House prices in England hit a new monthly record in September as they increased in value by 1.7% between August and last month. And that was the biggest monthly rise since just before the recession in 2007.

The figures were from the latest Halifax Price Index and were a reversal of the previous three months where property values had fallen month on month.

Property up £18,000 year-on-year in September

The 1.7% rise worked out at £4,425 added to the price of the average home in England, bringing that figure to £267,587 for September. It’s a jump of £18,000 on September 2020 when the property market reopened after the summer lockdown.

Other statistics, produced by the lender, show that the price of apartments have risen by 6.1% whereas both semi-detached homes and homes have gone up more – by 8.9% and 8.8% respectively. 

In terms of other areas of the UK, property inflation in Wales outdid all other areas, coming in at 11.5% last month. In Northern Ireland the figure was 9.3% and in Scotland prices rose by 8.3%.

South-west is England property price champ

In England, house price inflation is highest in the south-west, at 9.7%, bringing the cost of the average property there to £276,226. London, though, continues to lag behind the rest of the UK. Prices aren’t falling there anymore, but they aren’t rising as fast as the rest of the country at just 1% between August and September.

Estate agents say they are still more buyers than there are properties on the market. This brings property analysts to believe that prices, and the property market, will remain stable – despite the possibility of tax rises and inflation in the near future.

But Tom Bill, head of UK residential research at Knight Frank, refers to this property shortage as ‘an underlying weakness’ in the market. 

He said: “The imbalance between supply and demand is unsustainable and, in many cases, arises because prospective sellers are unable to find anywhere to buy themselves, creating a vicious circle of low supply. In some cases, they cannot even find properties to rent as a short-term option.”

Citing around 13 new buyers for every property listed in the UK last month, he said the last time there was such as short supply of properties was back at the beginning of 2020. In a bid to encourage house buyers now that the Stamp Duty Holiday has come to an end, mortgage lending is loosening too.

More mortgages coming onto the market

Certainly, the threat of rising inflation doesn’t seem to be having any effect on them. They offered lower interest rates in the third quarter of the year than the previous one. House deposits were lower too.

There is currently, what many in the industry would describe as a ‘mortgage war,’ taking place. Many High Street and online lenders are even vowing to introduce more mortgages until the end of next month. Most of the lending recently has been for re-mortgaging, rather than from those buying or first-time buyers (many of whom are still complaining of being priced-out of the market).

According to the Bank of England’s credit conditions survey mortgage lenders were encouraged by the improving economic outlook and rising house prices. Around 18% of them said they anticipated a further easing of credit conditions in the fourth quarter too. 

Even the prospect of what many believe will be a rise in the Bank of England’s base rate from 0.1% to 0.25%, around December, isn’t putting lenders off. Analysts say they will simply absorb the cost so that low interest mortgage deals will continue well into 2023.

The average property in the UK increased in value by £1000, last month – according to the most recent Halifax index. 

It brings the cost of the average house to £261,221. That’s £18,500 more expensive that the same time last year. July was the first month prices have been regarded since the ‘less generous’ Stamp Duty Holiday in England and Northern Ireland saw the £500,000 free tax threshold reduce by 50% to £250,000. In October it will revert to the usual £125,000 figure.

Annual house price rate falls for 2021

According to the High Street lender, the rate of increase for house prices last month was 0.4%, which was less of an increase than in July 2020. This means the annual house price increase for 2021 has fallen to 7.4%.

Russell Galley, Halifax’s managing director said he expected buyer activity to cool over the coming months, resulting in a steadier paced housing market by the end of the year. Despite this, fewer houses available compared to demand combined with continuing low interest rates means prices shouldn’t be falling any time soon – if at all.

Nicky Stevenson, managing director at the estate agents Fine & Country, said the Halifax figures showed that “the era of ballooning house prices is not over yet, even if a little air is now slowly starting to hiss out of the market.”

Greater mortgage availability and government schemes to help fund deposits were also helping to inflate prices. She added: “While annual growth has softened slightly since the frenzied heyday of the stamp duty holiday, there is still a great wall of money coming into the market despite the phasing out of this much celebrated tax break.”

This ‘great wall of money’ from affluent house owners who already have impressive amounts of equity in their existing homes, means many second steppers as well as first time buyers can’t afford to move home – certainly not at the present time. 

In fact, the price difference between a two-bedroom flat and three-bedroom house has doubled over the past decade. According to Zoopla’s figures the difference is £78,000, compared with £39,000 in 2010. 

North – South property divide widens

And, as people move towards greener spaces and bigger properties, the North and South divide continues to grow. Most popular destinations to move to judging by the rise in house prices from the Halifax survey, are the north-west and Yorkshire & Humberside. Wales also saw a large jump in house prices, with as much as 13.8%. London and the south-east, as well as the east of England witnessed far smaller house price jumps. Property in the capital was the lowest increase at just 2.5%.

House prices up 20% over five years says analyst 

Tom Bill, head of UK residential research at property agent Knight Frank expects prices to rise by as much as 20% over the next five years or so. This, he says, will be due to the fact more people will be working from home and looking for more space for their own office. He too sees continued migration to the countryside.

June 2021 was the busiest ever month on record for the UK property market.

HMRC saw 213,120 property transactions over the entire 30 days. That is the busiest since April 2005 when the government body first started recorded sales. 

The Stamp Duty Holiday helped boost the numbers in England and now although the biggest savings in stamp duty have passed, buyers can still save up to £2,500.

One senior analyst said June’s record reflected a “perfect storm of demand.” This, he said, was accelerated by “locked down buyers seeking more space.” The Stamp Duty holiday only exacerbated the situation.

Prices up 30% from previous peak

It’s not only the number of sales that are hitting records in the housing market. Prices too are peaking, with property 30% higher than the peak back in 2007, just before the markets crashed.

Zoopla recorded the average property price as £230,700 – an increase of 5.4% year on year. Meanwhile there were 25% fewer properties on the market for the first six months of this year compared to last.

Around 19 viewers for every property

As a result, NAEA Propertymark, which represents estate agents, reported that its members had approximately 19 viewings for every property on their books last month. Although this too will rebalance as the year continues, say the Association as the number of buyers declines in line with the ending of the Stamp Duty holiday in September.

In terms of cost, nearly half (40%) of properties were sold for more than the original asking price.

In Wales, property has risen by 8.4% over the past 12 months – that’s the highest growth in 16 years. In Northern Ireland it was even higher, with growth of 8.6%. 

Regionally, prices increased most in the North West (an increase of 7.3%) and Yorkshire & the Humber (up 6.8%). 

Places where property has gone up by £100,000

In terms of postcodes, there were locations were the price of a property had increased by more than £100,000 over the previous year. This is according to a survey commissioned by the Sunday Times.

It shows there are at least eight areas that qualify. These are – North Cornwall (ie Padstow and Polzeath), South Devon (Salcombe and Kingsbridge), East Suffolk, South Cornwall (eg Fowey), North Devon (Woolacombe and Croyde), Renfrewshire in Scotland (Kilmacolm) and North Somerset (Long Ashton near Bristol).

Inner London faring very poorly in comparison

Inner London as fared particularly badly over the past year. That’s for two reasons – the first being the absence of overseas buyers during the panic. The second reason is the desire to move to ‘greener pastures’ or ‘costal havens.’ Property in this luxury postcode market is actually 20% down on previous values, according to Savills. It’s believed the first reason will rebalance itself once airport restrictions on overseas visitors are lifted fully.

A Zoopla senior researcher said demand for houses was still far outstripping flats. She expected price increases for family-sized houses to continue over the coming months, peaking at 6% then falling to around 5% by December 2021.

House prices grew by the biggest monthly margin in June since 2007, new figures show. 

The Rightmove survey – which calculates on the basis of asking prices rather than actual selling price – reported a 0.7% jump between June 13 and July 10. This will have been accelerated by buying trying to benefit from the higher Stamp Duty holiday rate benefits. Since July 1 the tax-free figure now sits at £250 (rather than £500) until the end of September.

Asking prices ‘up’ 6.7% over last six months

The property asking price figure has actually increased by 6.7% within the past six months on the Rightmove portal. Government figures from the Office of National Statistics based on completed transactions, showed house prices had risen by 10% between May 2020 and the same period this year. That brought the cost of the average UK home to £255,000 (a jump of £23,000 within a year).

The most popular type of home has been terraced houses. In Wales, these rose in price by 15.2% and in England by 11.2%. Detached homes were the next most popular property in Wales and England, with price rises of 14% and 11% respectively.

North West property is biggest winner

Of course, the prices haven’t been across the board. Prices went up most in the North West (15%). London house valuations have suffered most, with the lowest annual increase of 5.2%). The main reason for this is the pandemic incentivizing more people to move to more rural areas. 

But a shortage of supply is also to blame for escalating house prices, say the Royal Institution of Chartered Surveyors (RICS). And they think this will continue to send prices soaring upwards over the next 12 months.

As far as moving out of cities is concerned though, some of the biggest winners when it comes to house prices have been villages and small commuter towns outside the capital.

Property ‘earning’ more than the average annual salary

In Hastings, Sussex, for instance they have increased so much that 62% of properties there increased more than the average salary this year, according to property portal Zoopla. In the South West, nearly one third of all homes have risen in value more than the house owner earns in a year. In the South East the figure is 28%.

In fact, the Zoopla study shows that one fifth of property in the UK earns more than the average salary (of £30,500).

Mortgage rates become more competitive

As a result, mortgage interest rates have gone down recently. Two high street lenders – TSB and Halifax – are offering two-year fixed interest rate deals of less than 1%. These do however, come with big deposit demands of 40%. 

Both 0.94% fixed rate deals have fees of just under £1000 and are only available for those looking to re-mortgage and those with equity have to pay higher rates.

Mortgage brokers admit the deals are good but that there are better ones on the table – especially those at higher rates but with no fee.

Commercial property investors and landlords are repositioning their portfolios by selling up retail and office space and opting for student campuses and warehousing instead. 

Global investment firm Blackstone are just one of many companies who have gone down this route in recent months, seeing how the pandemic has altered the commercial and residential property outlook. In terms of the latter, city housing is being spurned in favour of villages and greener spaces or coastal retreats. In commercial property terms, it’s all about students – both in terms of accommodation and research & development facilities in particular (ie high-tech life sciences campuses). Warehouses are also faring well with the increase in logistics companies.

As one analyst put it, commercial property interests have switched from retail to “beds, meds and sheds” — residential housing, healthcare and life science property and warehouses.

That’s because, in 2010, retail outlets and offices made up 70% of commercial property sales. Today it’s only around 35%, according to Real Capital Analytics.

‘Golden triangle of Oxford, Cambridge and London’

Earlier this year a 40% stake in Magdalen College’s Oxford Science Park was offered at £100 million – more than five times what the College paid five years ago. The ‘sweet spot’ according to investors in the ‘golden triangle’ between Oxford, Cambridge and London. Around £2.4bn was invested in life sciences property there last year and there’s still room for growth say analysts. Most big investors want to get in from the off though, saying the big money is in building new campuses and labs.

Warehouse shares up 16% post-pandemic

An increase in online shopping – particular during the pandemic – has led to a huge demand for warehouse space by distribution companies.  Warehouse developer Segro shares went up 16% recently. Office supplier British Land and Land Securities have lost around 30% of their share price since the pandemic, while shares for shopping centre supremo Hammerson are down by 75%.

Buy to let landlords ‘growing in confidence’

The sector may have been hit by a raft of tough legislation in recent years, but the buy to let market is still strong. And it’s going from strength to strength, if the last quarterly report by the National Residential Landlord Association’s quarterly Landlord Confidence Index is anything to go by.

This is backed up by a report commissioned by The Deposit Protection Service which found that more than one third (34%) of existing UK landlords had – or were about to – increase their property portfolio. All said they were encouraged by recent price growth. 

House values increase 20% in five years

Records by the Office for National Statistics show the value of the average house in the UK has grown by more than 20% over the past five years (from June 2016 to March 2021). That’s from £212,887 to £256,405. In 1991, the average UK house value was just £57,000.

The rental market too is flourishing, with a 4% increase year on year in May this year, according to the Homelet Rental Index. That’s an average rent in the UK of £997 pcm.