Property Market Monitor: November 2021

According to the Nationwide House Price Index, the price of a typical UK home has exceeded £250,000 for the first time. Annual house price growth remained close to double digits for the sixth month in a row in October (9.9%) but eased back from 10.0% in September and 11.0% in August^[i] (chart of the month). Prices were up by 0.7% month-on-month^[ii]. Overall, despite ongoing strength momentum has eased since the summer, and Nationwide has cautioned that the threat of base rate hikes from the Bank of England has pushed up mortgage rates and this could dent the property market^[iii]. However, purchasing activity has remained strong: Robert Gardner, Nationwide’s chief economist, pointed out that September mortgage applications remained 10% above the monthly average recorded in 2019^[iv]. In line with that, another interesting observation is that UK seasonally adjusted residential transactions in September were up by 68% from August’s figure (up by 60% on non-seasonally adjusted)^[v].

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

Source: Nationwide House Price Index, Blend Network

Market Commentary

The Halifax House Price Index shows a similar trend to the one observed by the Nationwide House Price Index: UK house prices hit a record high in October. However, at £270,027, the Halifax index records a higher value for the average UK property^[vi]. In year-on-year terms, house prices rose by 8.1% in October, highest level since June^[vii].

According to the Halifax House Price Index, Wales remained the strongest performing nation or region with annual house price rising by 12.9% in October, while Northern Ireland recorded its strongest growth in four months (11.3%). Northwest England (10.4%) and Scotland (8.6%) followed as the strongest performing nations/regions^[viii].

In line with the positive price momentum showed by the Halifax and Nationwide House Price Indices, the latest RICS Residential Market Survey^[ix] published in September shows a steady trend in buyer demand, following a brief deceleration in the wake of the flurry of activity seen prior to the phasing out of the Stamp Duty holiday. This appears to support market expectations that buyer demand and sales will stabilise will hold broadly steady going forward.

At Blend Network, we are seeing a steady pipeline of new development loan enquiries. For example, we recently funded the first tranche of a £1,090,000 GDV loan to convert a property in Northampton to a 18-bed HMO^[x], and the second tranche of a £1,100,000 GDV loan to develop lock-up garages into six new 3-bed houses in Stoke-On-Trent^[xi].

Property Market News & Data

In its latest Residential Property Forecasts, Savills expects mainstream UK house prices to increase 13.1% by 2026, with growth overall fastest in the North of England (18.8% in the North West & 17.6% in the North East), and slowest in London (5.6%). That said, they expect prime central London to outperform as intrnational travel resumes^[xii].
Construction material prices have continued to increase, and some industry sources suggest the trend could continue well into 2022. According to the Department for Business, Energy and Industrial Strategy’s monthly Statistics of Building Materials and Components report, the cost of materials for ‘all work’ was up by 23.6% year-on-year in September^[xiii]. Other sources point out to signs that the shortage could be easing.

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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.

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[i] Source: https://bit.ly/3CaK43T

[ii] Source: https://bit.ly/3CaK43T

[iii] Source: https://bit.ly/2YI3u2E

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

[v] Source: https://bit.ly/3wGGLkb

[vi] Source: https://bit.ly/3HrsYmz

[vii] Source: Savills ‘Residential Property Forecasts’, Winter 2021 Edition

[viii] Source: https://bit.ly/3D9bLvm

[ix] Source: https://bit.ly/3D5QLFO

[x] Source: https://bit.ly/3D5QLFO

[xi] Source: https://bit.ly/3D5QLFO