After a tale of two halves in Q2 2020, the property market continued to defy the odds and grow furthermore in Q3. One big factor that helped generate a surge of interest from buyers was the stamp duty holiday announcement which fell at the very beginning of the quarter on July 8th. Since then, without question, the market has increased month on month, but with much speculation as to when there will be a crash.
Currently, the UK House Price Index only paints a picture for July, nonetheless, the stats were already looking positive. As of July 2020, the average house price in the UK is £237,963. Property prices rose by 0.5% compared to the previous month and were up by 2.3% compared to the previous year. Yorkshire and the Humber experienced the greatest monthly price rise, up by 1.5%.
With the newly announced stamp duty holiday in place, August saw an even bigger increase in activity with Nationwide reporting that UK house prices rose by 2.0%, after taking account of seasonal effects, following a 1.8% rise in July. They further stated that this is the highest monthly rise since February 2004, 2.7%, (based on Nationwide’s housing index). Most economists believed that the ramping up of activity could be put down to the easing of lockdown restrictions and pent up activity from when the market was shut down earlier in the year.
Moving on to September figures released by Nationwide announced that UK house prices increased by 0.9% month-on-month, after taking account of seasonal effects, following a 2.0% rise in August. As a result, there was a further pick up in annual house price growth from 3.7% in August to 5.0% in September – the highest level since September 2016.
Furthermore, Rightmove reported: “The trend of up-sizing to a larger home has continued at pace over the past month, leading to record asking prices in the second-stepper sector, made up of three- or four-bedroom homes. This price record has been fuelled by buyers looking for more space, including both those who need extra space for their families and those looking for room to work from home. Regions outside the South of England have seen the strongest price jumps, with Yorkshire & the Humber, East Midlands, West Midlands, North East, North West and Scotland all at new records.”
Overall in Q3, Nationwide’s reported most UK regions saw a slight pickup in annual price growth in Q3 (July, August & September) compared with Q2 (April, May & June), with prices in all areas higher than a year ago.
While the market is clearly showing signs of growth first-time buyers are still very much being left behind. With very little support in place, that and the fact that this demographic is at the heart of those hardest hit by job losses or currently being on the furlough scheme, which will soon move to become the jobs support scheme. It is believed these make up a large proportion of people that have now put off plans to move.
It’s widely speculated that with further lockdown restrictions and other economic factors such as Brexit and the winding down of the furlough scheme, bolstered by the not so good jobs support scheme that inevitably the market will see a decrease in activity. More than likely the final push will come from buyers looking to complete transactions before the end of the stamp duty holiday come 31st March 2021. At this point without any other incentive to buy the market could potentially see a sharp decline below levelling out again.