BRITAIN’S house price boom has been driven by the “race for space” as people left city flats during the pandemic, the Bank of England (BOE) says.

U.K. house prices rose 11.8 percent in the year to September, one of the fastest rates of growth in the past 20 years. About half of that rise can be explained by people wanting to move to larger homes, the U.K. central bank said.

That contrasts with economists such as Ian Mulheirn of the Tony Blair Institute for Global Change, who have argued that the cut in interest rates from 0.75 percent to 0.1 percent in March 2020 and the stamp duty holiday on the first 500,000 pounds (US$661,000) of a home purchase drove the pandemic property boom. The BOE’s analysis did not mention rate cuts.

Instead, it said “just under half of the increase” was down to the race for space and the other half was down to “other factors, including the temporary relief to the stamp duty land tax, and savings accumulated by households during lockdowns.”

The BOE said the shifting housing pattern made it less likely that house prices would fall. “Absent further developments, there is unlikely to be a sharp correction in the level of house prices without a reversal in the ‘race for space’ housing preferences,” it said.

The analysis was accompanied by proposed changes to its mortgage affordability rules that would allow as many as 85,000 homebuyers to take out more debt.(SD-Agencies)