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House prices increased 7.5% in the year to January 2021

Average UK house prices increased by 7.5% in the year to January 2021, according to the latest House Price Index by the Office for National Statistics (ONS).

Prices rose by the greatest margin in Wales, increasing by 9.6% to £179,000, this was followed by England, where prices rose by 7.5% to £267,000.

Prices in Scotland increased by 6.9% to £164,000, and in Northern Ireland to £148,000, up 5.3%.

The North West was the English region, which saw the highest annual growth in average house prices up 12.0%.

In contrast, the West Midlands noted the lowest at 4.7%.

Tahir Farooqui, chief executive of Canopy, said: “With a further increase to house prices comes an even bigger gap between hopeful first-time buyers and their new home.

“While the government is promoting a range of incentives such as 95% mortgages and a tapered end to the stamp duty holiday, it’s not addressing the true problem.

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“House prices are too high and securing an affordable mortgage is a pipe-dream for many.

“One way to put to good use the £64,000 of rental payments that the average tenant spends before buying their first home, is rent tracking.

“This means each monthly payment builds up their credit score, ensuring they have better access to financial products when the time comes to secure a mortgage. A strong credit score is a foundation for financial freedom.”

Rich Horner, head of individual protection at MetLife, added: “The market is finally breathing a sigh of relief with today’s data showing strong house price growth, that will only continue to be fuelled by the Chancellor’s move to extend the stamp duty holiday.

“For the next few months, at least, buyers will be encouraged to continue their property search and make moves before June.

“There still remains an element of worry around what the second half of the year looks like as the property market, and society more broadly, returns to a level of normality after more than a year of lockdown.

“But pent up demand and a supply shortfall will work in the favour of sellers to buoy property prices.

“However, at the lower end of the market a level of reservation could move in. For a significant number the events of the past 12 months have left them in an ambiguous financial position.”

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Miles Robinson, head of mortgages at Trussle, said: “Despite a slight fall in house prices month-on-month from December 2020 to January 2021, it’s important to note that house prices are still significantly higher than the same period last year.

“Traditionally, the property market is quieter at the beginning of the year and it’s Spring that tends to spark a change in buyer momentum.

“However, buyer demand has remained strong throughout 2021.

“At Trussle we saw a 15% increase in mortgage applications in January and a 17% increase in February, when comparing the same periods year-on year.

“The recent Budget announcement confirming an extension to the stamp duty holiday, as well as a 95% mortgage guarantee scheme is likely to continue to boost buyer demand.

“This in turn could elevate house prices even further.”

By Jake Carter

Source: Mortgage Introducer

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UK house prices end 2020 on record high but growth slows

UK house prices ended 2020 on a record high, but the pace of growth slowed towards the end of the year, the latest figures showed.

House prices in the UK were 0.2 per cent higher in December than the previous month, reaching an average value of £253,374.

On an annual basis, property prices jumped six per cent compared to December the previous year due to the release of pent-up demand following the first Covid-19 lockdown in March, according to analysis by Halifax.

The rate of growth recorded last month slowed from the one per cent rise reported in November.

Analysts warned that the end of Help to Buy and the stamp duty holiday, combined with escalating unemployment, could have a downward impact on prices this year.

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Russell Galley, managing director at Halifax, said 2020 had been a “tale of two distinct halves for the housing market.”

“Following a strong start, the first half was dominated by the restrictions on movement due to Covid-19, and prices were subsequently down 0.5 per cent at mid-year as the market effectively ground to a halt,” Galley said.

“However, when the market reopened, prices soared as a result of pent-up demand, a desire amongst buyers for greater space and the time-limited incentive of the stamp duty holiday.”

He added: “With the pace of the UK’s economic recovery expected to be constrained by the renewed national lockdown, and unemployment widely predicted to rise in the coming months, downward pressure on house prices remains likely as we move through 2021.”

Howard Archer, chief economic adviser to the EY Item Club, predicted that UK house prices could be five per cent below current levels by the end of the year.

“The EY Item Club suspects elevated housing market activity and robust prices will prove unsustainable sooner rather than later – although, in the immediate future, activity may still benefit from buyers keen to take advantage of the Stamp Duty threshold increase before it ends,” he said.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“There is always the possibility that the chancellor could extend the threshold increase in the March Budget.”

He added that the housing market is “likely to come under mounting near-term pressure as the economy continues to be affected by restrictions in most areas”.

“There is also likely to be a fading of the pent-up demand effect on housing market activity,” he said.

By Jessica Clark

Source: City AM

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UK house prices up 7.3 per cent – strongest annual growth in six years

UK house prices enjoyed their strongest annual growth for six years in 2020 as the market was spurred on by tax breaks and changing demand amid the pandemic, according to latest figures from Nationwide Building Society.

The average UK house price jumped 7.3 per cent this year to £230,920 after rising 0.8 per cent in December alone.

Broken down by region, England saw prices rising 6.9 per cent year-on-year in the fourth quarter.

Wales was the next best price performer, with a 6.6 per cent rise, followed by Northern Ireland (up 5.9 per cent) and Scotland (up 3.2 per cent).

The report revealed that prices have jumped 5.3 per cent since March, when the pandemic struck, after demand was sent surging by a stamp duty holiday and the shift to homeworking.

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Nationwide said the stamp duty boost had brought forward people’s home-moving plans, while changing working patterns had increased demand for larger homes in less densely populated locations.

Robert Gardner, Nationwide’s chief economist, said: “The resilience seen in recent quarters seemed unlikely at the start of the pandemic.

“Indeed, housing market activity almost ground to a complete halt during the first lockdown as the wider economy shrank by an unprecedented 26 per cent.

“But, since then, housing demand has been buoyed by a raft of policy measures and changing preferences in the wake of the pandemic.”

However, he added that the outlook for the housing market remains “highly uncertain” as restrictions to control the virus tighten across the UK and with government support measures and the stamp duty holiday set to end in the spring.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

He said: “Housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”

Howard Archer, chief economist at the EY Item Club, also warned that the property market will see a reversal of fortunes in 2021 and could fall by around 5 per cent by the end of next year.

He said: “We believe that the housing market is likely to come under mounting near-term pressure as the economy is hampered by pandemic-related restrictions, while there may well still be a significant rise in unemployment despite the furlough scheme being extended until April.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: “We are in a very different place now as optimism following the initial rollout of a vaccine and the possibility of a Brexit deal has been replaced by realisation that the effects of the virus will get worse before they improve, as well as recognition of the negative impact on confidence and values.

“However, the determination of the overwhelming majority of buyers and sellers to conclude sales agreed prior to Christmas, relatively few price renegotiations and approval of the Oxford/AstraZeneca vaccine bodes well, provided present constraints prove relatively short term.”

Source: The Irish News

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2021 house price growth to reach 4%

House prices should inflate by 4% in 2021, Rightmove’s House Price Index found.

The firm said housing will be a high priority for people but price rises for newly marketed properties should be more modest than this year.

Prices this year have jumped by 6.6%, while the first quarter of next year is expected to be very busy due to the stamp duty deadline.

After that however it’s expected that things slow down, though cheap mortgage rates should continue to support the market.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Interestingly, Rightmove is forecasting solid price growth for 2021, despite activity clearly slowing as 2020 draws to a close.

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“At the coalface, we are experiencing much the same but expecting a busy first quarter as buyers and sellers rush to take advantage of the stamp duty concession. However, we don’t anticipate a cliff-edge scenario at present.

“Nearly all sales agreed seem to be proceeding to exchange of contract, unless exceptional circumstances prevail and prices are not being widely renegotiated in anticipation of a market fall due to Brexit, the pandemic or potentially worsening economic news.”

The possibility of the stamp duty holiday being extended was discussed once again.

Sam Mitchell, chief executive of online estate agent Strike, said: “It’s hard to predict what will happen in the next few months, particularly with so much uncertainty around Brexit deal talks and rising unemployment levels as a result of the pandemic.

“However, people’s increased home working flexibility and desires for more space and rural locations is likely to keep demand ticking by. Plus, the recent breakthrough with the vaccine news has injected a newfound confidence in those who might have been on the fence about buying or selling.

“There’s no doubt that the government will also continue its commitment to the country’s economic recovery with continued support for the UK property market included.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“Who knows, maybe they’ll consider an extension to the stamp duty scheme or turn their focus back to helping first time buyers get a foot onto the property ladder.”

Tomer Aboody, director of property lender MT Finance, said: “What a crazy year it has been for the property market, one which has to go down on record as the biggest rollercoaster in terms of market sentiment, transaction numbers and even a complete standstill.

“Whether we ever see this again, who knows but what is for sure is that buyers’ demands and priorities have changed. Space is at a premium, with families especially prioritising the commuter belt and local village amenities.

“Confidence is set to continue for the first quarter of next year until the furlough scheme ends and possibly stamp duty relief at the end of March. Thereafter, we are at the government’s mercy – will it extend the stamp duty holiday and extend the feel-good factor for the market?”

BY RYAN BEMBRIDGE

Source: Property Wire

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UK house prices grew at fastest rate since 2015 in November

UK house prices grew at an annual rate of 6.5 per cent in November, the fastest rate since January 2015, as the sector batted off the second national lockdown.

According to Nationwide’s house price index, prices also increased on a month-on-month basis to be up 0.9 per cent compared to last November.

As a result, the average house price in the UK now stands at £229,721, up from £227,826 last month.

Nationwide said that despite the second lockdown, which has seen economic activity shrink in other sectors, the housing market has remained “robust” through November.

Property transactions hit 105,600 in the period, the highest since 2016, while mortgage approvals reached their highest levels since 2007.

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Robert Gardner, Nationwide’s chief economist, said: “The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy.

“Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

“However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: ‘These figures feel like the storm before the calm as buyers and sellers rushed to take advantage of the stamp duty holiday before the March deadline, despite continuing Covid restrictions in October, the possibility of a no-deal Brexit and economic growth stalling.

‘That frenzy has been since replaced by a quieter, but just as determined mood to complete sales previously agreed. We don’t see any signs either of significant price adjustments, irrespective of whether there is an extension to the stamp duty holiday, with activity continuing to be supported by a shortage of listings and longer-term low interest rates.’

Housing market set to come under pressure

EY Item Club’s chief economist Howard Archer warned that the elevated levels of activity in the market were unlikely to last.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“The EY Item Club suspects that house prices could be around 5 per cent lower than now by mid-2021″, he said.

“The housing market is likely to come under mounting near-term pressure amid rising COVID-19 cases and lockdown restrictions, while there is likely to be a significant rise in unemployment even though the furlough scheme has been extended until March. Meanwhile, earnings have been limited and are likely to remain so.

“There is also likely to be a fading of the pent-up demand effect on housing market activity, while pandemic-related restrictions may also have some dampening impact on the housing market and consumer confidence.

“Indeed, consumer confidence declined further in November to be at a six-month low, which may increase the caution of many people in making major spending decisions.

Nationwide’s figures came after banker Halifax revaled that consumer confidence in the housing market had shrunk last month.

Just 14 per cent of people surveyed by Halifax said that they believed their home had become more valuable this month, compared with 17 per cent in September and October.

Despite the slip, the figure remains high above the four per cent recorded during the first national lockdown in May.

By Edward Thicknesse

Source: City AM

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Less than 20% of Britons think house prices will fall next year

An estimated 19% of individuals believe that UK house prices will fall next year according to the latest ING International Survey.

In contrast, 42% think house prices will rise in next 12 months.

The data also outlined that 35% of homebuyers in the UK offered a lower amount for their house than the asking price, compared with 30% in Europe.

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Over half (54%) of Britons spend three months or less looking to buy a home before purchase.

Additionally, the survey noted that 57% of those in the UK think that it has become more difficult to get on the housing ladder since 2015.

The survey results were based off of 13,000 respondents across Europe.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

James Smith, economist at ING Developed Markets, said: “The surprising post-lockdown resilience in the UK housing market has translated into relative optimism among British consumers.

“But this sentiment could be tested as we head into 2021.

“The anticipated end to the stamp duty holiday is set to coincide with a rise in unemployment over the winter, both of which are likely to put renewed pressure on house prices next year.”

By Jake Carter

Source: Mortgage Introducer

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UK house prices increase by 2.5%

UK house prices rose by 2.5% over the year to August elevating the average property in the UK to £239,000, data from the Land Registry has revealed.

The latest index, which is based on completed transactions and is published by the Office for National Statistics, offers a picture of the market in the month after the stamp duty holiday was introduced.

It shows average prices were £6,000 higher in August than at the same time in 2019 and highlights the East Midlands as the English region which experienced the highest annual growth with prices rising by 3.6%.

Nicky Stevenson, managing director at estate agents Fine & Country, said: “Here is official confirmation that the market did indeed get up to a canter over the summer months.

“The annual rate of growth soared as buyers frustrated by lockdown and lack of space crammed into the market in search of larger properties. That alone explains this year’s sudden rally, as the stamp duty holiday was only introduced in July.”

Stevenson explained the lag in this data being released would mean any extra demand the stamp duty relief created would not be seen in the Land Registry figures before the end of the year.

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The data also showed UK house prices have risen 0.7% since July 2020. In London prices were still on the rise, increasing by 0.9% since July 2020 and by 3.5% annually taking the average property value to £489,159.

Transactions level with 2019

HMRC data also published today revealed UK residential transactions in September 2020 were at 98,010, which were similar to the September 2019 figures. They were just 0.7% lower than the same month last year and 21.3% higher than August 2020.

Anna Clare Harper, CEO of asset manager SPI Capital and author of Strategic Property Investing, explained transaction data was of interest because it represented a more complete picture than comparable indices.

“What’s interesting about the September 2020 data is that transaction volumes are on a par with transactions in September 2019,” she said.

“This suggests that the temporary changes to stamp duty designed to boost confidence in the housing market have worked well to achieve this goal. There are very few sectors where buyers and sellers feel as confident as they did in September 2019.

“What happens next will be a reflection of policy and economics. Trade bodies such as RICS, as well as government policy makers, will play a significant role in the future of the housing market, as they have in the story that has played out so far in 2020.

“For potential home buyers and investors, the key will be not taking on too much credit, despite the relatively cheap cost of debt at present, as it is very difficult to forecast what will happen next.”

By Kate Saines

Source: Mortgage Finance Gazette

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UK house prices stage rapid recovery in third quarter

UK house prices enjoyed their strongest quarterly increase since before the financial crisis in the third quarter as lockdown restrictions eased.

Prices rebounded quickly in the third quarter after the broadbased closure of the market during the previous quarter.

Prices rose 3.3 per cent in the three months to September, according to the Halifax Property Index, the strongest increase recorded since the end of 2006. On an annual basis prices were 5.5 per cent higher, the sharpest rate of inflation since the final quarter of 2016.

The housing market has been buoyed by government interventions such as the stamp duty holiday introduced over the summer.

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And last week Boris Johnson announced plans to turn “generation rent” into “generation buy” by allowing people to purchase homes with a five per cent deposit.

Paul Smith, economics director at IHS suggested the resurgence in prices was also due to “strong demand driven by a desire for more space – either as a reaction of the lockdown or the structural economic effects of increasing home working”.

The upturn in prices meant the standardised house price edged close to the £250,000 mark during the third quarter. Price inflation has picked up across all buyer and property types, with existing property inflation – 5.8 per cent – outstripping that of new houses – +4.1 per cent.

Properties in greater London remain comfortably the most expensive, with the typical house now costing more than £500,000 and around 1.5 times higher than in the South East.

Wider economic issues, particularly the rise in unemployment due to coronavirus, suggest activity and the rapidly rising prices are unlikely to be sustained.

The recent rise in prices has led to a tightening of affordability constraints, with the house price-to-earnings ratio reaching a record high level of 6.5 by the end of the third quarter.

It surpassed the previous records of 6.4 set prior to the financial crisis.

Unsurprisingly London has the highest ratio of close to 9, and the immediate regions surrounding the capital, with ratios all above 7, where affordability remains a key issue.

By Angharad Carrick

Source: City AM

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UK house prices jump again in September as market defies gravity

UK house prices rose at the fastest pace in four years in September despite the raging coronavirus pandemic as people working from home sought more space, according to the Halifax house price index.

Yet the lender said it is “unlikely” that the British housing market will “remain immune” to the historic economic slowdown.

House prices grew 1.6 per cent month on month in September, Halifax said, after climbing by the same amount in August. The rise took the average price to a new record high of £249,870.

Properties were worth 7.3 per cent more on average than they were a year earlier, the biggest year-on-year rise since June 2016.

However, Halifax said the annualised figure was flattering because the property market was subdued a year ago due to worries over Brexit.

Russell Galley, managing director at Halifax, said the housing market had been “extremely strong” since restrictions on it were lifted in May.

“There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space,” Galley said.

He added that “the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March”.

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Rising house prices are the UK’s ‘iron lung’

Chancellor Rishi Sunak in July raised the threshold at which stamp duty is paid to £500,000 until the end of March 2021. Analysts say the policy has combined with demand that built up during lockdown to fuel buying.

North London estate agent Jeremy Leaf said: “These figures very clearly show the impact of pent-up demand, the stamp duty holiday and low interest rates on the market post lockdown.”

Lucy Pendleton of estate agents James Pendleton said: “The often frothy Halifax index has lived up to its reputation and is pushing the bounds of credibility here.

“However, it underlines just how much the housing market has become the economy’s iron lung of late, while its other vital signs flash amber at best.”

Yet Leaf said that “demand has lost a little momentum over the past few weeks”. He put this down to “the resurgence in Covid-19 and new restrictions on businesses… making some buyers a little more nervous”.

Coronavirus cases have risen sharply in the UK in recent weeks. It has caused the government to put vast swaths of the country in local lockdowns.

Sunak produced a new package of economic support in September. But he confirmed that the furlough scheme – which has supported around 10m jobs – would end this month.

Economists say rising Covid cases and unwinding government support are likely to weigh on UK house prices towards the end of the year.

House prices could fall by five per cent

Halifax’s Galley said: “It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic.”

Howard Archer, chief economic advisor to the EY Item Club, said the housing market “will come under increasing pressure over late-2020 and the early months of 2021”.

He said there is likely to be “a significant rise in unemployment and waning pent-up demand”.

Archer said UK house prices could be around five per cent lower by mid-2021 than they are now.

“The EY Item Club expects housing market activity to gradually improve over the second half of 2021,” Archer said.

“Very low borrowing costs should also help matters with the Bank of England unlikely to lift interest rates from 0.10% during 2021.”

Source: City AM

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House prices rise as appeal of gardens and space grows

Housing market activity in the region continued to rise in August, as those looking to take advantage of the stamp duty holiday continued their search for a new home.

Sixty-three per cent of respondents reported an increase in buyer interest across the West Midlands over the month, according to the August 2020 RICS UK Residential Survey.

However, the longer-term view remains more cautious.

As buyer enquiries continued to rise, the number of new properties listed for sale also increased, with a net balance of plus 26 per cent of survey participants noting an increase in vendors listing property to sell.

Consequently, strong growth in agreed sales was cited for a third successive month, with a net balance of plus 52 per cent of contributors seeing a pick-up.

Looking ahead, near term sales expectations for the West Midlands remain positive, but 12-month sales projections are still in negative territory, with the net balance coming in at minus 12 per cent.

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Anecdotal evidence suggests concerns over the broader economic climate continue to drive this subdued assessment.

Meanwhile, the pandemic is expected to cause a lasting shift in the desirability of certain property characteristics, as eight per cent of respondents, nationally, anticipate demand increasing for homes with gardens over the next two years.

Seventy-nine per cent predict rising demand for those properties near green space, while a net balance of plus 68 per cent foresee a rise in the desirability of properties with more private/less communal outside space.

Turning to house prices, the August survey feedback points to a sharp acceleration in house price inflation.

Across the region, a net balance of plus 52 per cent of respondents reported an increase in prices, the strongest reading since September 2018.

This is up from a net balance of plus 49 per cent in July and marks a turnaround compared to the reading of minus 27 per cent registered back in May.

Simon Rubinsohn, RICS chief economist, said: “The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months.”

By James Pugh

Source: Shropshire Star