Annual House Price Growth Gathers Momentum In September As Housing Market Recovery Continues

30th September 2020

The latest house price figures from Nationwide index shows that house prices have hit their highest level since September 2016, up 5% annually.

• Annual price growth picked up to 5.0% in September, the highest rate since Sep 2016.

• Prices rose 0.9% month-on-month, after taking account of seasonal factors

[b]• Most regions saw a pickup in house price growth rates in Q3[b]

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:"UK house prices increased by 0.9% month-on-month inSeptember, after taking account of seasonal effects, followinga 2.0% rise in August. As a result, there was a further pick upin annual house price growth from 3.7% in August to 5.0%

in September - the highest level since September 2016.

"Housing market activity has recovered strongly in recent months. Mortgage approvals for house purchase rose from c66,000 in July to almost 85,000 in August - the highest since 2007, well above the monthly average of 66,000 prevailing in 2019.

"The rebound reflects a number of factors. Pent-up demand is coming through, with decisions taken to move before lockdown now progressing. The stamp duty holiday is adding to momentum by bringing purchases forward. Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown.

Pandemic leading some to put off moving home..."Our recent market research indicates that, of the people that had been considering a move before the pandemic, 19% have put their plans on hold, with over a quarter (27%) of these citing concerns about the property market "Younger people were much more likely to have put off plans than older people, which may reflect concerns about

employment prospects.

"Indeed, most forecasters expect labour market conditions to weaken significantly in the quarters ahead as tighter restrictions dampen economic activity and the furlough scheme winds down. While the recently announced jobs support scheme will provide some assistance, it is not as comprehensive as the furlough scheme it replaces.

...but the pandemic may be spurring an even greater number of potential home movers into action...

"Interestingly, around 10% of those surveyed in September said they were in the process of moving as a result of the pandemic, with a further 18% considering a move for the same reason. This pattern was evident across the country, especially in London.

"Of those moving or considering a move, around a third

(35%) were looking to move to a different area, while nearly

30% were doing so to access a garden or outdoor space

more easily.

"As you might expect, the majority of people are looking to

move to less urban areas, with this trend becoming

increasingly evident among older age cohorts.

“The South West was the strongest performing region, with

annual price growth rising from 2.3% to 5.5% (see full table

of regional house price data on page 4). For the first time

since 2017, house price growth in southern England (London,

Outer Metropolitan, Outer South East, East Anglia and South

West) exceeded that in northern England (North, North West,

Yorkshire & Humberside, East Midlands and West Midlands).

“Annual house price growth in London continued to edge

higher, with prices up 4.4% in Q3. Average prices in the

capital hit a record high of £480,857 and are now 57%

above their 2007 levels (UK prices are 21% higher than their

2007 peak).

“The surrounding Outer Metropolitan region also saw a rise

in annual price growth to 5.0%, while the neighbouring

Outer South East region saw a 4.8% rise. Northern Ireland

was the weakest performing region, with prices up 1.5%

year-on-year. Average prices in the province are still 36%

below their 2007 peak.

“Scotland was one of the few areas to see a slowing in the

annual rate of price growth, to 2% in Q3, compared to 4.0%

in Q2. Meanwhile, Wales saw annual growth accelerate to

3.8%, from 1.0% in Q2.

Managing Director of Barrows and Forrester, James Forrester, commented:"While there may be an autumnal cold snap in the air, this drop in temperature is yet to reach the UK property market.

The furnaces of house price growth continue to burn brightly, fed by a seemingly never-ending stream of homebuyer demand. As a result, the market has exploded out of the blocks from a pandemic standstill, to what are quite frankly, remarkable new heights.

This has been largely due to a coiled spring of homebuyer Brexit uncertainty that has been quietly building in the background, boosted by a stamp duty holiday that has seen bargain loving Brits rush to secure a property purchase saving."

Director of Benham and Reeves, Marc von Grundherr, commented:

"The market is showing no signs of letting up and has continued along the rapid upward trajectory seen pretty much since lockdown restrictions were eased. You need only look at the remarkable rate of annual growth for proof of this revival, with an enormous five per cent jump on this time last year.

At this rate, it may be a blessing in disguise should the Government cancel Christmas, as the industry is going to need every hour, of every day, to simply service the huge levels of homebuyer activity we're seeing at present.

We're already seeing considerable backlogs in sale completions at the legal stage due to the unprecedented levels of market activity. We expect this activity will remain extremely strong, at least, until the stamp duty reprieve for homebuyers had ended. At which point normality may return."

Group CEO of Enness Global Mortgages, Islay Robinson, commented:"We've seen mortgage approvals reach a thirteen-year high this week and this concrete market foundation is helping to propel house prices to dizzying new heights.

The question is how long this momentum can be sustained?

Although the market is sure to run out off puff at some point, it certainly looks as though the traditional meander into Christmas and the New Year will be replaced by a sprint finish, and this could last well into next 2021.

For those considering a property purchase, now remains a great time to do so. Despite house prices rising rapidly, there are still some fantastic mortgage rates available for those who can secure them. The key to doing so is all in the deposit and so raising as much as you can at the front end of your purchase is going to pay dividends further down the line."