Property Market Monitor: September 2021

According to the Nationwide House Price Index[i], annual house price growth rose to 11.0% in July from 10.5% in June (chart of the month). In month-on-month terms, house prices were up 2.1%, the second largest gain in 15 years. Overall, taking into account the price momentum witnessed over the past 18 months, house prices are now around 13% higher than when the pandemic began. Consequently, average house prices nudge further towards the £250k mark, a record high. According to Robert Gardner, Nationwide’s Chief Economist, “the bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market”[ii]. Mr Gardner believes that the strength may reflect strong demand from those buying a property priced between £125,000 and £250,000 and who are looking to take advantage of the stamp duty relief in place until the end of September, though maximum savings are substantially lower[iii].

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

Source: Nationwide House Price Index, Blend Network

Market Commentary

  • The overview offered by the Nationwide House Price Index is fairly in line with the one offered by the Halifax House Price Index: house prices in August were 7.1% higher than the same month a year earlier and 0.7% higher than the previous month. As a result, house prices hit record high in August[iv]. Compared to June 2020, when the housing market began to reopen from the first lockdown, prices are up by £23,600[v].
  • Russell Galley, Managing Director at Halifax, believes structural factors such as the demand for more space amid greater home working have driven record levels of buyer activity. Mr. Galley thinks that these trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break ends. Moreover, the macro environment is becoming gradually positive, with job openings at a record high and consumer confidence returning to pre-Covid levels[vi].
  • Elsewhere, HMRC monthly property transactions data for UK home sales decreased in July. UK seasonally adjusted residential transactions in July were 73,740 – down by 62.8% from June’s figure of 198,420 but 4.2% higher than July 2020. Non-residential transactions were also down by 5.9% in July compared to the previous month, but again 21% higher than July 2020. The latest quarterly transactions (May-July) were approximately 14% lower than the preceding three months (February-April)[vii].

Property Market News & Data

  • The latest Bank of England money and credit figures show that the number of mortgage approvals for house purchase were 75,200 in July, down from 80,300 in June[viii]. This is the lowest since July 2020 but remains above pre-February 2020 levels.
  • According to the latest IHS Markit/Chartered Institute of Procurement and Supply Purchasing Managers’ Index (PMI) for the construction industry, which details the sector’s overall economic health as well as subindices such as inflation, more than four fifths of UK construction firms have reported price increases[ix]. This index shows that the UK construction industry is being hit by unprecedented shortages of raw materials and labour, the costs of which are also rising at rates far in excess of anything previously recorded in over two decades of PMI survey history[x].

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Data found in this article are the property of the sourced information. Whilst every effort has been made to ensure this data is correct, Blend Network cannot guarantee there are no errors in the sourced data.

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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[i] Source: https://bit.ly/3lgLEuR

[ii] Source: https://bit.ly/3lgLEuR

[iii] Source: https://bit.ly/3lgLEuR

[iv] Source: https://bit.ly/3nsJr27

[v] Source: https://bit.ly/391i8U7

[vi] Source: https://bit.ly/38ZoR0Z

[vii] Source: https://bit.ly/2XgvIAf

[viii] Source: https://bit.ly/2XgnZ5d

[ix] Source: https://bit.ly/2XgnZ5d

[x] Source: https://bit.ly/2XgnZ5d

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