Previously, we’ve seen transactions spike prior to the end of stamp duty holidays, followed by a brief trough before transactions start to recover, consistent with a large share of the impact coming through shifts in the timing of transactions, rather than an aggregate increase in demand.20  But there may also be some reasons to believe that the recent increase in demand for housing, and perhaps the composition of that demand, which has driven the UK market in recent months reflects some more persistent drivers and that the market will not fall back to its pre-pandemic decade performance when the tax incentives have gone. A survey conducted by Nationwide in April found that, amongst homeowners moving or considering a move as a result of the pandemic, three-quarters of them said they would still be moving or considering moving even if the stamp duty holiday hadn’t been extended. Moreover, the stamp duty holiday in Scotland has already come to an end with no material drop-off in demand. There has been a clear shift in attitudes towards remote working – both by employees and employers - as a result of the pandemic. According to the Understanding Society Covid special survey, half of respondents who have been working from home during the last year report wanting to work from home often or always once social distancing measures end, compared to just over one in ten prior to the pandemic.
Chart 1: House price: earnings  Chart 2: Flow of new mortgage borrowing  House price to earnings ratio Whole UK South and East London  Quarterly mortgage lending £  14  80000  12  70000  10 8  60000  Value of new lending if transactions remained at pre-crisis levels  50000 40000  6 4  97 99 01 03 05 07 09 11 13 15 17 19  30000 20000  2  10000  0  0  Value of new mortgage lending  99 00 01 03 04 05 07 08 09 11 12 13 15 16 17 19 Quarterly value of new mortgage transactions, excluding pure remortgaging. Counterfactual assumes that the number of mortgage approvals remains at its pre-crisis peak, while house prices and LTVs follow the realised out-turn. This exercise therefore doesn’t take into account potential feedback from transactions to house prices. 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  What lay behind this relatively “quiet” decade for the UK housing market? Housing is a very complex market with multiple drivers on both the supply and the demand side. There is a great deal of debate in the academic literature about the drivers of house prices and the role played by credit conditions. These provide a number of lenses through which to look at the UK housing market over this period. Housing supply is for obvious reasons an in-elastic market in most countries.