Advertisement
UK markets closed
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • FTSE 250

    19,884.73
    +74.07 (+0.37%)
     
  • AIM

    743.26
    +1.15 (+0.15%)
     
  • GBP/EUR

    1.1713
    +0.0020 (+0.17%)
     
  • GBP/USD

    1.2623
    +0.0001 (+0.01%)
     
  • Bitcoin GBP

    55,719.14
    +303.98 (+0.55%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • CAC 40

    8,205.81
    +1.00 (+0.01%)
     

House prices jump 5pc in a year but the 'mini-boom' is slowing

Illo
Illo

House prices surged to an all-time high in September but experts have warned the post-lockdown property boom cannot last as mortgages become harder to secure.

The average house sold for £226,129 in September, some 5pc higher compared with 2019 according to Nationwide Building Society. This was the highest annual growth rate in four years.

Property prices rose 0.9pc between August and September, although this was lower than the previous month’s 2pc.

The increase continues to be driven by pent-up demand following the market's deep freeze during the lockdown. This has combined with families moving to larger, more rural properties and the added incentive of a stamp duty cut.

ADVERTISEMENT

The stamp duty holiday, announced in July, has meant anyone buying a property before April 2021 could save up to £15,000 with the tax removed on the first £500,000 of any purchase.

Robert Gardner, Nationwide's chief economist, said "behavioural shifts" have boosted house purchases and sales. People have reassessed their preferences as a result of life in lockdown, and home-working has placed a new importance on living space, pushing the cash rich to upsize.

One in ten movers made the decision to do so as a result of the pandemic and a further 18pc are considering a move for the same reason, according to a Nationwide survey.

A third of those moving were looking to shift to a different area and one in three said they were moving to have easier access to a garden or outdoor space.

Despite the seemingly boisterous market, experts continue to warn there is more pain down the line. David Westgate, of Andrews Property Group estate agents, said the “mini boom” had peaked and there are signs the market is "slowly cooling” as lenders tighten their grip on mortgages.

He said: “The good news is that the slowing of the market, triggered by tighter lending, means that we are unlikely to see a cliff edge drop at the end of March when the stamp duty holiday ends, creating another boom and bust scenario.”

Jeremy Leaf, a north London estate agent, said the biggest concern, particularly for first-time buyers, is mortgage accessibility as lenders cut back on risky lending.

Mortgage approvals for house purchases rose to their highest level since 2007, from 66,000 in July to 85,000 in August, amid the sellers’ rush.

But lenders are said to have become increasingly nervous about unemployment – fearing a sharp rise in redundancies and a fall in wages when the Government's income support scheme, known as furlough, comes to an end in October.

Lucy Pendleton of estate agents James Pendleton said the surge cannot continue forever. It was unlikely the market will see a higher annual growth this year, she added.

“The market is strong but some agents have started to believe any property in any condition will sell. Quality homes are selling but buyers are not being reckless and won’t pay top price for properties that need a lot of money spent on them," she warned.

There has been a boost in sales of expensive homes with the number of £1m-plus house sales agreed in August was more than double (105pc) that of August 2019, according to data from property website Rightmove.