Property Market Monitor: May 2021

April saw the biggest monthly rise in UK house prices since February 2004. According to the Nationwide House Price Index, average UK house prices rose by 2.1% in April vs March after the Chancellor Mr. Sunak announced a package of measures to support buyers, from a stamp duty holiday extension, to a new mortgage guarantee scheme to help people with a 5% deposit get on the property ladder. Compared to a year ago, prices were up by 7.1% in April. In other words, prices are now up £15,916 since April 2020. We believe these policy measures are likely to continue to provide support to the housing market in the near-term. But the longer-term outlook remains highly uncertain and highly dependent on the speed of economic recovery and ongoing support for housing demand in the form of policy incentives.

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

Source: Nationwide House Price Index, Blend Network

Market Commentary

  • In April, average UK house prices grew by 7.1% year-on-year (chart of the month), the second highest increase since December 2014. Overall, the bounce back witnessed by the UK housing market in the aftermath of the first lockdown in March and April last year has been nothing short of astonishing. Putting it in terms of tangible numbers, the price of the average UK house is now up by £22,428 compared with June last year.
  • Looking forward, we believe housing market activity is likely to remain fairly buoyant over the next six months as a result of the stamp duty extension, additional job market support, continued low borrowing costs and many people still motivated to move as a result of changing housing preferences in the wake of the Covid-19 pandemic. We believe this to be particularly favourable to the market we serve at Blend Network: the low-cost, more affordable homes targeted at first-time buyers across the regions.
  • Yet while rollout of the vaccine and easing of lockdown restrictions is increasing economic confidence, there are also several uncertainties ahead. The main one being the risk of a sharp rise in unemployment towards the end of the year as most analysts expect.  In such a scenario, there is scope for housing market activity to slowly.

Figure 1: UK regional house price growth since the end of Jun1 2020 (% increase)

Source: Nationwide House Price Index, Blend Network

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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.

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