Property Market Monitor: February 2021

January 2021 saw UK annual house price growth slow down for the first time in six months. According to the Nationwide House Price Index, annual house price growth slowed to 6.4% year-on-year, down from a 7.3% six-year high in December 2020 – see chart of the month. While the slowdown likely reflects a dwindling demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase, prices still remain very strong with the past three months (November, December and January) being the first time we saw annual price growth above 6% in over five years. Looking ahead, we believe the housing market will likely remain well-supported this year, especially due to shifts in housing preferences and the Government’s help-to-buy scheme.

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

Source: Nationwide House Price Index, Blend Network

Market Commentary

  • Following six months of rapid growth that took many by surprise given the broader economic slowdown, UK annual house price growth showed early signs of a slowdown in January, easing to 6.4% year-on-year from 7.3% year-on-year in December. With the exception of May and June last year, this is the first slowdown in the annual growth rate since September 2019, ahead of the General Election and the mini Brexit-Boom.  
  • Figure 1 below shows the price increase 2020-2019 for first-time buyers across several UK regions. The Northwest and some regions across the Midlands have performed extremely well over the past few years, and in our opinion will continue to outperform due to the Government’s strong commitment to invest in the north’s infrastructure. First-time buyers looking to get on the property ladder with houses at £200k-300k or flats at £100k-200k constitute the profile of the typical buyer for the housing schemes funded by Blend Network such as the Image House scheme of 27 apartments in Stafford or the Crown House scheme of 30 apartments in Great Yarmouth, East Anglia.   
  • Looking ahead to 2021, we do believe that the housing market will likely remain well-supported this year, especially due to shifts in housing preferences and the Government’s help-to-buy scheme. However, clear headwind risks remain. According to Robert Gardner, Nationwide’s Chief Economist, if the stamp duty holiday ends as scheduled and labour market conditions continue to weaken as most analysts expect, housing market activity is likely to slow, perhaps sharply, in the coming months.

Figure 1: first-time buyers across several UK regions (Average 2020 vs average 2019)

Source: Nationwide House Price Index, Blend Network Despite the UK-wide picture described above, we continue to see experienced property developers looking to build schemes in specific areas that benefit from strong demand, lack of supply and therefore a good exit strategy. We recently listed the fourth tranche of two of our projects, the Image House and the Crown House projects, both offering 10% return p.a. to lenders. Keep an eye on www.blendnetwork.com and make sure you don’t miss our loans.

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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