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.
