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Annual House Price Growth Reaches Five-Year High In October

For sale rent signs shutterstock_418615390.jpg

The latest Nationwide House Price Index has shown a five-year high in annual house price growth.

  • Annual house price growth rises to 5.8% in October, the highest rate since Jan 2015
  • Prices up 0.8% month-on-month, after taking account of seasonal factors

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
“Annual house price growth rose to 5.8% in October – its highest level since January 2015. UK house prices rose 0.8% month-on-month in October after taking account of seasonal effects, following a 0.9% rise in September.

“Data suggests that the economic recovery has lost momentum in recent months with economic growth slowing sharply to 2.1% in August, down from 6.4% in July, despite a strong boost to the hospitality sector from the Eat Out to Help Out scheme, which has since expired.

“Labour market conditions also weakened with the unemployment rate rising to 4.5% in the three months to August – still low by historic standards, but up from an average of 3.8% in 2019.

“Nevertheless, housing market activity has remained robust. Mortgage approvals for house purchase climbed to 91,500 in September – the highest level since 2007. 

“The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy. Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

“However, activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.

Many looking to move rather than improve, with green enhancements high up the agenda

“As we explored in last month’s report, behavioural shifts appear to be boosting housing market activity as people reassess their housing needs and preferences. Indeed, our poll in September suggested that 10% of those surveyed were in the process of moving as a result of the pandemic, with a further 18% considering a move for the same reason.

“But  many others are looking to improve their property rather than move, with around a third (35%) considering enhancing their home as a result of the pandemic. Nearly half (47%) of those wanted to add or maximise space.

“Interestingly, 41% wanted to improve energy efficiency and reduce their carbon footprint – almost as many as those looking to add or maximise space – which may reflect increased public awareness of the climate crisis."

Source : Nationwide

Comment from Ross Counsell, chartered surveyor and director at  Good Move, on today’s Nationwide House Price Index

“According to the latest Nationwide House Price Index figures, annual house prices across the UK have jumped by 5.8%, and with yesterday’s Bank of England Money & Credit release revealing the number of mortgage approvals increased in September, it seems buyers and sellers are taking full advantage of low mortgage rates, sky-high property prices and the stamp duty holiday.

“Whilst the latest statistics are positive, we believe we’ll start to see a decrease in house prices in the coming months as the furlough scheme comes to an end, and unemployment levels peak. This will undoubtedly affect buyer preferences and how much they’re willing to spend on a property which in turn will impact prices. We expect buyers will also be more cautious, and possibly less inclined to commit to buying a property.

“It’s also likely first-time buyers will be impacted the most as lenders take a more cautious approach to who they lend to and tighten their criteria for granting a mortgage, for example, requiring larger deposits and secure employment. First-time buyers also have the competition of existing homeowners looking to move on their hands too.

“For now, the economic outlook is still highly uncertain at this stage. As 2020 draws to a close, that’s when we believe the true impact of coronavirus will become apparent.”


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30 October 2020

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