It seems that home buyers reaction to the pandemic is outweighing economic concerns, driving property prices to new highs. So, what is happening and where might we go next?
The UK is in the midst of it's deepest recession in decades. Government support for jobs and the economy will soon start to taper off. Unemployment could rise to levels not seen since the 1980s. There is the real threat of a disorderly end to the Brexit transition period.
It should be a difficult time for the property market, but we are seeing the opposite.
In their most recent House Price Index, the Nationwide announced a 2% rise in property prices in the month of August, the largest single month increase in 16 years.
Britain's largest property portal, Rightmove, reports that transaction volumes are up 14% since this time last year and that properties are selling faster now than at any time in the last decade.
How did we get here?
Back in December and January, a level of Brexit uncertainty was lifted, creating an uplift in property demand. This fed through into higher transaction volumes and prices, the so-called 'Boris Bounce'.
As the country moved into February and March, there was a growing realisation that the Covid pandemic could become a serious problem and the property market slowed. In the last week of March, like everything else, it shut down. Both transaction volumes and prices stagnated.
Spring is traditionally the property market's busiest period, so it was no surprise that when the market reopened, there was a release of pent up demand. The chancellor's announcement of stamp duty concessions in early July added fuel to the fire.
A surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire among some buyers to move to bigger properties, and of course the temporary cut to stamp duty.
Many reassessed their housing needs, looking for more room and outside space. It is no surprise that Rightmove's most sought after properties in recent weeks have been three bedroom semi-detached houses.
This perfect storm has has brought us to where we are now - a property market boom.
What comes next?
Forecasters were caught off guard when the market re-opened, underestimating the government's economic support and the level of pent up demand. They were also taken by surprise by the stamp duty discount. However, their predictions of a slowing of the market are not necessarily wrong. It may be just the timing that has changed.
The same forecasters now suggest that the downturn has been delayed until 2021, but that it may not be as severe or last as long as previously thought. Those who foresaw large falls in prices now seem to be moderating their predictions, but anticipating slowing transaction volumes.
The property investor
There is no doubt that the current climate has driven an increase in demand in the buy to let market. Evidence from the mortgage lenders shows that many investors are remortgaging existing properties to release capital for further purchases.
This is being driven by record low interest rates, the stamp duty cut and supportive banks, who currently view buy to let as a lower risk proposition than first time buyers. For overseas investors holding strong currencies, the low value of Sterling has reduced UK property prices to levels similar to those before the Brexit referendum.
In the longer term, prices for new build city centre apartments are likely to remain firm. Despite reports of a flight to the suburbs, millennials - the largest city centre demographic - are staying put. A more significant risk is that developers, as they did in 2009, take a wait and see position, creating a shortage of available stock. Our own experience bears this out. Many of the new developments we were promised at the end of last year are now on hold.