House prices gathered momentum in September as the housing market recovery continued. Data from the Nationwide House Price Index shows that average UK house prices rose by 5% year-on-year in September, the strongest growth in four years. Mortgage approvals for house purchase rose from c66,000 in July to almost 85,000 in August – the highest since 2007 and well above the monthly average of 66,000 prevailing in 2019. In Q3, all regions saw an increase in house prices. However, a number of high-frequency data suggests the momentum may be weakening. Prices continued to increase on a monthly basis, but the increase weakened to 0.9% month-on-month, down from 2% month-on-month increase in August.
Chart of the month: Monthly UK house price, annual % change
Source: Nationwide House Price Index
- September saw the strongest annual house price growth in four years. House price growth continued the strong momentum witnessed over the summer and in September rose by 5% year-on-year, the largest increase since September 2016. This solid performance came after a 3.7% annual price growth in August, taking average UK house prices to a fresh record high. This is illustrated in our chart of the month.
- Despite the strength, a look at monthly price activity suggests the recent momentum may be running out of steam. Prices were up by 0.9% in September compared to August, down from 2% month-on-month increase in August and 1.7% in July. UK house prices are still up by 2.5% year-to-date during the first 9 months of the year compared to the same period last year, but some high-frequency indicators suggest a slowdown.
- Over the third quarter, all regions continued to post strong house price growth. The southwest saw the strongest price performance in Q3 and posted a 5.5% price increase. On the other hand, Northern Ireland was the weakest region over the quarter and saw a modest 1.5% price increase. This was perhaps due to the more stringent Covid-19 restrictions introduced in Northern Ireland. On the year-to-date, the northwest remains by far the strongest region, closely followed by Wales.
Figure 1: UK regional quarterly house price growth (2020-to-date vs 2019)
Source: ONS, Nationwide House Price Index
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.