One of the UK’s biggest mortgage lenders, Nationwide, released their House Price Index this morning, reporting that prices have increased in July by 1.7 per cent when compared to June, and 1.5 per cent when compared with July last year. That said, prices are still 1.6 per cent lower this month than they were in April.
Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, says: “The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions. The rebound in activity reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing.”
“Behavioural shifts may 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 life in lockdown.
“Moreover, social distancing does not appear to be having as much of a chilling effect as we might have feared, at least at this stage. These trends look set to continue in the near term, further boosted by the recently announced stamp duty holiday, which will serve to bring some activity forward.”
Robert goes on to caution: “However, there is a risk this proves to be something of a false dawn. 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.”
Today’s Nationwide data also reports that the current UK average house price stands at £220,936 up from £216,403 in June. This means that as a result of the stamp duty holiday savings introduced earlier this month, approximately 90 per cent of all main residence home movers will pay no SDLT between now and March 2021 when the scheme ends, saving an average of £1,918.
For those who are paying £500,000 or over for their property, the maximum saving of £15,000 off the total tax bill will apply in the vast majority of cases.
Marc von Grundherr, Director of London estate agency chain Benham and Reeves comments: “The property market party is in full swing at the moment, and we’re yet to see the benefit of the recently announced stamp duty holiday filter through.
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“Once that does, expect further increases in house price growth due to a notable and sustained increase in buyer demand.”
Marc continues: “London, in particular, has now turned a corner and will see the vast majority of buyers benefit from a stamp duty reprieve. This will help accelerate the capital return to form and see the region regain its seat at the helm of the UK property market, helping to drive house price growth in the right direction. As a result, we should finish the year in a much, much better position than anyone could have imagined just a few short months ago.”
But his optimism isn’t shared by everyone. Guy Harrington, CEO of property lender Glenhawk takes a bearish stance, suggesting that: “The UK housing market is in a honeymoon phase; post lockdown, with sentiment boosted as both banks remain desperate to lend and by government stamp duty and Help to Buy proposals. The reality is very different.
“The UK is staring down the barrel of a period of unprecedented pain, underpinned by mass unemployment as the furlough scheme ends and a likely second spike, which will hit consumer confidence in unimaginable ways and undo all the gains seen in recent months. If you think we’ve seen the worst, 2021 may just top it.”
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With such polarised opinion from the professionals, what does this mean for would-be home movers at the moment?
The advice for sellers in many areas of the UK is very simple; if there is current demand in your local area, price sensibly and realistically then in all probability, you’ll achieve a relatively quick sale.
If you aim for an aspirational asking price, you may find your property sticks on the market, regardless of how many buyers looking for homes in your area.
Mortgage affordability is still very tight, and lenders are now more cautious than ever about the amounts they are offering to borrowers, due to the possibility of a downturn later this year or in early 2021. Bluntly put, you can put your home on the market for any amount you want, but if a prospective buyer has to raise a mortgage to pay for it, then you could come unstuck when it’s valued by the mortgage lender.
With such polarised opinion from the professionals, what does this mean for would-be home movers at the moment?
The advice for sellers in many areas of the UK is very simple; if there is current demand in your local area, price sensibly and realistically then in all probability, you’ll achieve a relatively quick sale.
If you aim for an aspirational asking price, you may find your property sticks on the market, regardless of how many buyers looking for homes in your area.
Mortgage affordability is still very tight, and lenders are now more cautious than ever about the amounts they are offering to borrowers, due to the possibility of a downturn later this year or in early 2021. Bluntly put, you can put your home on the market for any amount you want, but if a prospective buyer has to raise a mortgage to pay for it, then you could come unstuck when it’s valued by the mortgage lender.
If you’re buying, it’s best at the moment to get your mortgage in place before you start viewing any properties. Due to current levels of demand, many sellers are instructing their estate agents to only allow viewings for buyers who have a mortgage in place, and if they are selling in order to purchase, have already accepted an offer on their home.
With many families cancelling overseas holiday plans this year and instead opting for a staycation, estate agents are bracing themselves for what could be one of, if not the, busiest Augusts in the last decade as far as housing market activity is concerned.
Whether the current celebratory mood leads to a ‘morning after’ headache in the months to come, however, remains to be seen.
Follow Louisa on Twitter: @louisafletcher