property prices hit 16-year high fuelled by demand

There was more good news for the housing market this week with hugely positive figures released by Nationwide Building Society. The lender revealed that house prices hit a 16-year high in August, bouncing back from falls earlier this year. Prices rose by 2 per cent in August compared to the previous month, underlining the rapid recovery since lockdown restrictions were eased.

It is further evidence of the extent to which the macro-economic fundamentals have been, and remain, strong. The results reflect both pent-up demand driving prices higher but also the unprecedented level of liquidity which has been pumped into the economy by the Government over the past few months.

What’s more, Nationwide’s figures aren’t a flash in the pan – they are being backed up by other data. UK HPI, the combined Land Registry/Office for National Statistics survey, is playing catch-up with May’s data out this week, but it shows that house prices picked up before lockdown hit. Prices rose by 2.9 per cent in the year to May, showing that buyers were there ready to transact before lockdown brought everything to a halt. The housing market was on an upwards trajectory with transactional volumes increasing. Values were increasing year-on-year due to lack of supply, with buyers having to pay more if they were serious about securing a property.

The data shows that northern regions continue to perform best overall with the biggest increase in values; the trend for people moving out of cities to greener pastures with good travel connections to the rest of the country will only reinforce this. The pandemic has made many people realise that they can work efficiently from home at least some of the time and they don’t have to live in the big urban centres if they don’t want to.

cautious optimism rather than getting carried away

The stamp duty holiday will ensure that the market remains busy for a while and with possible further stimulus to come in the autumn Budget, we aren’t writing the property sector off just yet.

However, while the news at the moment is positive, as ever we would warn against over-optimism. The long-term impact of the Covid-19 pandemic and resulting lockdown will not begin to be borne out until the furlough scheme has truly ended in October. Only then will we have visibility on the resulting unemployment numbers and the impact this will have on the nation’s finances and indeed the property market.

the lending outlook

Mortgage lenders have probably never been busier and with liquidity still good, mortgage products remain competitively-priced. There is some tweaking of criteria as lenders react to the market and each other, in an effort to avoid being over-exposed with service levels suffering as a result.

If you wish to discuss your property finance requirements, please don’t hesitate to contact a member of the MT Finance team on 0203 051 2331 or leave your details on our contact form, and someone will be in touch shortly.

quick enquiry