Home » Features » Onwards and upwards
Housing Market

Onwards and upwards

With the Spring Budget behind us, and a nicely tapered Stamp Duty holiday ahead, it’s all looking up, says Kate Faulkner of Designs on Property.

Kate Faulkner

Link to Property Prices

Headlines

Rightmove “Upwards price pressure resumes as demand grows while new sellers pause.”

NAEA Propertymark “Stamp Duty holiday continues to encourage house hunters as demand increases by two fifths.”

RICS “Lockdown still weighing on sales market activity somewhat, but forward-looking indicators improve.”

Nationwide “Annual house price growth rebounds in February.”

Halifax “Housing market slows in February but average price holds steady.”

E.surv “Continued price increases in February – annual rates reach 8.6%.”

Hometrack “Demand for housing remains elevated, +12.4% higher than this time last year.”

Kate Faulkner imageKate says: While we thought we were all heading for a nightmare guillotine at the end of March in the property market, thank goodness the Treasury listened to all those who worked hard to raise the issue of ending Stamp Duty so abruptly. When other markets have been closed down for nearly a year and some people have received no help throughout the pandemic, the property industry has thrived.

Thank goodness the Treasury listened to all those who worked hard to raise the issue of ending Stamp Duty so abruptly.

And although some reports are showing a slowing of activity, most agree that those interested in home moving this year is still higher than previous years, and this growth in demand isn’t likely to stop any time soon. The bigger issue is, the number of properties for sale is quite low, and as the Rightmove figures show, part of this is because families will not want to sell while they are having to home school.

Link to Property Prices

Hopefully over the coming months, more sales will come to market to help balance supply and demand as shown by the Hometrack graph. Hopefully, with the year ‘settled’ for the property market now in terms of SDLT, over 100,000 sales have been saved and, although not many new sales will be able to take advantage of the latest extension, the additional announcement of 95% lending coming back into the market has certainly sparked even more interest in moving this year.

Link to Property Prices

The national views in detail

Rightmove
“After three consecutive monthly falls the average price of property coming to market surprisingly increases by 0.5% this month, as upwards price pressure resumes.”

Nationwide
“February saw the annual rate of house price growth rebound to 6.9%, from 6.4% in January. House prices rose by 0.7% month-on- month, after taking account of seasonal effects, more than reversing the 0.2% monthly decline recorded in January.”

Halifax
“Having enjoyed an extremely strong period of activity in the second half of last year, the housing market continued its softer start to 2021, with average prices down very slightly (-0.1%) compared to January. However, with annual house price inflation currently at +5.2%, property values remain comfortably higher than 12 months ago, when February was the last full month before lockdown.”

E.surv
“House prices in February continued to advance, rising by 8.6% in the last year.”

Principality
“Average house prices in Wales in 2020 topped £200,000 for the first time, with record high house prices seen across most parts of Wales and all property types. Annual house price inflation was 8.2% last year, the strongest in 15 years, with double-digit percentage increases in prices in a third of local authorities.”

Hometrack
“House prices climbed by 0.3% in January, taking the annual rate of growth to 4.3%, matching the highest rate of growth since April 2017.”

Link to Property Prices

Regional house price indices

Kate says: Some astonishing figures are coming out from all the indices of the huge growth in property prices and of course, the continued variations. The largest rises are being recorded by Land Registry which published four areas being in double digit growth: North West, Yorkshire & Humber, East Midlands and the South West. London lagged behind with ‘only’ 3.5% growth year on year. This level of performance is way in excess of what we’ve seen over the last few years. On a quarterly basis, the figures are even higher, with E.surv showing data that some areas, such as the North West, Blackburn with Darwen, saw a 23% rise and the East Midlands, including Nottingham City, grew at 18%. The South West saw annual house price growth in the last quarter of 2020 rising by over 18%.

And all this growth was despite the fact the economy fell by in excess of -10% in 2020, so property has really bucked the trend during the pandemic.

RICS
“At the regional level, respondents across all parts of the UK noted some degree of price growth in the latest results, with Wales, the North of England and Northern Ireland all exhibiting particularly strong readings. Moreover, whereas survey participants reported a slight pull-back in London house prices last month, the latest net balance rose to +20% across the capital.

“Alongside this, twelve month price expectations picked up, with the UK-wide net balance climbing to +46% from +30% last time. All UK regions/countries are now expected to see an increase in prices over the year to come, with contributors in Northern Ireland and Wales appearing most confident that prices will be higher in a year’s time.”

E.surv
“There has been widespread price growth across Wales and all nine English regions. Once again, all ten Government Office Regions (GOR) have simultaneously set a new record average house price, and it is the seventh month in a row in which all have seen a positive annual growth rates.

“The South West has the highest annual house price growth, of 15.3%, and with areas within it such as Bournemouth, Cornwall and Gloucestershire all experiencing price growth in excess of 20%. This month, the North West and the East Midlands retain their second and third positions, with growth rates of 11.5% and 11.2% respectively. In the North West, Blackburn with Darwen had the highest annual rate, of 23.0%, while in the East Midlands, Nottingham City came highest at 18.1%.

“By contrast, the South East, the East of England and Greater London have the lowest rates of increase, probably indicating that the movement from inner and central London to the Capital’s suburbs has largely run its course.”

Hometrack
“Price growth at a country and regional level ranges from 2.8% in London to 5.5% in the North West of England and 5.6% in Wales.”

Property transactions, demand and supply

Kate says: Having seen such incredible supply and demand growth in 2020, the fear of trying to get movers ‘over the line’ in time to meet the SDLT deadline has been worrisome from the start of the year, and we know everyone is pretty much exhausted from the huge amount of extra work in the second half of 2020.

And for those that were thinking the push towards the end of March would mean a bit of a break from April onwards, that doesn’t seem to be the case at all.

Hopefully, with kids going back to school and the lockdown starting to end, if all goes well on controlling the pandemic through the vaccination programme, then more supply will come to the market and with a steadier time likely from March onwards, everyone can look forward to another good year this year, delivering back much needed growth to the economy.

Rightmove
“Buyer demand was ahead of the same period in 2020 throughout January, and is even stronger in all key metrics for the first week in February compared to a year ago. Despite the very minimal chance of benefitting from the Stamp Duty savings, the number of purchases agreed is currently up by 7%. The pipeline for future sales is looking even stronger, with the number of prospective buyers sending enquiries to estate agents up by 18%, and the number of visits to Rightmove up by 45%. This high buyer demand is outstripping new supply and helping to edge up prices despite the challenging economic backdrop.

“The number of new sellers coming to market is 21% down over the last four weeks when compared with the prior year.

NAEA Propertymark
“The average number of sales agreed per estate agent branch stood at 10 in January which is an increase from eight in December. This is the highest figure recorded for the month of January since 2007, when the number stood at 13.

“The number of sales made to FTBs remained the same at 23 per cent in January. Year-on-year this is a decrease of six percentage points from 29 per cent in January 2020.

“The number of properties available per member branch stood at 38 in January, rising from 33 in December.

“The average number of house hunters registered per estate agent branch stood at 487 in January, which is an increase of 40 per cent from 348 in December. Year-on-year, this is a 27 per cent increase from 382 in January 2020.”

RICS
“The results point to another slightly softer month for sales market activity, albeit this is following an especially strong second half of 2020. In particular, current lockdown restrictions appear to be deterring new vendors putting their homes up for sale. However, forward looking metrics have shown some improvement, with sales expected to rise modestly over the coming three months. Interestingly, over three-quarters of the survey sample was gathered prior to the Chancellor confirming that the Stamp Duty holiday would be extended.

“At the national level, new buyer enquiries came in at -9% in February. Although this is the second consecutive negative monthly figure, it is noticeably less downbeat than the reading of -29% in January. Meanwhile, new instructions also fell for a second month in succession, evidenced by -29% of contributors reporting a decline (which compares to -40% in January).”

Principality
“Wales has not experienced the usual seasonal slowdown, with December sales continuing at the high levels seen in the months of October and November. Indeed, with the Land Transaction Tax holiday due to end in the spring of 2021 there was a considerable stimulus effect in place with buyers clamouring to complete and exchange as soon as possible.

“There had been a strong spike in agreed sales after the first lockdown was lifted, and while actual sales in Q3 were still a third below the levels of a year earlier, we estimate that transactions climbed to 12,000 in Q4. Overall transactions were down by 21% in.”

Link to Property Prices

Kate says: Buyer demand has remained strong through the first six weeks of 2021. It is up 12.4% compared to the same point last year – when demand rebounded after the General Election result in December 2019. The flow of new buyers comes despite the imminent ending of the Stamp Duty holiday.

Everyone can look forward to another good year this year, delivering back much-needed growth to the economy.

Robust levels of demand signals the continuation of a trend that we have highlighted since the summer last year. While Stamp Duty has prompted higher levels of activity, there is still a cohort of buyers and movers who are looking for a new home after a reassessment of how and where they are living after repeated lockdowns, and the rise of working from home. The data points towards a ‘search for space’ among some buyers. As demand remains high, the number of homes being listed for sale is not keeping pace, putting sustained upward pressure on pricing.

Regional imbalances

The mismatch between supply and demand is still evident in most regions across the country, as shown in the chart below. Demand levels in the North East are running more than 40% higher so far this year than over the same period last year, while new supply has shrunk.

The exception is London, where demand levels have fallen year-on-year. However, there is a caveat here. Demand levels in London may be down 17% on an annual basis, but this is compared to a period in 2020 when there was a major surge in activity after the Election result in December 2019.

KATE’S COMMENT

Spring-loaded Budget

 

Link to Property Prices

 

While listening to the Budget, I could hear huge sighs of relief, especially from the 100,000+ movers who were very worried their purchase might not go through in time for the SDLT holiday. On the other hand, the industry probably gave a sigh of relief, then a sharp intake of breath knowing some new cliff edges had been created and there will be little time off certainly until the end of June 2021.

However, I think this is better than being in the situation those in the catering and hospitality industry are in, and I think the remarkable strength of the property market – both in sales and lettings – will help to keep the market buoyant for some years to come.

The remarkable strength of the property market, both in sales and lettings, will help to keep the market buoyant for some years.

The reality is we are in for a pretty exciting year. Market wise, demand seems to have gone through the roof again and will remain in positive territory probably until the summer – bearing in mind it’s unlikely we’ll repeat the strength of the 2020 market in the second half of the year this year, both boosted by the SDLT extension and the government’s support for 95 per cent LTVs from April.

Link to Property Prices

Savills forecast

Savills have been the first off the blocks to assess the impact of these policies with their new forecasts for this year, and let’s bear in mind how pessimistic everyone one was this time last year:

Interestingly, although the forecasts have changed to positive for this year, the five-year forecast hasn’t changed that much, so it’s really ‘bringing forward’ some of the future growth expected, which is good news for buyers and sellers as it makes for a steadier moving market over the next few years.

Critical for success this year will be:

1 Making sure new home movers are aware the June deadline may not be achieved and they need to have their SDLT available, just in case

2 Securing more sales to match the enormous increase in demand.

In addition, there are some exciting new steps being taken, such as ‘sales ready’ or ‘contract ready’ packs and the ‘BASPI’, all of which aim to reduce the time it takes to sell a home and the number of fall throughs.

Finally, there are some great new prop tech initiatives, such as Property Log Books, digital ID and signatures, and many more that could genuinely make home moving a much more guaranteed process.

If we can achieve good transaction levels, small rises in prices to encourage people to buy and sell and a more streamlined moving process for both consumers and the industry, that would really be a remarkable outcome following this very harrowing pandemic.

April 28, 2021

What's your opinion?

Please note: This is a site for professional discussion. Comments will carry your full name and company.

This site uses Akismet to reduce spam. Learn how your comment data is processed.