Eugenio Sanchez Pelayo and Gary Harper

UK house prices rose quickly during the pandemic. Earlier Bank of England analysis linked part of that rise to buyers paying more for houses than they would for a flat with similar characteristics, but could not show whether this revaluation would persist. With four more years of data, we find that it did. We also find London’s relative weakness began before Covid continued, helping explain the particularly weak performance of London flats. Finally, we decompose annual house-price growth to see what drove the cycle. Changes in the prices associated with property type and location contributed most during the pandemic boom, transaction composition accounted for most of the 2023–24 fall, and both contributed to the recovery in 2025.

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