Housing market recovery

Mortgage expert James Mayne explains how the housing market recovery continued over the summer and on through September.

The housing market continued to recover through September. According to mortgage lender the Nationwide annual house price growth was at 5.0% in September. This is the highest rate since September 2016. From August to September house price growth increased by 0.9%, having increased by 2.0% from July to August. The average UK house price was at £226,129 though this figure is not seasonally adjusted. Nationwide’s chief economist Robert Gardner said: ‘The rebound reflects a number of factors. Pent-up demand is coming through, with decisions taken to move before lockdown now progressing.’

House prices; the most expensive regions in the UK

House prices do vary from region to region. As reported by property portal Zoopla, the most expensive streets in the UK where the average property price is £1m; now number 12,545. This represents a 30% increase in five years. Over a third, 4,707 expensive streets are in Southeast England, a further 4,523 high property value streets are in London. Kensington Palace Gardens in London W8 has an average property price of £35,991,500. Top of the Southeast England most expensive street list is Montrose Gardens in Leatherhead, Surrey where the average property price is £6,037,000.

Housing demand is up

Housing demand is up in the UK when comparing year to date growth in demand. Three key metrics sales agreed, total inventory and demand were at +3%, +10% and +39% in September 2020. This compares to negative growth rates or decline for sales agreed and total inventory in June 2020. Housing sales agreed and total inventory which were at -23% and -13% in June (Zoopla House Price Index). From July the UK housing market switched from negative to positive growth rates. Mortgage approvals increased from around 66,000 in July, to close to 85,000 in August (the highest since 2007) and well above the monthly average for 2019 which was at 66,000 throughout the year (Nationwide House Price Index).

Where housing demand is coming from

For the past ten years first time buyers have driven the UK housing market, but Zoopla are predicting a change. When analysing this years’ property sales, existing homeowners are moving in greater numbers. Demand for housing from house hunters is 39% higher, year to date; than it was at this time last year. New sales agreed from the start 2020 are 3% higher than they were for the same period in 2019. The uniqueness of lockdown has changed housing priorities. Proximity to work and school, when taking altered learning and work routines into account; indoor and outdoor space have swapped position to ‘must haves’. Provisos for location now include access to family, grocery shops, facilities and places to take exercise. Doubling down on house hunter changing priorities, economic uncertainty has reduced the availability of high loan to value mortgages. Lenders have tightened proof of income requirements. These financial factors are making first time buyer mortgages scarce. In contrast property demand from existing homeowners is up by 53% when compared to last year.

If you are considering buying a property contact our mortgage specialists James Mayne, or Adrian Chambers on 01243 532 635.

Alternatively book a virtual consultation.

Your home may be repossessed if you do not keep up mortgage payments.