Rightmove “2021 forecast: 4% price growth as housing priorities outweigh uncertainties.”
NAEA Propertymark “Home buyers storm the market in hope of meeting Stamp Duty deadline.”
RICS “Sales market activity indicators remain positive albeit momentum continues to ease.”
Nationwide “Annual house price growth rose to a six-year high of 7.3% at the end of 2020.”
Halifax “House prices end 2020 at record high, but pace of growth has slowed.”
e.surv “Prices continue to climb despite the second lockdown.”
Hometrack “House price growth climbs to +3.9% – expected to plateau at 5% in 2021 Q1”
Kate says: The NAEA perhaps have some of the most startling facts this month from the indices, especially considering we had our second lockdown in England during November:
- Average number of prospective buyers registered per estate agent branch were at their highest since August 2004!
- Rather than falling in the run up to Xmas, the number of buyers registered were 29% higher than October.
- The average number of sales agreed per estate agent branch matched figures seen in 2002: 13 (vs 12 in October).
- This compares to the average number of sales in November 2018 and 2019 of seven – so a staggering 86% increase.
- In contrast, the number of properties available per member branch stood at 40 in November vs 39 in October. And with price rises for the year recorded of over 5% for most of the indices, Hometrack capture the reason succinctly: “Over the whole of 2020 we have recorded 40% more demand for housing than in 2019. The flow of new supply onto the market has been 4% higher than 2019 and this supply/demand mismatch explains why house price growth is increasing.”
The national views in detail
Rightmove “2020’s unanticipated market momentum sees prices finish 6.6% up on 2019 despite a fall of 0.6% this month.”
RICS “House prices continue to be driven sharply higher for the time being, with +65% of respondents citing a rise in the latest report. Indeed, the national net balance has now remained in a tight range of between +61% and +65% in each of the last four months, continuing to signal significant upward pressure on house prices across the UK as a whole.”
Nationwide “Annual house price growth accelerated further in December, reaching a six year high of 7.3%, up from 6.5% in the previous month. House prices ended the year 5.3% above the level prevailing in March, when the pandemic struck the UK.”
Halifax “House prices in December were 6.0% higher than in the same month a year earlier.”
e.surv “While we are seeing the rapid growth in house prices begin to slow month on month, prices are still up significantly year on year. The data shows that the average house price in November 2020 was 5.8% higher than in November 2019, making this a record-breaking year for yet another reason. This increase in prices continues to be fuelled by the Stamp Duty tax break, which will continue until 31st March 2021.”
Hometrack “The annual rate of UK house price growth has moved higher to +3.9% in November up from +1.3% a year ago. The 3-month growth rate peaked at 2% in September and has slowed, suggesting annual growth will start to plateau at c.5% in 2021 Q1.”
Regional house price indices
Kate says: The ‘norm’ for regional performance is usually to be extremely diverse, but according to the Land Registry data, (which does lag a couple of months behind), shows October prices are consistently up by 5 or 6% year on year, bar the East (+3.4%) and London (+3.9%).
RICS “London is the only region where house price inflation appears somewhat muted, with the latest net balance across the capital coming in at just +7% (down from +13% previously).”
Nationwide “England saw the highest growth amongst the home nations in 2020, with prices up 6.9%. This is a sharp contrast with 2019 when England was the weakest nation with minimal annual growth.
All regions in England saw prices rise over the year, within a fairly narrow range of 5% to 9%. The East Midlands was the strongest region in 2020, with prices up 8.6% over the year. The Outer South East region, which includes cities such as Brighton, Southampton and Oxford, saw a significant change in fortunes – prices were up 8% in 2020, following a 1% decline in 2019. The neighbouring Outer Metropolitan region, which includes places such as Slough, Guildford, Crawley and Chelmsford, was the weakest performing English region, but still saw prices rise by 5.6% over the year. Meanwhile, London saw a 6.2% increase, with average prices reaching their highest ever at £486,562.
“We also saw a marked rise in annual price growth in Northern England in the fourth quarter, in particular in the North West and Yorkshire & Humberside, where annual price growth increased to 8.0% and 7.7%, respectively.
“Wales saw prices rise by 6.6%, whilst Northern Ireland saw a 5.9% increase. Scotland saw the weakest growth of the home nations, with prices only up 3.2% in 2020. This contrasts with 2019, where Scotland ended the year on top, with growth of 2.8%.”
e.surv “This is the second consecutive month since February 2016 that all ten of the Government Office Regions (GOR) have simultaneously set a new record average house price. It is also the fourth month in a row in which all ten of the GOR areas have seen a positive movement in their annual growth rates.
“In October, the South West has climbed into first place, with 6.4% growth, deposing the South East, the previous month’s leader, into second position, with growth of 5.9%, which itself is marginally ahead of the North West, where prices are increasing by 5.8%. The largest increase in price growth in the month was seen in the East Midlands, where rates are now at 4.6%, compared to 3.2% previously.”
Hometrack “The impetus for house price growth is coming from northern England and Wales where affordability remains less of a barrier to price growth. Average prices in the North West are increasing at 5% followed by Wales and Yorkshire and the Humber (both 4.9%).”
Property transactions, demand and supply
Kate says: The figures for transactions – especially mortgages – are as incredible as they are for prices in 2020. Nationwide is saying: “The number of mortgages approved for house purchases each month reached their highest level for a decade in October, nearly 50% above the monthly average recorded in 2019. Indeed, by the end of October, the total number of mortgages approved for house purchase in 2020 was only 7% below the total recorded over the same period in 2019.” Which considering the market was locked down for almost two months is astonishing.
Halifax though, reports figures to be higher for more than a decade: “Mortgage approvals rose in November to the highest level seen in over 13 years. The latest Bank of England figures show the number of mortgages approved to finance house purchases rose by 6.7% to 104,969. Year-on-year, the November figure was 56.4% above November 2019.” (Source: Bank of England, seasonally-adjusted figures).
The Halifax data confirms why lenders are so busy and it explains the difficulties in securing mortgage statements etc when buying and selling, which can frustrate completions. We can only hope that by some miracle, lenders will have been able to ramp up their services so they can cope over the coming months for the industry and home movers to be able to move prior to the SDLT deadline – if the industry’s wish for a new year announcement of an extension isn’t granted.
Commentary from the indices
Rightmove “Despite the clock ticking, around 130,000 sales were agreed over the last month, up by a remarkable 44% on the same period in 2019. A month ago we said that there were a massive 650,000 sales agreed and in the pipeline, many of which will be aiming for completion before 31st March to qualify for Stamp Duty savings. One month on, and a month closer to that deadline, the figure remains at around 650,000 because 130,000 additional sales have joined the processing logjam and replaced the 130,000 completions or fall-throughs that have taken place in the last month.
“Demand has therefore exceeded supply in 2020 with the number of properties coming to market for the year to date down by 0.6% on the same period in 2019, and the number of sales agreed up by 8.3%. As a consequence, the number of available properties for sale is at a record low.”
NAEA Propertymark “The average number of sales agreed per estate agent branch stood at 13 in November which is a small increase from 12 in October. This is the highest figure recorded for the month of November since 2002, when the number also stood at 13. Year-on-year, the average number of sales agreed per branch has increased by 86 per cent, rising from seven in November 2018 and 2019. “The number of sales made to FTBs stood at 24 per cent in November, rising from 21 per cent in October. Year-on-year, this is a fall of four percentage points from 28 per cent in November 2019.
“The average number of house hunters registered per estate agent branch stood at 580 in November, up 29% on October and the highest number recorded since August 2004.”
RICS “In terms of new buyer demand, +15% of survey participants saw an increase in enquiries during December. Although still positive and therefore indicative of some degree of uplift in demand, this latest reading is down from +26% last time out and has now moderated in five successive reports.
“Meanwhile, the flow of new instructions being listed onto the sales market continued to pick-up over the month, albeit modestly, evidenced by +7% of respondents reporting an increase. Alongside this, the number of appraisals remains higher YOY, with December also coming in at +7%. Nevertheless, in both cases, these indicators have softened over recent months in another sign that momentum has eased of late.
Hometrack South of England leads the recovery in new sales and sales agreed continue to run ahead of last year by over 40%, in line with above average demand. Over the course of 2020 we have recorded 9% more new sales agreed than in 2019. These sales convert into completions after 3-4 months so a proportion of these new sales will not complete until 2021.
The rebound in sales has been strongest in the South East and Eastern regions where they are more than 20% higher than 2019. Sales agreed have lagged in Scotland, Wales and Northern Ireland as a result of longer market housing market closures than in England over the year.
What will the first part of 2021 hold for the housing market?
There are two key questions which need answering before we can know how the property market will perform, particularly in the first quarter of 2021. First is, will the market remain open? With daily Coronavirus figures looking increasingly scary and Kier Starmer calling for property viewings to halt, there are rumours the market might be closed.
Personally, I hope not, and bearing in mind the latest news from more stringent rules in Scotland haven’t closed the market, I am hoping the industry can continue.
Why should we continue?
There are many key workers carrying out essential activities and putting themselves at risk on a daily basis – and they have been doing that since April. Of course, the main pressure is on the NHS, but also on people in food retailing too, through to essential services such as the police.
Hopefully, the industry can continue to keep everyone safe while buying, selling, letting and renovating a home.
For me the home moving sector’s contribution to the Covid crisis is threefold. Firstly, people move for many reasons, but some of the key ones are death, divorce and debt, and there can be no doubt that Covid will have, sadly, increased the need for people to move and put the right roof over their head. Secondly, if home moving doesn’t continue, it’s difficult for construction of much needed new homes to carry on, and finally, while the government is racking up enormous debt, the home moving market is helping to put money back into the economy to help those adversely affected.
I hope that with the guidance put in place last year, the home moving industry can continue to keep everyone safe while buying, selling, letting and renovating a home.
The second question is will SDLT be extended? Much has been reported on the HBSG request to extend/taper the ‘guillotine’ of the 31st March as well as other companies and organisations. And if it’s to have the impact we need, this needs to be announced sooner rather than later. If we can secure an extension, it will help take the pressure off everyone this quarter, especially buyers and sellers, helping to avoid sales falling through if the deadline isn’t met. It would also help to encourage more strong moving activity this year which means we can, as a sector, help deliver more back to the economy.
Advice is fast moving at the moment, but let’s hope, with government support, we can continue to move people smoothly and safely in 2021.