Property Market Monitor: August 2020

Data from the Nationwide House Price Index shows that UK house price growth rebounded strongly in July as activity bounced back. The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions and Prime Minister’s pledge to put the government’s ‘arms around people at a time of crisis’ and ‘build, build, build’ to dig the UK out of the crisis. We do expect the recently introduced stamp duty holiday to continue to provide further support in the near term. Mr. Johnson’s promise could be a game changer if it goes hand in hand with greater access to finance for the tens of thousands of small property developers and construction companies left bruised by the pandemic. But the rebound in activity also reflects pent up demand is coming through.

Chart of the month: Monthly UK house price, annual % change

Picture 1

Market Commentary

  • The Nationwide House Price Index shows that annual UK house price growth rose by 1.5% year-on-year in July. Naturally, the monthly increase was even sharper, with prices up by 1.7% compared to June when prices declines for the first time since 2012. The latest data means that house prices are up by 2% on a year-to-date basis compared to the first seven months of last year. However, there remains a wide regional difference and particularly a deep north/south divide in house prices.
  • According to Nationwide, the temporary increase in stamp duty threshold in England and Northern Ireland to £500,000 means that around 90% of owner occupier transactions in England will pay no stamp duty over the next nine months. They expect the stamp duty holiday savings to be greatest for those in London and the South.
  • Figures 1 this month shows the house price performance across different UK regions since Brexit. As we can see, parts of the north and the Midlands have strongly outperformed London and its outer metropolitan area. We expect this trend to continue and indeed to accelerate as a result of the Government’s pledge to level-up economic growth across the UK regions and build more infrastructure in the north.

Figure 1: UK regional house prices since Brexit

Picture 2

As you will have seen in recent emails, we had our strongest months in June and July. Our underwriting team at Blend Network remain very busy assessing deals to ensure we continue lending to experienced property developers who come to us with a solid project, an enviable track record and a strong exit strategy. Keep an eye for new loans coming at www.blendnetwork.com.

 

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