- 26th August 2020
- Posted by: DMM
- Category: Uncategorised
We are some months into the post-lockdown world and watching how the market reacts and why we’re seeing what is perhaps an unexpected mini-boom in property.
With the UK officially into recession, defined as two consecutive quarters of economic decline, the economy has fight through a tough period seeing off the Coronavirus. With the property market shut down in March you could have been forgiven for assuming a post-lockdown market slump may follow. But no, the current property market has seen a prompt resurgence and so we look back at some of the marketplace reports for July and what affect that may be having on this unexpected mini-boom in property.
The monthly Rightmove House Price Index of 17 August reported a rewriting of the rulebook with a mini-boom in property. Rightmove say that they had seen the highest number of sales agreed in a month since they started tracking this data over ten years ago, up by 20% on the previous high, and with a record total value of over £37 billion. The market also appears to being feed by house owners too with the highest number of properties coming to market in a month since March 2008.
Rightmove say “Unseasonal record high for new seller asking prices in seven regions, but London drags down the national average to a 0.2% fall due to its own more typical 2.0% seasonal monthly drop.”
Miles Shipside, Rightmove director and housing market analyst, says “Home movers are both marketing and buying more property than we have recorded in any previous month for over ten years, helping push prices to their highest ever level in seven regions. Rather than just a release of existing pent-up demand due to the suspension of the housing market during lockdown, there’s an added layer of additional demand due to people’s changed housing priorities after the experience of lockdown. This is also keeping up the momentum of the unexpected mini-boom, which is now going longer and faster.”
“London has 69% more properties coming to market, with the South East at 60% and the East at 56%. With work and transport patterns potentially changing most around the capital, commuter-belt properties need to have more appeal to prospective buyers than just proximity to a station. Many buyers do appear to be satisfying their new needs in these regions, as the number of sales agreed in each is also at a record level. The out-of-city exodus has helped push prices to record levels in Devon and Cornwall.”
The unexpected mini-boom in property with prices up 1.5%
The Halifax House Price Index also headlined house price growth and the mini-boom in property driving house prices up in July to 1.6% higher than in June, on a monthly basis. Their report says in the latest quarter (May to July) house prices were 0.2% lower than in the preceding three months (February to April) with house prices in July 3.8% higher than in the same month a year earlier.
Russell Galley, Managing Director, Halifax, said: “Following four months of decline, average house prices in July experienced their greatest month on month increase this year, up 1.6% from June and comfortably offsetting losses in 2020. The average house price in July is the highest it has ever been since the Halifax House Price Index began, 3.8% higher than a year ago.
“The latest data adds to the emerging view that the market is experiencing a surprising spike post lockdown. As pent-up demand from the period of lockdown is released into a largely open housing market, a low supply of available homes is helping to exert upwards pressure on house prices. Supported by the government’s initiative of a significant cut in stamp duty, and evidence from households and agents suggesting that confidence is currently growing, the immediate future for the housing market looks brighter than many might have expected three months ago.
The Nationwide House Price Report for July also comes in positive showing annual house price growth recovering 1.5% in July, up 1.7% month-on-month, after taking account of seasonal factors, reversing last month’s fall.
Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “UK house prices rose by 1.7% in July, after taking account of seasonal effects, offsetting the 1.6% fall in June. As a result, annual house price growth recovered to 1.5%, from -0.1% last month. On a seasonally adjusted basis, house prices in July were 1.6% lower than in April. “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.”
We’ll keep following the news and keep you updated to views on how long this unexpected mini-boom in property may last! If in the meantime, you are seeking property development finance then you can compare property development finance simply here!