Industry Roundup: Prices At An All Time High
Here's our round up of the housing sector, based on insight from Rightmove, Nationwide and Halifax.
In summary, the housing market has continued to be buoyant over September and October with prices being reported at an all time high driven by the pent up demand arising from the first lockdown, low borrowing interest rates, the volume of buyers exceeding sellers and the stamp duty holiday. Clearly, there are many uncertainties ahead and the outlook is that there are some signs of momentum easing although the end of the year and the early parts of 2021 are expected to be busy to meet the end of the stamp duty holiday on 31 March.
Rightmove has reported that asking prices right now are at an all time high! They have reported that the number of buyers contacting estate agents is up two-thirds compared to 12 months ago. They state that if you want to meet the stamp duty deadline of 31 March 2021, you need to find a buyer soon.
Headline Figures In addition to the record new average property price:
Compared to September 2019:
- The average time to secure a buyer is now 50 days, 12 days quicker than in September 2019 and at the lowest level reported over that period, see below:
- The number of sales reported by agents also set a new record. This was 70% higher
- Traffic to Rightmove was up almost 50%, the biggest annual jump since 2006
- The number of sales agreed for October is up 58%
A new precedent has been set - estate agents have more properties sold than they have available for sale
The pace of growth is easing
Tim Bannister, resident data expert at Rightmove says:
"Previous records are tumbling in this extraordinary market, and there are still some legs left in the upwards march of property prices. We predict that the annual rate of growth will peak by December at around 7% higher than a year ago.
Many buyers seem willing to pay record prices for properties that fit their changed post-lockdown needs, though agents are commenting that some owners’ price expectations are now getting too optimistic, and not all properties fit the must-have template that buyers are now seeking.
Not only is the time left to sell and legally complete before the 31st March stamp duty deadline being eaten away by the calendar, but more time is also needed because the sheer volume of sales is making it take longer for sales that have been agreed to complete the process.
Sellers and their agents should therefore be wary of being too optimistic on their initial asking price, as whilst activity levels continue to amaze there are some signs of momentum easing off from these unprecedented levels.”
Martin Robinson, Director of Hunters estate agent, says:
“We would normally see a slowing of the market as the nights draw in, but the appetite to take full advantage of the low interest rates and a stamp duty holiday means activity continues to grow.
Demand is still outweighing supply, particularly for quality properties marketed at the right price, and we’re regularly experiencing sales going to best and final offers. The market continues to be strong right across the property types, whether it be first time buyer, investor, second time mover or houses in the country which offer more outside space.
We’re also seeing changes in the habits of the consumer with many saying that there is no need to be on the doorstep of their workplace and are looking to move to a more rural or affordable location, broadband speed permitting, to work remotely where they can get more for their money.”
Learn more here.
Nationwide have reported an annual house price growth of 5.8%, it's highest for five-years.
Robert Gardner, Nationwide's Chief Economist, says:
“Nevertheless, housing market activity has remained robust. Mortgage approvals for house purchase climbed to 91,500 in September – the highest level since 2007.
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. Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.
However, activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March."
Nationwide undertook a poll in September and the results of this suggests that 10% of those surveyed were in the process of moving as a result of the pandemic, with a further 18% considering a move for the same reason. The results also show that many others are looking to improve their property rather than move, with around a third (35%) considering enhancing their home as a result of the pandemic. Nearly half (47%) of those wanted to add or maximise space.
Learn more here
On a monthly basis, house prices in October were 0.3% higher than in September, with the average sale price being £250,457. Prices in October were 7.5% higher than in October 2019, the strongest growth since June 2016.
Russell Galley, Managing Director, Halifax, says:
“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% in October, its highest rate since mid-2016. Underlying the pace of recent price growth in the market is the 5.3% gain over the past four months, the strongest since 2006. However, month-on-month price growth slowed considerably, down to just 0.3% compared to 1.5% in September.
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% compared to a 6.0% 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.
This level of price inflation is underpinned by unusually high levels of demand, with latest industry figures showing home-buyer mortgage approvals at their highest level since 2007, as transaction levels continue to be supercharged by pent-up demand as a result of the spring/summer lockdown, as well as the Chancellor’s waiver on stamp duty for properties up to £500,000.
While Government support measures have undoubtedly helped to delay the expected downturn in the housing market, they will not continue indefinitely and, as we move through autumn and into winter, the macroeconomic landscape in the UK remains highly uncertain. Though the renewed lockdown is set to be less restrictive than earlier this year, it bears out that the country’s struggle with COVID-19 is far from over. 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.”
The data below shows a slight decline in the level of properties coming for sale.
Learn more here.
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