Property Market Monitor: December 2020

UK annual house price growth continued to post multi-year record highs. According to the Nationwide House Price Index, the average UK house price was up by 6.5% year-on-year in November, the highest number since January 2015, as illustrated in our chart of the month. Yet concerns are mounting around the medium-term sustainability of such rapid growth. According to a recent report by Capital Economics, although the negative economic consequences of the pandemic have evaded the housing market on the back of extraordinary support measures put in place by the government, regulators and banks, house prices are expected to decline in 2021. Nationwide’s Chief Economist Robert Gardner also threw doubt into the sustainability of such strength by pointing out that labour market conditions had weakened in the three months to September with unemployment rate rising to 4.8%.

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

Source: Nationwide House Price Index, Blend Network

Market Commentary

  • Annual house price growth rose to 6.5% in November, the highest rate since January 2015. This comes after several month of surprisingly strong housing market performance – 5.8% YoY in October, 5% YoY in September and 3.7% YoY in August.
  • Prices were also up by 0.9% in November compared to October. This took the year-to-date price increase during the first 11 months of the year to 3.2%, a fairly impressive performance given the magnitude of the pandemic and consequent economic slowdown. According to Nationwide’s Chief Economist Robert Gardner, October saw property transactions rise to 105,600, the highest level since 2016, while mortgage approvals for house purchase rose to their highest level since 2007 at c97,500.
  • According to Capital Economics’ latest UK Housing Market Focus dated 27 November, while policy support in the form of stamp duty holiday has likely reduced and delayed the impact of the pandemic on UK house prices, it has not removed it altogether. Consequently, they expect the pandemic to take its toll in 2021 with a 5% dip in house prices next year. However, they expect the correction to be smaller than in previous recessions and leave prices slightly higher at the end of 2021 than they started 2020. Figure 1 from the Capital Economics report shows that at the end of the much less generous stamp duty holiday in 2008-9 there was a clear change in momentum in house prices, a phenomenon that they expect to see this time around as well.

Figure 1: House Prices When Stamp Duty Cuts Expire (% 3m/3m)

At Blend Network, our focus remains on funding highly liquid properties in very strong pockets of the UK property market. We have had a very strong Q4 by funding £2,540,000 in the last quarter of October and by repaying £1,550,000 to our lenders in Q4. Thank you for your support so far and 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)

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