Halifax House Price index

Levels of transactions expected to increase 'materially' in coming months




After four months of decline, house prices surged by 1.6% in July from June, according to the latest Halifax House Price Index.

The ‘mini boom’ saw the average house price in July grow to £241,604 — the highest it has ever been since the index began, and 3.8% higher than a year ago.

Despite this, house prices in the latest quarter (May to July) were still 0.2% lower than in the preceding three months (February to April). 

“The latest data adds to the emerging view that the market is experiencing a surprising spike post lockdown,” said Russell Galley, managing director at Halifax.

“As pent-up demand from the period of lockdown is released into a largely open housing market, a low supply of available homes is helping to exert upwards pressure on house prices. 

“Supported by the government’s initiative of a significant cut in stamp duty, and evidence from households and agents suggesting that confidence is currently growing, the immediate future for the housing market looks brighter than many might have expected three months ago. 

“However, looking further ahead, there is still a great deal of uncertainty around the lasting impact of the pandemic. 

“As government support measures come to an end, the resulting impact on the macroeconomic environment and, in turn the housing market, will start to become more apparent. 

“In particular, a weakening in labour market conditions would lead us to expect greater downward pressure on prices in the medium term.”

Industry reacts to ‘mini boom’ in July

“The stamp duty holiday has clearly provided a further boost to affordability and has naturally stimulated demand,” stated Alan Cleary, group managing director at OneSavings Bank for mortgages.

“With supply having returned to more normal levels, overall levels of transactions can be expected to increase materially in the coming months.

“Buyers who put their plans on hold during lockdown have now been given the confidence to return to the market.”

Anna Clare Harper, author of Strategic Property Investing, said that the temporary nature of the stamp duty holiday has “unsurprisingly” encouraged many people to buy property.

“Throw six months’ worth of pent-up supply and demand and lockdown-led lifestyle changes into the mix, and, anecdotally, you have a frenzy in the housing market,” she added.

“What we can’t forecast is what happens next: economically, and in policy. 

“What we can predict accurately is that these two factors will prove fundamental to the future of the UK housing market.”

Guy Harrington, CEO at Glenhawk, added that while it might be “all smiles” now, yesterday’s Bank of England forecast made for “depressing reading” and the imminent unemployment car crash when furlough ends will bring the market “rapidly down to earth”. 

“The government should be applauded for its stimulus efforts … but sadly it’s going to get a whole lot worse before it gets better.”

Islay Robinson, group CEO at Enness Global Mortgages, likened last month’s stamp duty holiday as the “property market equivalent of Black Friday”.

“It isn’t just the average homebuyer that’s hitting the market for a discounted spending spree either, demand has spiked at all tiers with high-end and foreign buyers also scrambling to secure themselves a deal. 

The offshoot of this is a rebound in property price growth and with, the cost of borrowing remaining very favourable, it’s unlikely to let up anytime soon.”

“The mini-boom is real, but so are fears of a maxi-bust,” declared Andrew Montlake, managing director at Coreco.

“Prices and activity are holding up well for now as the post-lockdown surge continues, but everyone knows that the autumn is when we will see the real impact of Covid-19 on the economy.

“The property market is a peculiar beast right now.

“Landlords are making hay while the stamp duty sun shines, and are especially active with holiday lets.

“For first time buyers, the picture is far less rosy. 

“The stamp duty holiday has become academic as the people who it was intended for are least likely to be able to make use of it as borrowing at higher loan-to-values is increasingly difficult —— It’s a classic fiscal clanger.”

Tomer Aboody, director at MT Finance, agrees that the stamp duty adjustment has made a huge difference for some buyers, providing them with extra funds to put towards purchase and refurbishment. 

“If this positive response doesn’t convince the government that a stamp duty overhaul is needed so that higher-value transactions also enjoy further relief, boosting transactions and resulting in a positive trickle-down effect, then nothing will,” he noted.

“July 2020 was stronger than the previous July, when we were still dealing with our old friend Brexit, which seems to have been forgotten for now. 

“Confidence should be there for the next few months at least, and with the pending economic downcycle, now more than ever the housing industry should be looked upon as the foundation upon which to keep the UK working.”

Mark Harris, chief executive at SPF Private Clients, believes the stamp duty holiday and low mortgage rates are persuading buyers to take the plunge — particularly those who have put decisions to move on hold during Brexit uncertainty, and then lockdown.  

'We don’t know how long this flurry of activity will continue, especially as the furlough scheme comes to an end, but for now things continue to move in the right direction.”

Jonathan Hopper, CEO at Garrington Property Finders, said that, in many areas, property prices have received an “espresso-style injection of energy”.

“Yes it’s just one month, but the symbolism is important.

“Front line estate agents have been busy ever since they were allowed to reopen after lockdown, but, until June, the Halifax’s data was still recording month-on-month price changes as stuck in reverse.

“No longer — the key question now is whether the post-lockdown jump in buyer interest will translate into a steady stream of sales, and whether it will maintain the upward momentum on prices.”

Lucy Pendleton, property expert at James Pendleton, said the estate agency saw an “immediate uplift” in buyer registrations and viewings being booked in, and seller instructions were at levels it hadn’t witnessed since 2017.
 
"The London market has benefited more than most from the stamp duty holiday, with the high cost of housing meaning more buyers across the board can enjoy the maximum £15,000 saving available.
 
“The freeze has also warded off the bargain hunters and gazunderers we were seeing during lockdown, as sellers have been less inclined to knock money off their properties now that there's a stamp duty bonus on the table.
 
"It's noticeable that offers coming in now are sensible rather than optimistic; there is clearly a desire to get the transaction done and move or sell, and that will hopefully keep the market flowing in the short term at least.” 

She highlighted that the property market is now entering what is typically a quiet period.

“But, with most of the country taking a staycation this year, we expect activity to be strong throughout August as people [take] the opportunity to view and list properties while conditions are favourable.”

“We expected a rebound when the country emerged from lockdown but not one this pronounced,” added David Westgate, Group Chief Executive at Andrews Property Group. 

“Since the Summer Statement, we’ve seen a huge rise in the number of landlords looking to add to their portfolios.

“The market is far less fluid for first-time buyers, many of whom are finding it increasingly difficult to secure mortgage finance as lenders tighten their criteria.”

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