Lucy Pendleton, property expert at independent estate agent James Pendleton, comments: “This market seems to be able to hurdle anything and, though the annual growth rate has cooled slightly, it still continues to plough a low-Earth orbit.
“It must be beginning to dawn on the Chancellor that the stamp duty tax break was completely unnecessary. Any sensible estate agent is hoping the market puts on the brakes before we end up in bubble territory. A housing market has to take the economy with it ultimately, and the threat to the labour market in the second quarter of this year is a major concern.
“The simple truth is that extra space has become non-negotiable for legions of homeowners with families, and the usual winter slowdown has met the immovable force that is hundreds of thousands of people all trying to jump to larger properties at the same time.
“It’s right about now that vendors begin to think of their homes as piggy banks once again, even if agents on the ground are seeing more homes fall short of asking prices. This only leads to tears later on when the chasing pack forces valuations back to a more sensible level, and there are indications in London that this is already beginning to happen.”
Nicky Stevenson, Managing Director at national estate agent group Fine & Country, comments: “Buyers forced to re-evaluate their living arrangements have delivered a market with endless momentum that now threatens to course right through to the spring. It’s very unusual to reach a record high in December, when buyers usually use the winter to pause their house hunting.
“This time around, buyers have remained steadfast and this underlines the fact that the race for more space is no passing fashion. It looks set to be a seismic shift in priorities that could last a generation and a third national lockdown is only going to solidify that trend.
“People have long memories when it comes to the traumas inflicted in situations like this. Room to spread out is now putting other so-called essentials in the shade and forcing compromises over things that would once have been deemed priorities like en-suites and out-buildings.
“This is forcing buyers to focus on a much longer time horizon that allows them to mentally set aside headaches like Brexit, the pandemic, and the end of government support measures.
“The more time passes, the more apparent it becomes that the desire for a larger home is trumping the stamp duty tax break in buyers’ eyes, as it becomes increasingly unlikely that transactions will complete in time to benefit.”
The November Halifax House Price Index report has now been released, showing the 2020 trend for increasing house prices continues.
The report highlights:
House prices in October were 0.3% than in September on a monthly basis
House prices were 4.0% higher in the months August to October than in the preceding three months of May to July
House prices were 7.5% higher in October 2020 than in the same month the previous year – the strongest growth since June 2016
Russell Galley, Managing Director of Halifax, said: “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.”
Lucy Pendleton, property expert at independent estate agents James Pendleton, comments: “Average house prices may have crashed through a quarter of a million pounds for the first time but the growth rate that got them there is frankly ridiculous.
“There seems little prospect that house prices are really rising this fast nationally, and it’s a dangerous thing to be saying, unless true, because it can scare off first-time buyers, who are the lifeblood of the market.
“The huge demand that has driven the market higher has been fuelled by armies of buyers pumped up by impatience, adrenalin, frustration and relatively cheap borrowing.
“That’s what will take the credit for this continuing surge in prices but we won’t see figures like this for long if we’re lucky. Growth like this is only ever in the interests of a tiny proportion of the population — it’s not good for agents in the long run or consumers. A boom followed by a bust in the spring should be avoided at all costs but the higher prices travel, the more likely that is. However, a slowdown in monthly price growth indicates that the market has already started to level off.”
Marc von Grundherr,Director of Benham and Reeves, comments: “We find ourselves in a dramatically different place to this time last year and while shorter term growth rates are starting to show signs of a seasonal slowdown, house prices continue to hit record highs.
“A second national lockdown is unlikely to have any impact on current house price trends with the market remaining open for business and buyer demand remaining strong.
“While the hopper continues to overflow with a huge number of pending transactions waiting to complete, there should remain a consistent level of house price growth to carry the market through Christmas and well into 2021.”
James Forrester, Managing Director of Barrows and Forrester, comments: “While the nation continues to wobble over the economic turmoil posed by the current pandemic and a second lockdown, the UK housing market is using these headwinds of uncertainty to fill her sails as house prices continue to climb ever higher.
“Homebuyers continue to overrun the market and for many, the task of buying or selling may well have provided a welcome distraction to the daily doom and gloom of COVID and so we haven’t seen the decline that many market naysayers so keenly awaited.
“With the Bank of England announcing further economic support, we should see a degree of smooth sailing as the year ends.”
Read the full Halifax House Price Index report here.
Halifax has released its latest House Price Index, revealing that house prices continue to rise. Mortgage approvals have also increased, reaching the highest levels since October 2007.
Russell Galley, Managing Director of Halifax, comments within the report: “The average UK house price is now approaching £250,000 after September saw a third consecutive month of substantial gains.
“The annual rate of change will naturally draw attention, with the increase of 7.3% the strongest since mid-2016. Context is important with the annual comparison, however, as September 2019 saw political uncertainty weigh on the market.
“Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May. Across the last three months, we have received more mortgage applications from both first-time buyers and homemovers than any time since 2008.
“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, while the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March.
“It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic. The release of pent up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane. And as employment support measures are gradually scaled back beyond the end of October, the spectre of increased unemployment over the winter will come into sharper relief.
“Therefore, while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”
Read Halifax’s full House Price Index report here.
Property industry reactions
Nicky Stevenson, Managing Director at national estate agent group Fine & Country, has commented:“The property market has been basking in its own economic microclimate lately, characterised by a relative feeding frenzy for larger, more expensive homes.
“That’s unusual. Historically, the market has traditionally looked to first-time buyers for an indication of direction. However, it is existing homeowners with the buying power to spend more who have been driving house price growth over the past couple of months, fuelled by a desire for more space.
“The share of transactions being taken up by more expensive properties has grown and this role reversal has been responsible for the steep upward lurch in valuations. Increases in prices at this end of the property food chain have a disproportionate effect on house price statistics.
“There will be a flip side though. When this extra demand for larger homes starts to return to normal, the annual rate of growth overall could sit down as quickly as it stood up. That said, demand is likely to continue to outweigh supply and significant outright falls in prices for any property category remain unlikely nationwide.
“The only caveat to that is the end of the furlough scheme. The Chancellor has been choosing his words carefully and seems deeply opposed to pulling the rug out from under the jobs market. That would be the biggest near-term source of weakness and it remains a larger threat than Brexit.”
Lucy Pendleton, property expert at independent estate agents James Pendleton, has 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.
“The market’s rate of climb has been as steep as it has been artificial so don’t expect this to last. The three main drivers remain in play for now — homeowners moving to larger properties, stamp duty relief and pent-up demand, which is still being felt because of delays to the conveyancing and mortgage approvals process.
“Buyers at the upper end of the market are confident but not careless, and owners of poor-quality stock are having to increasingly watch from the sidelines as their properties sit on the market for extended periods. This is a house price boom fuelled by aspiration, not loose money.”
Despite house price growth, mortgage approvals continue to rise
Marc von Grundherr, Director ofBenham and Reeves, commented: “It’s now abundantly clear that the market has not only shrugged off any pandemic induced symptoms but has also well and truly waved goodbye to the prolonged uncertainty caused by Brexit.
“Of course, any knee-jerk restrictions imposed by the Government in the coming months could result in a case of one step forward, two steps back where price growth is concerned.
“It’s therefore imperative that we allow the industry to remain operational to service the overwhelming levels of buyer demand seen in recent months. Failing to do so could leave many buyers in lockdown limbo and cause house prices to plateau.”
James Forrester, Managing Director ofBarrows and Forester, commented: “Yet further signs of a monumental market revival and one that continues to be fuelled by heightened levels of buyer demand. The questions is how much fuel is left in the tank?
“It’s very likely that we will see this strong level of growth sustained as we see out the remainder of the year. However, with the furloughs scheme coming to an end, this could be the final swan song before a period of muted market activity.
“The Government has played its hand in anticipation of this with the promise of 95% mortgages for those struggling to get on the ladder. However, even a 5% deposit may prove financially unviable for those struggling to find work.
“So, while the outlook is certainly a bright one at present, there may well be dark clouds on the horizon. There’s no doubt the market can weather this storm, but its the duration and initial damage of that storm that remains to be seen.”
Hugh Wade-Jones, Managing Director ofEnness Global Mortgages, commented:“Homebuyers continue to take advantage of great mortgage rates where they can and this is allowing them to buy bigger and better with more space both indoors and out. Naturally, these homes command a higher price tag and this is helping to contribute to a much more buoyant rate of house price growth.
“This is certainly a trend that’s being led by the top end of the market and by those with the financial stability to transact on these larger homes at the drop of a hat.
“As this demand is met and starts to subside we will see these huge levels of top-line house price growth follow suit and a more ‘normal’ market landscape return.”
Colby Short, Founder and CEO ofGetAgent.co.uk, commented: “Home sellers continue to benefit from the uplift in buyer demand spurred by the current stamp duty holiday, with sold prices up across the board on a monthly basis with the exception of Scotland.
“This is being driven by the more affordable regions of the UK where the price threshold of £500,000 and the resulting stamp duty saving is more abundant and this is a trend that should remain consistent right through until next April.”
Matthew Cooper, Founder & Managing Director of Yes Homebuyers, commented: “It’s quite easy to get carried away with the huge house price growth being shown at the front end of the transaction process via mortgage approvals and asking prices. However, the reality is that the market is moving at a far slower rate where actual sold prices are concerned.
“Although prices have still gained positive ground, this likely to be a temporary hoorah and there is a very strong chance that this growth will recede rapidly come April once the sun has set on the stamp duty holiday.”
Adam Pigott, CEO ofOpenBrix, commented: “We’ve seen a huge boost to market sentiment as a result of the current stamp duty holiday and it seems as though a second adrenaline shot may be administered in the form of a potential 95% mortgage for struggling homebuyers.
“Should this be the case, house price growth should remain consistently strong although it’s yet to be seen to what extent the end of the furloughs scheme may dampen this appetite.
“Until this impact is felt, the market continues to fire on all cylinders and we are a world away from the catastrophic declines that many predicted at the start of the year.”
The latest Halifax House Price Index reports that house prices have fallen for the fourth month in a row. However, there has been a surge in new mortgage enquiries.
The highlights of the Halifax House Price Index include:
On a monthly basis, house prices in June were 0.1% lower than in May
In the latest quarter (April to June) house prices were 0.9% lower than in the preceding three months (January to March)
House prices in June were 2.5% higher than in the same month a year earlier
Russell Galley, Managing Director, Halifax, comments within the report: “Average house prices fell by 0.1% in June as the UK property market continued to emerge from lockdown.
“Though only a small decrease, it is notable as the first time since 2010 – when the housing market was struggling to gain traction following the shock of the global financial crisis – that prices have fallen for four months in a row.
“Activity levels bounced back strongly in June, which is typically the busiest month for mortgage activity in the UK. New mortgage enquiries were up by 100% compared to May, and with prospective buyers also revisiting purchases previously put on hold, transaction volumes rose sharply compared to previous months. However, whilst encouraging, it remains too early to say if this level of activity will be sustained.
“The near-term outlook points to a continuation of the recent modest downward trend in prices through the third quarter of the year, with sentiment indicators, based on surveys of both agents and households, currently at or around multi-year lows.
“Of course, come the autumn, the macroeconomic landscape in the UK should be clearer and the scale of the impact of the pandemic on the labour market more apparent.
“We do expect greater downward pressure on prices in the medium-term, the extent of which will depend on the success of government support measures and the speed at which the economy can recover.”
Managing Director ofBarrows and Forrester, James Forrester, has commented: “Yet another contrasting medical examination of the UK property market and one that shows the impact of an industry-wide lockdown is still lingering with further monthly declines in house price growth.
“However, the positives are that prices remain higher on an annual basis despite the turbulent start to the year. This is a much better indicator of market health and one that should reassure the nation’s home sellers, as well as bolstering the surge of buyer demand that has already flooded the market since lockdown restrictions were eased.
“We’re expecting to see a further boost in the form of a stamp duty holiday tomorrow, and while this has already drawn its critics, it will only act as a positive stimulus for the market in the long-term.”
Managing Director ofEnness Global Mortgages, Hugh Wade-Jones, commented: “More positive news for the UK property market and hopefully the first of a double dose of good news this week.
“Unfortunately, it looks as though the top tier of the market will once again be shown the cold shoulder in terms of any stamp duty relief or otherwise.
“However, we’ve seen a promising increase in market activity in recent months, and this has been driven of late by foreign buyers returning to the top tiers of the market, in particular.
“While domestic activity remains the backbone of the UK property sector, it is this foreign investment that will help spur the market back to full health.
“Although it might take a little while longer to materialise at the top level, it bodes very well for the remainder of the year where overall house prices are concerned.”
Industry reaction to the July Halifax House Price Index
Director ofBenham and Reeves, Marc von Grundherr, commented: “The potential announcement of a stamp duty holiday by the chancellor tomorrow should help lift market sentiment, certainly where buyer demand is concerned. Of course, some are already forecasting that many buyers will hold off now to benefit later, causing a slump in the market as a result.
“While a valid point, it’s unlikely to send a market that is comfortably shifting through the gears into full reverse. The transaction process can be a long one, and it is doubtful that the average buyer will jeopardise their bricks and mortar aspirations, simply to save a few thousand pounds in stamp duty.
“The flip side to this is that with such demand already returning to the market, postponing a purchase until October could see the price of your chosen property increase in value, exceeding the saving you might have made. So any buyers considering such an idea would be ill-advised to take the risk.”
Lucy Pendleton, property expert at independent estate agents James Pendleton, said: “The typically more bullish Halifax index hasn’t disappointed. People remain confident despite the pandemic but the biggest threat to the market at the moment is the posturing going on in government over a potential Stamp Duty tax break.
“The market will seize up if this continues. Ministers more intent on teasing than leading either need to introduce it or ditch it. The flying of kites only encourages people to hold off with their move.
“If they don’t provide clarity, the recovery in the market, which by the Halifax’s reckoning is still powering ahead, will be put in doubt.
“Two things have so far characterised the residential market since it reopened in mid-May. First, there were the overzealous bargain hunters who came crashing in demanding huge discounts and were quickly beaten back.
“We’re not hearing from that type of buyer anymore. Second, we’ve noticed a lot of buyers and sellers who had been frustrated by the pandemic’s shut down of the country showing huge determination to now get on with their move.
“It just goes to show that moving home is a marathon and not a sprint for most people, a decision often years in the making, and that is underpinning the annual growth still being registered by the Halifax in June.
“This confidence and robust overall demand bodes well for transaction volumes, and sensible offers provide some clue that a broad price correction is not on the cards at the moment.”
Mary-Anne Bowring, group managing director atRingleyand creator of automated lettings platform,PlanetRent, said: “Today’s figures show potential green shoots of recovery with rising mortgage enquiries although it is clear lockdown and prolonged uncertainty are still having their effect and with no clear route out the pandemic yet, the for-sale market is likely to be subdued as buyers and sellers act cautiously and put off major financial decisions.
“This is why government policies aimed at restimulating the housing market need to look beyond first-time buyers and existing owner-occupiers and tap into new sources of demand like buy to let landlords by scrapping the stamp duty surcharge they face.
“With only the private sector predicted to keep on growing and the disruption caused by Coronavirus likely to cause a short-term spike in rental demand, the government could kill two birds with one stone by driving activity and meeting a growing housing need.
“Landlords are also an important source of development finance for housebuilders through off-plan sales and so cutting SDLT for buy to let investors could help housebuilding recover too.”
House prices in October were 0.9% higher than in the same month a year earlier
House prices have fallen by 0.1% on a monthly basis
From August to October, house prices were 0.2% higher than in May to July
Russell Galley, Managing Director of Halifax, said: “Average house prices continued to slow in October, with a modest rise of 0.9% over the past year. While this is the lowest growth seen in 2019, it again extends the largely flat trend which has taken hold over recent months.
“A number of underlying factors such as mortgage affordability and wage growth continue to support prices. However, there is evidence of consumers erring on the side of caution.
“We remain unchanged from our view that activity levels and price growth will remain subdued while the UK navigates political and economic uncertainty.”
Milton Rodosthenous, director of online auction service LetsBid Property, comments: “It’s no surprise to see that annual house price growth slowed again in October, adding to the overall flat trend recorded over the last few months.
“That said, the market has remained stable and resilient in the face of an unprecedented political situation and a period of uncertainty that has stretched to over three years now.
“It’s likely that activity in the market will stay at the same subdued pace over the next couple of months. However, the outcome of the General Election in December combined with the traditional market boost in January should provide the property industry with renewed optimism for the New Year.”
“The market’s biggest problem in recent times has been a lack of confidence, but certainty surrounding the outcome of Brexit and the government alongside the positivity a fresh year brings, will encourage buyers and sellers to return to the market in volume.”
“With consumer confidence in the property market restored, there’s no reason why 2020 can’t be a great year for house price growth and transactions.”
Lucy Pendleton, founder director of independent estate agents James Pendleton, says: “The market is hovering around six-year lows and is unlikely to move off the rocks until there is some certainty for buyers but London is already roaring back to life.
“October produced a general election date so hopes are growing that certainty could be just around the corner but the situation isn’t without its risks for house hunters.
“Buyers will have that date of December 12 firmly in mind as they enter negotiations and this will undoubtedly lead some to put off exchanging contracts until the outcome is known.”
Yet another report confirms a slow in house price growth for the UK, as the latest Halifax House Price Index shows annual growth to now be at 1.1%.
The highlights for this latest report from Halifax include:
House prices in September were 1.1% higher than in the same month a year earlier
On a monthly basis, house prices fell by 0.4%
In the latest quarter (July to September) house prices were 0.4% higher than in the preceding three months (April to June)
Russell Galley, Managing Director, Halifax, said: “Annual house price growth slowed somewhat in September, rising by just 1.1% over the last year. Whilst this is lowest level of growth since April 2013, it remains in keeping with the predominantly flat trend we’ve seen in recent months.
“Underlying market indicators, including completed sales and mortgages approvals, continue to be broadly stable. Meanwhile for buyers, important affordability measures – such as wage growth and interest rates – still look favourable.
“Looking ahead, we expect activity levels and price growth to remain subdued while the current period of economic uncertainty persists.”
Lucy Pendleton, founder director of independent estate agents James Pendleton, comments: “The housing market’s game of musical statues continues. The only problem is that a rowdy bunch of competitive parents have been jostling for control of the off button for months and the music never actually stops.
“Annual growth is now at a six and a half year low and any fuel injection provided by buyer incentives and low mortgage borrowing rates has long gone. The fumes of uncertainty are all that enter now, and the housing market’s engine must take what sustenance it can until the UK’s political future is more assured.
“This index has gone from gazelle to sloth in only a matter of months, although some tinkering with the methodology has now removed the astoundingly high year on year figures we saw in the first half of the year from the index.”
