Property Market Monitor: October 2020

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

Market Commentary

• 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.

 

Your capital is at risk if you lend to businesses. P2P lending is not covered by the Financial Services Compensation Scheme. Investments are illiquid (the inability to sell assets quickly or without substantial loss in value). Past performance is not a reliable indicator of future results.

 

Blend Loan Network Limited is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (FRN. 574048)