We all know that the market is ‘booming’ at this moment in time, but it is important to appreciate this is more of a boom in transactions rather than a boom in house prices. Taking annual house price growth from today back to 2000, prices have increased annually by around 6%, while even in these ‘boom’ times, they are hovering around the more normal 4-5% rise, which is only just above what we’ve seen since 2005. This ignores the latest Halifax rise of 7.5% which we tend not to take too seriously as the index varies quite dramatically and can blow hot and cold from one month to the next.
However, when you read the stats from Rightmove showing activity is now at levels not seen since 2006, the reason for everyone working towards capacity and home mover’s finding it tough to bag a property even with generous offers, it isn’t a surprise:-
There is one surprise though and that’s despite this huge uplift in volumes, property prices, although rising potentially ahead of a recession, are not doing so at the pace we would normally have seen in the past and indeed areas such as London, Cambridge and Oxford, not strangers to double digit price growth are seeing OK rises, but not vast increases. This suggests the ‘caps’ put on house price affordability from 2014 with restrictions on how much money can be lent as a multiple of income and lending at long term rates rather than the current 2% or less, are working at keeping prices in check.
Many of the indices also suggest that its houses, not necessarily flats that are driving the prices upwards and this is a trend which appears to have been exacerbated as it’s something we’ve been tracking since 2007.
At a regional level, the table below shows the stark contrast in property price changes. The North East continues to refuse to see decent house price growth since the last recession. Property prices are still 6% lower, in nominal terms, than they were 13 years ago and with latest average house price growth of just 0.2%, it doesn’t look like they will recover any time soon. In contrast, the top performing region is the East Midlands with 3.6% growth year on year according to the Land Registry, with Hometrack saying Nottingham has the highest year on year growth (5%) for their city index. This is better than the average annual increase of 2.7% seen since 2005, but although transactions are booming, it’s clear that prices are on the rise, but not ‘running away with themselves’, even at a regional level.
Source: UK HPI
With regional price growth ranging from 0.2% to 3.6%, some towns and cities are excelling, but not all. Topping the charts for the Land Registry is Nottingham, but at 9.6% growth, this seems high compared to everywhere else in the country and other indices, so I’m not sure I’d take this rise too seriously. Other areas are more in line with high house prices rises such as Edinburgh rising at 5.3%, Leicester at 5.9% and Bristol at 6.2%.
However, the ‘boom’ isn’t helping everywhere. Reading seems to have taken a particular hit with prices recorded as a -3.5% fall, however, it’s likely that this will be reversed by the end of the year based on current activity levels. Other areas such as Tunbridge Wells, Birmingham and Peterborough aren’t even registering a 1% rise year on year.
Having said that, with forecasters a few months ago predicting price falls of 5-16%, any rise must be taken as good news in today’s uncertain world.
Source: UK HPI
Towns/cities commentary from the indices
The table above shows the relative movement in the rates of annual house price growth of 12 conurbation areas/cities in England and Wales, over the period July - September 2020. The ‘simple average’ annual house price growth of the 12 conurbations amounted to +3.4% in July 2020, +4.1% in August and +3.7% in September 2020.
In September 2020, the City of Bristol topped the league at 8.3%, having been in third position at 7.5% in August. All property types in Bristol have seen an increase in their respective prices over the last twelve months, with the highest increase being seen in semi-detached homes. Merseyside remains in second position where it has been for the last two months. As with Bristol, all property types in Merseyside have seen an increase in their values over the last twelve months.
In September, five of the twelve conurbation areas listed above have seen their annual rate of price change increase compared to August, while in seven areas the rate slowed, suggesting that some of the steam associated with the rapid rise in prices is beginning to dissipate.
“Up massively” is the only real commentary that anyone needs to know at this moment in time. Lots more listings as shown by the Home.co.uk chart below, especially in London and this is backed by Hometrack data too, as well as Rightmove stats. Interestingly, it does appear that the North East not only isn’t benefiting from price rises, but also isn’t seeing that much of a pick-up in listings either, being ‘bottom of the pile’ according to Home.co.uk.
The huge rise in sales agreed from the NAEA to 14 sales per branch is massive. Welcome post the lockdown, but this is now causing the industry to have capacity issues with everyone from lender to agent, legal company and surveyor through to the removal industry really struggling to keep up.
Worryingly, this is leading to fears that those who have not yet sold or even made offers on a property may not complete before March 31st and if they have bought to avoid stamp duty, they may not have the money to pay it, potentially collapsing chains around the country, causing chaos in a currently healthy property market.
As a result, the Home Buying and Selling Group has launched a new ‘pledge’ which recommends:
For more information and advice to help you move smoothly visit the: Home Buying and Selling Group Industry Pledge
Source: Agency Express
Transactions, demand and supply commentary from individual indices
The Advisory track current market conditions so buyers and sellers can gain an independent view of how easy it would be to buy and sell their home in their area. This makes it easier for good agents that are honest about market conditions to value and manage expectations. For example, in L16 81% of the properties on the market are under offer.
From PropCast’s perspective, the hot markets from a postcode perspective don’t necessarily track the overall increases and decreases seen even at town and city levels, with Liverpool, and Sheffield having some of the busiest markets, and London and Liverpool having some of the slower ones. View the House Selling Weather Forecast here.
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