A perfect storm of factors have combined to see house prices across the UK rise by 6.5% in November 2020, which represents the highest monthly increase since January 2015 – a fact confirmed by Nationwide’s House Price Index. Tom Scarborough, CEO of multi-agent property seller Movewise highlights some of the reasons for this sharp rise, which was kick-started in October.
Surging activity has seen house prices rise by 6.5% in November, the highest rate of growth since January 2015, Nationwide’s House Price Index has revealed. “The Stamp Duty holiday has taken a market already driven by pent-up demand and sent prices sharply up.”
His point being that the demand was already there because of all of the frustrations of lockdown and the stamp duty holiday lit the blue touch paper. In addition to this, he also recognises the impact that the pandemic has had on people’s prerequisites for a new home, showing that the rise in prices and demand for properties is not as universal as it seems. “”As much as the headline figures would have us believe it, not all properties are soaring in value. Properties in major cities, those without gardens or outdoor space, and higher value properties haven’t participated in the price boom. Increasingly, people are happy to compromise on location in order to afford a larger property with outdoor space and room for an office.” So, the increase in people working from home, the realisation of the importance of outdoor space and a renewed appreciation of nature could all have helped drive the price increases in rural and coastal areas that we have seen. In fact, Nationwide confirmed that properties in national parks are subject to a 20% selling premium, while those homes on the fringes of such parks still sell for 6% more than equivalent homes.
So, the trend is very much dependent on outdoor space and geography, as we have seen, but it is also representative of a demographic bubble as confirmed by Samuel Tombs, chief UK economist at Pantheon Macroeconomics, who is quoted as saying:
“A relatively narrow cohort of well-off households, who already own their homes with little debt, seem to be driving the market with the savings that they have realised this year from working from home.”
While the overall trend began in October, November was the record breaking month, showing a further 0.9% increase in house prices. Experts are divided on whether this is likely to be followed up with a bumper month in December, but with a stamp duty holiday extension yet to be announced, the speculation and uncertainty could spark a rush to beat the 31st March deadline for completions.
With a vaccine for Covid-19 now approved and plans underway for widespread vaccinations, the hope and general feel among experts is that the UK can avoid a house price crash next year. Capital Economics’ property economist Andrew Wishart forecasts a 5% drop over the course of next year, rather than a price crash. This would still leave house prices higher, by the end of 2021, than at the beginning of 2020.