Property market round-up - October 2020

Nationwide's figures for the month show property values up 5.8% over the last year. As usual, cities in the north lead the way.

Add that to the gains for the same period a year ago and total returns for the two years are over 10%. For someone buying on a two thirds mortgage, that's 30% on capital invested. Who said buy to let is dead?

The big picture - house prices up 5.8% year-on-year

From Nationwide Building Society -

• 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

	Oct 2020 y-o-y	Oct 2019 y-o-y
Monthly change	0.8%	0.9%
Annual change	5.8%	5.0%
Average price*	£227,826	​£226,129

*  not seasonally adjusted

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.

Robert Gardner, Chief Economist, Nationwide

Drilling down to the regions

The Zoopla/Hometrack UK Cities index is a month behind Nationwide's report and supports their September figures, with the UK's largest cities recording an average annual increase of 2.9% year-on-year.

The top performers -

	Average Price	Sep 2020 y-o-y	Sep 2019 y-o-y
Nottingham	​£159,800	5.1%	2.8%
Manchester	​£175,700	4.6%	3.5%
Leeds	​£171,400	4.5%	2.6%
Liverpool	​£124,000	3.8%	3.0%
Edinburgh	​£230,300	3.6%	3.0%
Leicester	​£184,600	3.6%	4.2%

Stamp duty changes always distort market volumes to some degree and the scale will depend upon how much buyer activity is driven by the change. We believe that the ‘once in a lifetime re-evaluation of housing’, in response to COVID, has been a greater underlying driver of demand with stamp duty savings more of an ‘added bonus’ from completing a sale before next April.

​In our view, the latent demand for housing that has been unlocked by COVID, especially amongst older homeowners, has the potential to run into 2021.

Zoopla