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Property rose by 5% in September says Nationwide

Another month in the property market and another house price index citing further property rises… but for how much longer?

Nationwide is the latest lender to record impressive figures. UK Property, according to the building society’s survey, rose by 5% in September compared with the previous year. That’s the highest for four years. Only last month the Halifax recorded the cost of the average property at more than £245,000.

Nationwide’s monthly rise was 0.9% from August – and it’s pretty much throughout the UK. Only the London market remained subdued.

The house price rise for the year as a whole is expected to be around 2% – that’s according to a specialist survey published by news agency Reuters this month.

Some property analysts are warning caution though saying this month’s rise was likely to be the highest this year. That’s because the furlough scheme ends next month and, although it will be replaced with the Job Retention Scheme, the latter isn’t as generous. The result is likely to be large-scale unemployment, according to economists.

Still, low interest rates and the Stamp Duty holiday for buyers of properties of up to £500,000 in England will keep house hunters keen. At least until the first few months of next year. The scheme is due to finish at the end of March 2021.

The signs of a slowing market are already there though. Visitor numbers to property portals are reducing. The three biggest UK property for sale sites all saw a fall of 5% in visitor numbers in September compared to August, according to consultants Pantheon Macroeconomics. 

Mortgage approvals highest for more than a decade

It was good news for mortgage approvals last month too. More mortgages were granted to UK buyers than in 13 years. A total of 84,700 went through in August. That compares to 66,300 in July. However, despite the big monthly jump, there are still fewer mortgage approvals this year than in 2019 at this rate (418,000 compared to 524,000 last year).

But is it only the wealthy who are buying? Figures revealed by the BoE seems to imply this. Consumer credit, for instance, didn’t rise very much – by £0.3bn when the prediction was for a rise of £1.5bn. 

And certainly, first time buyers are taking the brunt of lenders’ reluctance to offer high loan to value deals (ie 80% and 85% mortgages).

Property market not as badly hit as predicted?

The upshot is that with home ownership having narrowed to those wealthier sectors of the population, the property market may not be as badly affected as many people fear come the end of the furlough scheme. That’s because they are less likely to be impacted by job losses.

Of those home owners who have already lost their jobs and moved on to University Credit, half of them have continued to pay their mortgages. The other 50% opted for the government’s Mortgage Holiday Scheme, which is due to end at the end of October, along with the current furlough scheme.

Buyers told to ‘Hurry Up’ or miss out on holiday

Potential house buyers keen to take advantage of the Chancellor’s Stamp Duty holiday better ‘get their skates on’, according to one property regulatory body.

That’s because a lack of conveyancers due to furloughing and lockdown measures is causing completion delays, says estate agent overseer NAEA Propertymark. And, nor are backlogs in mortgage applications helping (for similar poor staffing reasons). The upshot is that it could take far longer than three months to buy and sell a property.

As a result, those looking to move and save thousands of pounds in Stamp Duty costs, should start viewing by the beginning of October at the very latest. Rishi Sunak’s Stamp Duty ‘holiday’ where buyers pay no Stamp Duty on property valued at up to £500,000, is due to come to an end on March 31, 2021.

Back in July – just weeks after lockdown ended – estate agents in England were selling an average of 13 properties per month. That was the largest number of sales recorded by NAEA Propertymark since June 2007.

Homes in Yorkshire top year-on-year values

Meanwhile, the exodus from busy London continues, with many residents fleeing the capital for bigger homes in quieter towns and villages. One region that is benefitting hugely from the city to country switch is Yorkshire. Property prices here grew 8.8% cent between September this year and last, bringing the value of the average house to £220,099. That’s according to property analysis site, Home.co.uk. From July to August the jump in property values in Yorkshire of 0.9% was twice the UK national average.

The neighbouring North West region has also done well in the property stakes over the past 12 months, where homeowners say the value of their property jump by 7.4%. But homeowners in the North East haven’t exactly been feeling left out either, with an increase of 4.9%. The monthly growth for here was even better than Yorkshire, with house price increases of 1.1%.

Property in the south under-performing

Further south though it is a different picture. And it isn’t just homeowners in London that are seeing price falls. The South West, South East and the East of England are all experiencing property growth below the national average. In Greater London supply of properties has grown exponentially by 71% over the past 12 months. In the East of England region housing supply is up by 34%. In Yorkshire the supply figure was a mere 9%.

A spokesman for Home.co.uk added Scotland into the mix of good-performing regions ‘up north.’ In fact, from Yorkshire upwards the price of housing was the best yet since the financial crisis of 2008.

He added: “It is quite remarkable that, after nearly a decade of price stagnation, the North East property market finally takes off post pandemic… [the aforementioned regions’] performance is compensating for the lacklustre activity in London and adjacent regions.”

Not everything in the garden is rosy… But, with the prospect of a No Deal Brexit, furloughing finishing and the end of the Stamp Duty holiday in March next year, house prices will plummet say property analysts. Think tank, The Centre for Economic and Business Research, reckon it could be by as much as 13.8%.

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