Agents have universally welcomed new Nationwide data showing annual price growth picked up to 5.0 per cent last month - the highest rate since autumn 2016.
According to the figures, prices rose 0.9 per cent month-on-month after taking account of seasonal factors.
Robert Gardner, Nationwide's chief economist, comments: "Housing market activity has recovered strongly in recent months. Mortgage approvals for house purchase rose from around 66,000 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 the 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."
The latest Nationwide research also shows some people having put off moving home because of the pandemic: of those considering a move pre-Coronavirus, 19 per cent have put plans on hold, with just over a quarter citing worries about the property market.
Gardener adds: "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.”
In response, London agent and former RICS residential chairman Jeremy Leaf says: ”There’s little sign on the ground yet that this report and others which have emerged recently reflect the calm before the storm and a fizzling out of the mini-boom. Certainly increased restrictions and the unwinding of the furlough scheme will have some impact on confidence but not much at the moment.
“Of just as much concern to our buyers, and particularly those vital first-time buyers, is mortgage accessibility with lenders running the risk of reducing activity in the market at a time when it is so vital to the economy generally.”
Meanwhile Marc von Grundherr of Benham and Reeves agency cautions: “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.”
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The chances of house prices dropping from about Feb 2021 has to be well aver 50/50. Show me one point in history when unemployment has been as high as it will be and house prices keep on rising....Cycles may widen but will always remain. Confidence in the lat 10 days has definitely dropped and so has the number of proceedable buyers - all indicators of the months ahead unless there is more stimulus. In my view the stamp duty holiday has just increased the risk of a big drop in volumes and then prices next year.
The stamp holiday was too short with transactions times the length they are, perceived too generous, creating too much frenzied activity and crazy house price inflation, hence lenders have quickly battened down the hatches. Whilst good for stakeholders, like any quick fix, they end and you have to deal with the cliff edge, but thats's not the only consideration.
When the cebr is predicting house price deflation of 14% next year, furlough ending/unemployment rising, the brewing social housing/PRS crisis, another 6 months of CV19, inevitable tax rises, and possibly leaving the EU on WTO rules, the government needs to be implementing measures with this possible nasty cocktail of confidence draining events on the horizon in mind, that give some steady sustained stimulus and activity through 2021 and 2022 and into 2023.
Let's hope this wasnt some high octane gimmickry for a few weeks before austerity starts and they avoid the temptation to allow the 2024 general election to start to influence the timing of these decisions in lieu of what is right for the economy over the medium and long term. They will have one eye on that already though.
Has Jeremy Leaf ever said a negative word about the UK property market?
UK Government is borrowing about £30 billion a month (Likely £300 bil. per annum) to prop up the UK economy and housing market. While we collectively struggle with Covid, lock-down, redundancies, companies closing down, 20% drop in GDP and that's before we even consider Brexit.
UK property is not immune and values are already too high... just a matter of time
'unless there is more stimulus' someone writes above. This Government is drunk on debt so it can't be ruled out, HOWEVER, all this will achieve is to inflate the bubble needlessly further. It's all going to end in tears, it's just a matter of how close we are to this point.
If something needs constant medication, chances are it's not well. Medication may alleviate the illness and give the impression of normality. It may delay death but if there is no cure, the removal of the medication brings the reality of fragility sharply into focus.
The housing market appears to be heavily medicated. A rise in property prices may be a false positive as an indicator of health. The idea that all is normal because the graph is pointing up is possibly a distraction from what is really happening.
The delay in what's going at the coalface today is rarely reflected in this historically correlated data.
I worked through the boom of the eighties and the recession of the early nineties. I remember house price drops of 40%, negative equity and repossessions. That was 30 years ago. The challenge will be that estate agents and homeowners either didn't experience this or don't believe it could happen again...
I too worked during those periods (And the mini 'sag' in 2003)and the GFC 2008/09) and history will repeat itself. Economic Cycles may be manipulated, but remain cyclical.
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