Market snapshot, November 2020
The UK's economy bounced back from recession with record growth of 15.5% in July to September. The economy is now 22.9% higher than its April low, however, it remains 8.2% below the levels seen in February.
We now have a second lockdown, however, the housing market remains open, the furlough scheme has been extended and mortgage holidays are available. The Bank of England scenario, based on no second wave and a smooth transition to a new EU free trade deal, expect the economy to shrink by 9.5% in 2020 and to return to pre-covid levels by the end of 2021. The UK unemployment rate rose to 4.8% in the three months to September.
98,010 property sales were recorded in September 2020, 21.3% more than August and only -0.7% lower than September 2019 (HMRC). Newly agreed sales this year have overtaken the total amount in 2019.
According to Rightmove sales agreed are up 50% on October 2019 and there are c.650,000 sales going through the buying and selling process, 67% more than at the same time in 2019. With properties selling (sold SSTC), in just 49 days, 15 days faster than a year ago. RICS October survey reported a net balance of +46% of agents reporting an increase in buyer enquiries, +32% for new instructions and +41% for agreed sales. Although indicators remain positive, they are lower than last month.
Buyer demand across England was 49% higher year-on-year during the first six days of Lockdown 2. The market is currently strongest in the higher price brackets. Year-on-year has been a 106% uplift in sales priced £400,000–£500,000 compared to just 16% for those priced £100,000–£200,000. Activity levels are also higher in the regions where average property prices are the highest, buyers set to make bigger stamp duty savings in these locations.
The Office for Budget Responsibility central scenario estimates 750,000 homes will sell this year, longer term, their central scenario expects c.1.5 million. The upside scenario suggests over 1.6 million sales in 2021. Savills forecasts estimate c.1.1 million sales in 2020 and 1.2 million in 2021.
In September 91,454 mortgages were approved, an annual increase of 39%, representing the backlog caused by lockdown and the surge in demand following the stamp duty holiday announcement. Gross mortgage lending was £20.5bn, an annual decrease of -7.6%, often lagging approval data.
According to ONS average rental values across the UK rose by 1.5% in the year to a September (IPHRP) and Zoopla report a 1.1% annual increase in June.
RICS October survey reported +21% net balance of agents reporting an increase in tenant demand, the lowest reading since May 2020. New instructions to let a property decreased to -8%, a continuation of the pre-lockdown trend. A net balance of +11% of agents expects rental growth over the next 3 months, down on last month and below pre-covid levels.
The housing market is set to remain high on the Government's agenda following the Prime Ministers announcement of Generation Buy. The current Help to Buy scheme has been extended. Previously homes needed to have been built by December 2020, this has now been extended to February 2021. The deadline for the legal completion of sales remains the same, 31 March 2021. The new Help to Buy scheme, replacing the current scheme, will come into place from 1st April 2021 and run until March 2023 as planned.
Fri 20 Nov 2020