, it’s important to address how we are defining a Covid-19 wave.

There is currently no official definition of what a Covid-19 “wave” is, and the data used may change depending on how you define it.

At RWinvest, we are using the wave definition provided by The I, which defines a wave starting when reported cases rise over a seven-day period starting from below 2,000 national cases.

With these parameters, we get three Covid waves, beginning in March 2020 and running until the present day, which is December 2021 at the time of writing.

As the country exited the UK’s first lockdown, there was a newfound appetite to move homes.

With people trapped inside their homes for months, many started to re-evaluate what they wanted from their ideal home and decided to move out.

This was compounded by the Stamp Duty Tax Holiday, implemented in July 2020, which allowed homebuyers to save up to £15,000 on taxes when buying a new home.

These factors were mirrored in the housing market, which saw a huge rise in property prices over the year.

In fact, despite two national lockdowns occurring in this period (November 5th – December 2nd 2020, and January 6th to July 19th 2021) prices continued to rise to a peak of £253,508 in March – the first-time UK prices surpassed £250k on average.

While there was a slight dip in April 2021 of -1.10%, the data shows that the UK housing market performed well during the pandemic and remained resilient.

As most Covid-19 restrictions came to an end and the country returned to some form of normality, UK house prices experienced an unprecedented surge during the third wave of Covid.

With tax savings still available from an extended stamp duty holiday, and phase 4 of the Covid-19 roadmap beginning on July 19th, housing market activity exploded.

As of July 2021, Rightmove noted a huge supply and demand imbalance, with the busiest ever first half of a year with 140,000 more sales agreed and 85,000 fewer listings than the long-term average.

This persisted throughout 2021, with September 2021 seeing the hottest-ever competition to buy property, with buyer demand twice as high as pre-pandemic levels.

In fact, Rightmove found that the price of new property coming to the market reached an all-time high of £338,462. This was at the same time as the Guardian reported that UK house prices were rising at the highest level since 2004.

While property prices dropped in July after the main Stamp Duty Holiday ended, they soon recovered, reaching an all-time peak of £269,945, according to Land Registry data.

This again shows the resilience of the housing market, with property constantly in demand by both homebuyers and investors.

• Since March 2023, house prices have increased to an average of £285,009, a 4.1% increase compared to 2022.
• Despite three national lockdowns in the UK, property prices have continued to hike, with predictions from Savills suggesting up to an 11.7% rise in North West house prices by 2027.
• Rent reached an all-time high of £1,213 PCM in May 2023, according to HomeLet.