The latest Nationwide House Price Index figures revealed,the UK house prices have seen an annual increase of 5%, the highest growth since September 2016.The average house price is now standing at £226,129.The figures also revealed that month-on-month prices have increased by 0.9%.
Commenting on reasons for the increase, Robert Gardner, chief economist at Nationwide, said:
“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 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.”
Prices have risen after the lockdown restrictions eased in May. Mortgage approvals for home purchases hit 84,700 in August, the highest level since 2007 and well above the 66,300 approved in July, according to Bank of England data published on Tuesday.
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Richard Donnell, head of research at property portal Zoopla said:
“These averages are useful for macroeconomic analysis but for your average homeowner, it’s what’s happening locally that matters.”
“There’s thousands of housing markets out there, each with their own distinct trend, and there’s parts of the country where the market remains weak.”
Nationwide’s analysis found younger people were far more likely than older buyers to be putting off plans to move, with concerns around job security and future price falls causing many to hesitate.
Existing property owners, meanwhile, account for a growing proportion of the market, with shifting lifestyle preferences one reason for moves. Nationwide’s survey reported that more than a third of buyers were looking to relocate. Rest 30 per cent said they were seeking homes with more outdoor space.
Further,the government’s furlough scheme will end in next month and likely to result in a spike in unemployment. It’s replacement, the job support scheme, is a less generous measure and will not protect all jobs, warned Sunak.
With coronavirus rates rising rapidly, Prime Minister Boris Johnson has also introduced new local lockdowns. Boris warned that restrictions could last a further six months, raising questions for the economy.
Moreover, the stamp duty holiday, introduced in July, is due to end in March next year. This is one of the reasons behind the current spike in prices and transactions.
Despite the dangers ahead, some experts believe the market will be stronger than expected next year.
Savills, the estate agency, revised its price forecasts upwards on Tuesday. They anticipated a 5-10% fall in prices in the months following the UK’s lockdown in March. The company now predicts prices will rise 4% this year and plateau in 2021.
They are hoping there is no second shutdown of the housing market and that a vaccine becomes available next year.
“The pace of change in the UK housing market has taken us all by surprise over the past few months, suggesting normal rules simply don’t apply,” said Lucian Cook, head of residential research at Savills.