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Rightmove: July house prices beat pre-lockdown levels by 2.4%

The average asking price of property coming to market in July was £320,265, 2.4% (£7,640) higher than in March pre-lockdown, and the annual rate of increase (3.7%) was the highest since December 2016, according to Rightmove’s July House Price Index.

Year-on-year buyer enquiries increased by 75% in Britain since the start of July, while 44% of new listings that came up for sale in the first month after the English market opened on 13 May have already been marked as sale agreed, compared to 34% for the equivalent dates last year.

The number of monthly sales rose 15% in England on last year, and in the five days after the stamp duty announcement it rose 35% above levels from the same days one year previous.

The number of properties coming to market in July was up by 11.1% compared to a year ago, despite Scotland and Wales not contributing for the full period, and total available stock recovering to being 13% down.

40,741 (44%) of the 92,085 newly listed properties in the first month after the English market reopened have already found a buyer, compared to 34% for the equivalent dates last year.

Miles Shipside, director and housing market analyst at Rightmove, said: “The unexpected mini-boom continues to gather momentum as more nations reopen.

“Overall buyer enquiries are up by an incredible 75% year-on-year in Britain and we expect activity will increase even further as Scotland has not yet been open for a full month, and Wales still has some housing market restrictions in place.

“The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time-limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.

“The strength of buyer demand has contributed to record prices, with the 3.7% annual rate of increase being the highest for over three and a half years.

“These figures are the earliest indicator of house price trends. They show on average prices gently rising not falling, and this will be reflected in the coming months in other house price reports.”

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Shipside added:”There is a window of opportunity for sellers to come to market and to find a buyer who is tempted by the stamp duty savings.

“Although March next year may sound like a long time away, in reality sellers need to find a buyer before Christmas, to allow a further three months for completion of the legal process to beat the deadline.

“While property is selling much faster than a year ago, it’s important not to over-price and miss this window.

“It’s still a price sensitive market with buyers having limits on what they are able to borrow, and the uncertain economic outlook making them more cautious.”

He continued: “While most first-time buyers will not benefit from the stamp duty holiday, as they were already exempt from stamp duty on purchases of up to £300,000, many will benefit from lenders now starting to bring back first-time buyer mortgages for up to 90% of the purchase price.

“Lower-deposit lending helps to boost buyer activity on the all-important first rung of the ladder, which in turn helps to boost the numbers of second-steppers who are able to trade up, and so also enables others higher up the chain to move.”

Marc von Grundherr, director of Benham and Reeves, said: “Oh, ye of little faith. Previous reports from a number of ‘doomster’ commentators as to the demise of the UK property market seem to have been greatly exaggerated as if often the case.

“Prices are up, enquiries are through the roof and sales are being agreed like billy-o, and that’s even before the effects of the temporary stamp duty reprieve have had time to kick in.

“Hold on tight folks, we’re in for a fast ride over the next few months and prices will rise further as a consequence of this unprecedented demand.

“Albeit somewhat fabricated by a chancellor determined to bolster the flagging economy via the property market.”

James Forester, managing director of Barrows and Forrester, said: “Light the blue touch-paper indeed. Such significant levels of buyer activity are unheard of within the UK market and should ensure a nitrous-oxide fuelled return to form for the UK property market.

“This is, of course, a result of a double whammy of pent up demand that had been throttled during lockdown and the latest government incentives via a huge stamp duty saving.

“While the market will return to a more familiar form of ‘normality’ as this demand levels out, it has truly defibrillated any fears of a downturn in home values.

“In addition to this, the government’s continued failure to address the UK’s housing shortage will ensure that even when buyer demand returns to normal levels, prices will remain buoyant due to the supply and demand imbalance.”

Islay Robinson, CEO of Enness Global, added: “We are now seeing a welcome boost in mortgage lending at all levels of the market, especially for first-time buyers, which will help fuel the market from the bottom right through to those transacting at the very highest price brackets.

“The latest Rightmove numbers also show that at last, London is back in positive territory.

“As the cornerstone of the UK property market, good health across the capital will help drive the market forward on a national scale with the figures also showing that it is the more expensive homes that are rising in value the most, 4% up in asking price terms since March.

“So it would seem that this return to prominence is being driven by the well-heeled buyer as well as a heightened level of foreign investment, buoyed by favourable mortgage terms and current exchange rate advantages.

“With buyers returning in their droves, we can rest assured that these positive trends will continue for the remainder of the year.”

By Jessica Bird

Source: Mortgage Introducer

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UK house price growth to remain positive over the next quarter – Zoopla

The latest Zoopla House Price Index has been published, with the bulk of new pricing evidence coming from sales agreed before the lockdown.

Data on pricing for new sales agreed in the last four weeks is starting to feed through and points to a resumption in the upward pressure on house prices seen at the start of the year.

As an example, average asking prices for properties marked as sold on Zoopla, which were rising at 7% in the first three months of the year, have returned to registering a similar growth rate over the first two weeks of June.

Near-term outlook for house prices

Most of these new sales agreed are likely to complete between August and October 2020, which Zoopla expects will show sustained UK house price growth of between +2% to +3% over the next quarter, once they feed into the index.

While some have forecast annual house price falls over calendar year 2020, the portal expects any price falls in the house price indices only to crystallise in the final months of the year.

Economic impacts of COVID-19 to hit home in H2 2020

After an initial rebound, demand is expected to weaken over the summer months as the economic impact of COVID starts to materialise, with figures reported last week by the ONS indicating an acceleration in unemployment.

Caution amongst lenders and more limited availability of 90% loan to value (LTV) mortgages will reduce demand, particularly amongst first-time buyers who, over recent years, have been the engine of the housing market.

In 2019, a fifth of all homebuyers purchased a home with a deposit of 10% or less, so a decrease in the availability of 90%+ LTV mortgages could preclude this cohort of would-be buyers from entering the market, effectively reducing demand.

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Government and central bank support will continue to play an important role in how the economy fares with a knock-on impact for the strength of consumer sentiment.

Retail sales, for example, rebounded more than many expected in May.

While almost a fifth of mortgage holders have taken payment holidays, borrowers are able to take these up until the end of October 2020, meaning support is extended for the rest of the mortgaged sector up until April 2021.

Further support and innovation to support the economy and the housing market cannot be ruled out in these unprecedented times, which will limit the downside, albeit not completely.

Strongest sales rebound in northern cities

New sales agreed, subject to contract, have grown the most in England where the market is open for business.

The rebound in sales has been strongest in northern England, led by Leeds, Sheffield and Manchester where sales are up to 20% higher than in February 2020.

In cities where sales are not keeping pace with pre-COVID levels, including Glasgow, Newcastle and Cambridge, this is down to a lower supply of homes for sale.

Level of homes for sale (inventory) in these cities is significantly lower than last year.

While the new flow of homes for sale is back to pre-COVID levels, the number of homes for sale per estate agency branch is 15% lower than a year ago.

This is a result of the market closure at what is a busy time of year.

Stock levels in Cambridge, for example, are up to 40% lower year-on-year.

Zoopla says that the lack of supply supports their view of house price growth holding steady in the short term.

House price growth

UK house price growth is up 2.4% on the year, and has increased from 1.6% at the start of 2020.

The 20 city index registered slower growth over May, slowing to +2.1% from 2.4% in April as less pricing evidence dragged the growth rate lower.

The city with the highest rate of house price growth over the past 12 months is Nottingham (4.3%), followed by Manchester (3.9%).

Meanwhile, Oxford (-0.6%) and Aberdeen (-2%) have recorded modest price falls.

Regional momentum

Activity levels are expected to rebound in Scotland, Wales and Northern Ireland as these markets reopen and pent up demand is released.

These countries account for less than a fifth of UK housing sales but more activity will support headline measures of demand and market activity in the immediate term.

The Welsh market opened on Monday but demand for homes has been building since the English market reopened, gaining momentum over the last two weeks.

Demand for housing in Wales has now rebounded close to what has been recorded in England.

Sales agreed, however, remain 65% lower than pre-COVID levels in Wales as the physical viewing of property has not been permitted.

Zoopla expects sales volumes to increase over the rest of June and into July, mirroring the rebound in England.

Scotland’s market, which reopens later in June, has seen a similar trend with demand recently returning to pre-COVID levels, but with sales volumes lagging well behind.

Commenting on the findings Richard Donnell, Director of Research & Insight, said:

“The rebound in housing market activity has taken many in the industry by surprise.

“It is welcome news given the projections for falling economic growth and rising unemployment.

“Estate agents and developers are responding and using the upsurge in demand to rebuild their sales pipelines and open up their developments.

“We see returning pent up demand and new buyers entering the market creating upward pressure on prices in the face of a lower supply of homes for sale which has been exacerbated by the lockdown.

“House price growth is set to hold up in the near term and we expect the downward pressure on prices to come in the final months of the year as demand weakens.

“While the average asking price for homes marked as sold on Zoopla are 7% higher than a year ago this is down to an increase in sales in higher value markets where activity has remained subdued in recent years.

“We do not expect the rate of growth in the Zoopla House Price Index to reach this level, rather it is expected to hold steady at 2%.

“The Welsh housing market opened this week and levels of demand have already returned close to the levels seen in England in anticipation of the market reopening. Scotland, where the market reopens on 29 June has also seen demand rise back to pre-COVID levels but sales remain more than two thirds lower and are expected to rebound in the coming weeks.”

Source: Property Industry Eye

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Harlow in Essex leads the way on 10-year house price growth

In the past decade Harlow in Essex has recorded the highest house price growth, CashLady analysis of Land Registry data has found.

Over the period prices have risen by 74.92% in Harlow, followed by Southend-on-Sea (74.85%), Watford (74.75%), Thurrock (73.20%) and Cambridge (73.03%).

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In December 2019 prices in Harlow averaged at £290,068, up from £165,829 a decade before.

If prices continued to rise at the same rate they would reach £507,387 by 2030.

At the other end of the spectrum Aards and North Down in Northern Ireland saw prices fall by 7.73% in 10 years, followed by Aberdeen (-7.47%), Inverclyde (-5.81%) Mid and East Antrim (-5.32%) and County Durham (-5.18%).

BY RYAN BEMBRIDGE

Source: Property Wire