Autumn is always a busy time of the year for the property market and this year is proving to be no exception. While annual house price growth slowed from 11.0% in August to 10.0% In September, the average UK price still hit a record £267,587, up 1.7% on the August ﬁgure of almost £263,000.
The overall picture is a mixed one, with continued growth in Wales, Northern Ireland and Scotland, while in England it has started to slow down. That said, in September, sales were 23% above the 2017-19 average, and more than one million homes were sold by the end of August 2021, a landmark number reached two months ahead of schedule, while this year is set to see the most transactions take place since the 2009 ﬁnancial crisis.
The growth trend is being driven by several factors: the end of the stamp duty holiday, the ongoing ‘race for space’ prompted by people’s experiences of lockdown, as well as historic record low mortgage interest rates and the government’s 95% mortgage scheme.
Focusing on the London market, although it was the only one in England to report a drop in growth - slipping to 4.2% from 7.3% - it nonetheless remains stable as it didn’t experience the same spike in prices during the stamp duty holiday.
Demand remains consistent - and high - and there’s an added wave of interest from returning overseas buyers, and some experts predict that injection of cash could see London house prices increase by up to £134,000 in some areas.
Meanwhile, in certain areas of London, including Hampstead, demand for three and four bed properties is again outstripping supply, a shortage that is also likely to ensure prices remain solid, unlike other parts of the UK, where we predict they’re likely to soften.
However, if inﬂation remains high, it could trigger the Bank of England to increase what have been historically low mortgage rates, with the subsequent knock-on impact on affordability.
It is an issue affecting 10 out of 13 UK counties, where mortgage payments relative to take home pay are now above the long-run average. Before the pandemic, the only region affected by this was London.
Speaking of which, the Capital’s rental market also saw the fastest monthly growth of 1.6% in August, though it too has been hit by the supply shortage which reached its highest level for more than 10 years in August, a RICS survey has revealed.
As always with the property market, there’s so much more to keep an eye on than who is buying what and where, but we expect the current period of growth and robust activity to continue, as more people seek to make the lifestyle changes prompted by the pandemic.
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