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House Prices At Record High But Headwinds Expected

Average UK house price reached new record high in October although the market looks set to slow in the coming months, reported Halifax in its latest House Price Index, published this week

‘The average UK house price now tops a quarter of a million pounds (£250,457) for the first time in history, as annual house price inflation rose to 7.5 per cent in October, its highest rate since mid-2016’, said Halifax, said Halifax managing director Russell Galley. ‘Underlying the pace of recent price growth in the market is the 5.3 per cent gain over the past four months, the strongest since 2006. However, month-on-month price growth slowed considerably, down to just 0.3 per cent compared to 1.5 per cent in September.

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‘Overall we saw a broad continuation of recent trends with the market still predominantly being driven by home-mover demand for larger houses. Since March flat prices are up by 2.0 per cent compared to a 6.0 per cent increase for a typical detached property. In cash terms that equates to a £2,883 increase for flats compared to a £27,371 rise for detached houses’.

Latest figures put home-buyer mortgage approvals at their highest level since 2007, ‘as transaction levels continue to be supercharged by pent-up demand’, said Galley.

Government support measures have helped to delay an expected downturn in the housing market but ‘they will not continue indefinitely’.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

The macroeconomic landscape in the UK remains highly uncertain, said Galley. ‘With a number of clear headwinds facing the housing market, we expect to see greater downward pressure on house prices as we move into 2021’.

Halifax figures mirror those of Nationwide which put October house price growth at 5.8 per cent, and monthly rises of 0.8 per cent.

The annual rate of increase was the highest recorded by Nationwide since January 2015, said its chief economist Robert Gardner.

But, he added, ‘data suggests that the economic recovery has lost momentum in recent months with economic growth slowing sharply to 2.1 per cent in August, down from 6.4 per cent in July.

‘The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy’.

Source: Residential Landlord

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House price growth to reach 17.5% by year end

Annual house price growth will reach 17.5% by the end of the year, according to quote service Reallymoving.

Such is the urgency for home sales to be completed before the end of the stamp duty holiday, prices are expected to rise by 8.8% over the next three months alone, including a 6.1% increase between September and October.

If Reallymoving is accurate in its predictions, which are based on deals already agreed, then the typical price agreed will rise to just shy of £342,000 in December.

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Rob Houghton, chief executive of reallymoving, said: “Our data indicates continued strong price increases in the run up to Christmas but the slowdown in the rate of growth in November and December could be an early sign that the post-lockdown spike in activity is beginning to run out of steam.

“For the remainder of the year the stamp duty holiday will continue to support demand but the real test will be the start of 2021, when the window for offering on a property and completing before the March 31st deadline begins to close. This is likely to be in the context of rising unemployment and continued lockdowns, impeding economic activity and denting consumer confidence.

“Increasing numbers of first-time buyers have been locked out of the market in recent months due to competition for homes and the withdrawal of high Loan to Value mortgages.

“But if the government presses ahead with the launch of its proposed 95% loans in spring 2021, that would help overcome the biggest barrier to home ownership for thousands of first-time buyers, boosting demand at the lower end of the market at a crucial time.”

BY RYAN BEMBRIDGE

Source: Property Wire

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UK house prices increase by 2.5%

UK house prices rose by 2.5% over the year to August elevating the average property in the UK to £239,000, data from the Land Registry has revealed.

The latest index, which is based on completed transactions and is published by the Office for National Statistics, offers a picture of the market in the month after the stamp duty holiday was introduced.

It shows average prices were £6,000 higher in August than at the same time in 2019 and highlights the East Midlands as the English region which experienced the highest annual growth with prices rising by 3.6%.

Nicky Stevenson, managing director at estate agents Fine & Country, said: “Here is official confirmation that the market did indeed get up to a canter over the summer months.

“The annual rate of growth soared as buyers frustrated by lockdown and lack of space crammed into the market in search of larger properties. That alone explains this year’s sudden rally, as the stamp duty holiday was only introduced in July.”

Stevenson explained the lag in this data being released would mean any extra demand the stamp duty relief created would not be seen in the Land Registry figures before the end of the year.

The data also showed UK house prices have risen 0.7% since July 2020. In London prices were still on the rise, increasing by 0.9% since July 2020 and by 3.5% annually taking the average property value to £489,159.

Transactions level with 2019

HMRC data also published today revealed UK residential transactions in September 2020 were at 98,010, which were similar to the September 2019 figures. They were just 0.7% lower than the same month last year and 21.3% higher than August 2020.

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Anna Clare Harper, CEO of asset manager SPI Capital and author of Strategic Property Investing, explained transaction data was of interest because it represented a more complete picture than comparable indices.

“What’s interesting about the September 2020 data is that transaction volumes are on a par with transactions in September 2019,” she said.

“This suggests that the temporary changes to stamp duty designed to boost confidence in the housing market have worked well to achieve this goal. There are very few sectors where buyers and sellers feel as confident as they did in September 2019.

“What happens next will be a reflection of policy and economics. Trade bodies such as RICS, as well as government policy makers, will play a significant role in the future of the housing market, as they have in the story that has played out so far in 2020.

“For potential home buyers and investors, the key will be not taking on too much credit, despite the relatively cheap cost of debt at present, as it is very difficult to forecast what will happen next.”

By Kate Saines

Source: Mortgage Finance Gazette

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UK house prices stage rapid recovery in third quarter

UK house prices enjoyed their strongest quarterly increase since before the financial crisis in the third quarter as lockdown restrictions eased.

Prices rebounded quickly in the third quarter after the broadbased closure of the market during the previous quarter.

Prices rose 3.3 per cent in the three months to September, according to the Halifax Property Index, the strongest increase recorded since the end of 2006. On an annual basis prices were 5.5 per cent higher, the sharpest rate of inflation since the final quarter of 2016.

The housing market has been buoyed by government interventions such as the stamp duty holiday introduced over the summer.

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And last week Boris Johnson announced plans to turn “generation rent” into “generation buy” by allowing people to purchase homes with a five per cent deposit.

Paul Smith, economics director at IHS suggested the resurgence in prices was also due to “strong demand driven by a desire for more space – either as a reaction of the lockdown or the structural economic effects of increasing home working”.

The upturn in prices meant the standardised house price edged close to the £250,000 mark during the third quarter. Price inflation has picked up across all buyer and property types, with existing property inflation – 5.8 per cent – outstripping that of new houses – +4.1 per cent.

Properties in greater London remain comfortably the most expensive, with the typical house now costing more than £500,000 and around 1.5 times higher than in the South East.

Wider economic issues, particularly the rise in unemployment due to coronavirus, suggest activity and the rapidly rising prices are unlikely to be sustained.

The recent rise in prices has led to a tightening of affordability constraints, with the house price-to-earnings ratio reaching a record high level of 6.5 by the end of the third quarter.

It surpassed the previous records of 6.4 set prior to the financial crisis.

Unsurprisingly London has the highest ratio of close to 9, and the immediate regions surrounding the capital, with ratios all above 7, where affordability remains a key issue.

By Angharad Carrick

Source: City AM

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UK house prices jump again in September as market defies gravity

UK house prices rose at the fastest pace in four years in September despite the raging coronavirus pandemic as people working from home sought more space, according to the Halifax house price index.

Yet the lender said it is “unlikely” that the British housing market will “remain immune” to the historic economic slowdown.

House prices grew 1.6 per cent month on month in September, Halifax said, after climbing by the same amount in August. The rise took the average price to a new record high of £249,870.

Properties were worth 7.3 per cent more on average than they were a year earlier, the biggest year-on-year rise since June 2016.

However, Halifax said the annualised figure was flattering because the property market was subdued a year ago due to worries over Brexit.

Russell Galley, managing director at Halifax, said the housing market had been “extremely strong” since restrictions on it were lifted in May.

“There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space,” Galley said.

He added that “the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March”.

Rising house prices are the UK’s ‘iron lung’

Chancellor Rishi Sunak in July raised the threshold at which stamp duty is paid to £500,000 until the end of March 2021. Analysts say the policy has combined with demand that built up during lockdown to fuel buying.

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North London estate agent Jeremy Leaf said: “These figures very clearly show the impact of pent-up demand, the stamp duty holiday and low interest rates on the market post lockdown.”

Lucy Pendleton of estate agents James Pendleton said: “The often frothy Halifax index has lived up to its reputation and is pushing the bounds of credibility here.

“However, it underlines just how much the housing market has become the economy’s iron lung of late, while its other vital signs flash amber at best.”

Yet Leaf said that “demand has lost a little momentum over the past few weeks”. He put this down to “the resurgence in Covid-19 and new restrictions on businesses… making some buyers a little more nervous”.

Coronavirus cases have risen sharply in the UK in recent weeks. It has caused the government to put vast swaths of the country in local lockdowns.

Sunak produced a new package of economic support in September. But he confirmed that the furlough scheme – which has supported around 10m jobs – would end this month.

Economists say rising Covid cases and unwinding government support are likely to weigh on UK house prices towards the end of the year.

House prices could fall by five per cent

Halifax’s Galley said: “It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic.”

Howard Archer, chief economic advisor to the EY Item Club, said the housing market “will come under increasing pressure over late-2020 and the early months of 2021”.

He said there is likely to be “a significant rise in unemployment and waning pent-up demand”.

Archer said UK house prices could be around five per cent lower by mid-2021 than they are now.

“The EY Item Club expects housing market activity to gradually improve over the second half of 2021,” Archer said.

“Very low borrowing costs should also help matters with the Bank of England unlikely to lift interest rates from 0.10% during 2021.”

Source: City AM

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House Price Trend Continues Upwards

House prices increased by 2 per cent in September, according to the latest Nationwide index. This pushed up the annual rate of house price growth to 5.0 per cent, the highest rate since Sep 2016

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said:

‘Housing market activity has recovered strongly in recent months’, said Nationwide chief economist Robert Gardner. ‘Mortgage approvals for house purchase rose from around 66,000 in July to almost 85,000 in August – the highest since 2007, well above the monthly average of 66,000 prevailing in 2019.

‘The rebound reflects a number of factors. Pent-up demand is coming through, with decisions taken to move before lockdown now progressing. The stamp duty holiday is adding to momentum by bringing purchases forward. Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown’.

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Nationwide said its recent research indicated that, of the people who had been considering a move before the Coronavirus Crisis, a fifth had put their plans on hold – a quarter of these saying they had concerns about the property market.

‘Younger people were much more likely to have put off plans than older people, which may reflect concerns about employment prospects’, said Gardner.

‘Indeed, most forecasters expect labour market conditions to weaken significantly in the quarters ahead as tighter restrictions dampen economic activity and the furlough scheme winds down. While the recently announced jobs support scheme will provide some assistance, it is not as comprehensive as the furlough scheme it replaces’.

Of those moving or considering a move, around a third were looking to move to a different area, while nearly 30 per cent were doing so to access a garden or outdoor space more easily.

‘As you might expect, the majority of people are looking to move to less urban areas, with this trend becoming increasingly evident among older age cohorts’, said Gardner.

Source: Residential Landlord

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House price growth to reach 14% in November

Reallymoving has predicted annual house price growth to reach 14% by November 2020.

The quote service said the prediction is based on deals already agreed, as pent up demand and urgency to benefit from the temporary stamp duty holiday has driven up activity in the market.

Annual price growth is forecast to reach 4.7% in September, 11.4% in October, and finally 14% in November.

Rob Houghton, chief executive of reallymoving, said: “Buyers are determined to make their move now, despite the fact that the current spike in prices will in many cases wipe out the stamp duty savings.

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“For those higher up the ladder with secure finances, a healthy level of equity in their property and little other debt, gloomy economic forecasts are only encouraging them to press ahead with the move rather than sit tight and wait out what could be a long and painful recession.

“More than ever people’s homes are their castles and their offices – and with borrowing costs likely to be rock bottom for the foreseeable future, paying over the odds on a purchase isn’t too painful if you’re also getting over the odds on your sale and making a stamp duty saving.

“It’s a different story for first-time buyers though, who aren’t benefitting from stamp duty savings in most areas and who have seen low deposit mortgages all but wiped out. This explains why the proportion of first-time buyers in the market has dropped by 19% since May.”

BY RYAN BEMBRIDGE

Source: Property Wire

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House prices recover to ‘all-time high’

UK house prices have seen the highest monthly rises in 16 years, reversing losses recorded in previous months, according to the latest Nationwide House Price Index.

The index, published today (September 2), showed UK house prices rose by 2 per cent in August, after taking account of seasonal factors, marking the highest monthly rise since February 2004 when it was 2.7 per cent.

Annual house price growth consequently “accelerated” to 3.7 per cent in August, from 1.5 per cent the previous month, the lender added.

Average house prices reached an all-time high of £224,123, up from £220,935 in July.

Robert Gardner, chief economist at Nationwide, said: “House prices have now reversed the losses recorded in May and June and are at a new all-time high.

“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.”

He added: “This rebound reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing. Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.”

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Nationwide’s House Price Index for May and June showed prices fell 1.7 per cent and 1.4 per cent respectively month-on-month, after taking account of seasonal factors.

Commenting on the latest figures, Chris Sykes, mortgage consultant at Private Finance, said: “This latest data shows that strong activity levels in the housing market are continuing to put upward pressure on property prices.

“Price rises in August may be in part the result of residual pent up demand still being released following the reopening of the housing market and the higher stamp duty threshold incentivising buyers and buy-to-let investors to push ahead with purchases.

“This has created a unique set of circumstances making it appear as if it is business as usual.”

While Mr Gardner said the trends looked “set to continue in the near term”, boosted further by the stamp duty holiday, he warned: “[Most] forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down.

“If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.”

Likewise, Private Finance’s, Mr Sykes said: “[This] buoyancy may not last for long. Severe uncertainty over the strength of the UK’s economic recovery is persisting, while concerns about the reintroduction of a nationwide lockdown are mounting due to an uptick in infections. This could cause the market to readjust to reflect the new economic reality.”

He added: “Lenders are beginning to hedge against high uncertainty levels in the UK economy by reducing their exposure to riskier borrowers”.

By Chloe Cheung

Source: FT Adviser

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UK house price growth strongest for 16 years

UK house prices recorded the fastest monthly increase for 16 years in August.

House prices rose 2% in August compared to July, according to the Nationwide House Price Index. This was the fastest month-on-month rise since 2004.

And over the year, house prices increased by 3.7% to £224,123 compared to August 2019.

“House prices reversed losses recorded in May and June to reach a new all-time high,” said Robert Gardner, chief economist at Nationwide.

“The bounce back reflects an unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions,” Gardner said.

He said the rebound was driven by factors including pent-up demand and people reassessing their housing needs as a result of life in lockdown.

“Our research indicates that 15% of people were considering moving owing to lockdown,” said Gardner.

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Economic uncertainty

Nationwide expected the trend to continue in the short-term, helped by the stamp duty holiday. But Gardner said: “Most forecasters expect labour market conditions to weaken significantly in the quarters ahead. This would likely dampen housing activity once again.”

Chris Sykes, mortgage consultant at brokers Private Finance, agreed: “Uncertainty over the strength of the UK’s economic recovery is persisting, while concerns about reintroducing a national lockdown are mounting.

“This could cause the market to readjust to a new economic reality.”

Sykes added that lifting the government ban on evictions in September could lead to an upsurge in evictions and negative publicity for landlords, potentially suppressing appetite in the buy-to-let market.

Miles Robinson, head of mortgages at Trussle, added: “There is a chance we’re experiencing a mini-boom ahead of the real after-effects of the pandemic.”

He urged the government and lenders to “think of ways to ensure the market remains accessible to all.”

Written by: Liz Bury

Source: Your Money

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House prices boom across West Midlands as lockdown eases

Homes in the West Midlands are going for as much as £30,000 more than their asking prices as the housing market in the region booms after the coronavirus lockdown.

Nationally, the cost of a house in the UK rose by a little over £3,000 last month as the property market hit new highs – with one estate agent believing it was down to homeowners ‘reassessed their housing needs’ while spending more time in their home during the lockdown.

House-buyers have shrugged off continued uncertainty in the economy and social distancing to send the average price of a UK home to £224,123 as restrictions ease.

The two per cent rise in August of £3,188 wiped out the losses made earlier this year as the pandemic tore through the country, according to data from building society Nationwide.

It is also the highest rise in a single month since February 2004, when prices jumped by 2.7 per cent.

Nick Berriman, a director of Berriman Eaton which has offices in Tettenhall and Wombourne, as well as Bridgnorth, said: “It is the strongest market we have seen since 2006.

“Some properties are selling for in excess of the asking price – in one case by £30,000 more. We are getting very strong prices on lots of houses. The £300,000-to-£500,000 sector is seeing the bulk of interest.”

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Mr Berriman said their Tettenhall office alone had managed 50 sales last month, which was double the average for August of 20-to-25.

He said Weighbridge Cottage, Patshull, went on the market at offers around £550,000 and was under offer within 24 hours, while Elm Gables, on Springhill Park, Lower Penn, was also on the market at offers around £525,000 and saw a sale agreed in excess of the guide price.

“June was our busiest ever month and July was significantly stronger and broke the record again,” he added. “August was slightly down on that level with holidays coming into play.

“During lockdowm a lot of people spent more time in their homes than they would normally spend and re-assessed their requirements for a home. Some now want to downsize, some upsize and others want a garden. People had the chance to see exactly what their house offers and found it does not meet requirements any more.

“The supply of houses is not drying up. In July we had more than 50 new instructions at the Tettenhall office – significantly higher than normal.”

Significant hike

Barrows and Forrester has branches in Lichfield and Birmingham and its managing director James Forrester said the latest Nationwide house price index showed a significant hike in house prices.

“Those questioning the resilience of the UK property market should be well and truly silenced by now, as the largest rate of monthly price growth in 16-and-a-half years is far from a coincidence or a one-off set of freak results,” he said.

“In fact, it’s the latest in a long line of data-based reports that shows the market has turned quicker than a pint of milk in the mid-day sun, rebounding from the depths of pandemic decline seen early in the year to return to very good health, all things considered.”

Speaking about the new report, Nationwide’s chief economist Robert Gardner said: “The bounce-back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.

“This rebound reflects a number of factors. Pent-up demand is coming through, where decisions taken to move before lockdown are progressing.

“Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.

“Our own research, conducted in May, indicated that around 15 per cent of people surveyed were considering moving as a result of lockdown.”

The holiday in stamp duty means that the trend of rising prices is likely to continue in the near term, but Mr Gardner warned that a massive rise in unemployment, which is forecast by most experts, would probably send the housing market back into a slump.

Meanwhile, official figures from the Office for National Statistics showed house prices increased by 0.2 per cent in May compared with the month before.

The ONS and the Land Registry said the average price at which a home was sold was up 2.9 per cent on the year to reached £236,000 during the month, after decreasing 0.2 per cent in April.

It is a £7,000 rise on the same month last year.

Chris Sykes, at mortgage broker Private Finance, added that as Government protections for renters come to an end, more properties could start hitting the market.

“The ending of the Government’s eviction ban in September could lead to a surge in landlords trying to remove tenants from properties,” he said.

“This may cause a great deal of negative publicity, possibly suppressing appetite for new buy-to-let purchases. Landlords may even sell some of their properties to avoid potential difficulties moving forward.”

By John Corser

Source: Express & Star