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What Next for UK House Prices?

New Records Set and Forecasts Rise in Extraordinary Times

The house price forecasting rulebook has been thrown out of the window in this extraordinary year, with predictions of a post-lockdown price plunge in the third quarter failing to materialise.

The average price of property coming to market increased by 1.1 per cent (+£3,534) this month, to an all-time national record of £323,530 – some 5.5 per cent (+£16,818) higher than a year ago and the highest annual growth rate for over four years.

The momentum caused by the combination of post-Brexit pent-up demand and a surge in new demand – partly due to the reduction in Stamp Duty Land Tax – has led to new records in several key metrics.

In fact, property portal Rightmove now says its original forecast in December last year of a two per cent annual rise for 2020 was far ‘too timid’ and it is now looking like the annual growth rate will actually peak at around the seven per cent mark by December.

As well as the new price record, September saw three new records for market activity set. Rightmove says:

  • the average time to sell is now 50 days, which is 12 days faster than the same period last year
  • for the first time ever, estate agents now have more properties marked as sold than they have as available for sale
  • the number of sales reported by agents also set a new record and was 70 per cent higher than the same period a year ago

Regionally, all areas have recorded annual price rises ranging from 2.6 per cent in London up to 8.7 per cent in Scotland (see the map below for further breakdowns).

So far in October the number of sales agreed is still 58 per cent up on the same period last year. The number of active buyers contacting estate agents also continues to run at a high level, up by 66 per cent in September compared to 12 months ago and only marginally down on the peak of +67 per cent seen in July.

The portal itself has also recorded a 49 per cent increase in traffic in September compared to the same period last year, which is the biggest year-on-year jump since 2006.

Tim Bannister, Rightmove’s Director of Property Data comments: “Previous records are tumbling in this extraordinary market, and there are still some legs left in the upwards march of property prices.”

Martin Robinson, Director of Hunters, said: “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.”

Dominic Agace, Chief Executive of Winkworth estate agents, with 100 offices nationwide, including 60 in the capital, said: ” I think the trend to make a move for more space will continue, reflecting the increasing trend for working from home.” 

However, he cautioned: “With increasing supply and uncertainty around Covid, we expect prices to flatten out now we are past the peak autumnal market.”

Not only is the time left to sell and legally complete before the 31st March stamp duty deadline fast approaching, 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 according to Rightmove’s data. So it seems like if you want to take advantage of the markets current benefits, a sooner rather than later approach would be advisable.

However, if you wait a little longer, first-time buyers may benefit from more attractive mortgage rates. The government has hinted that additional low-deposit mortgage support for first-time buyers is on its way.

It certainly appears that the current momentum, assisted by the prospect of stamp duty savings, is helping to keep the housing market healthy.

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Alex Wright, Editor