Property market round-up - November 2020

Property values continue to surge, now up to 6.5% year-on-year according to Nationwide Building Society. ​It is still the North, North West and the Midlands showing the greatest gains, with Nottingham and Manchester leading the way.

The big picture - house prices up 6.5% year-on-year

From Nationwide Building Society

• Annual house price growth rose to 6.5% in November, the highest rate since Jan 2015
• Prices up 0.9% month-on-month, after taking account of seasonal factors 
• Mortgage approvals for house purchase at the highest level for 13 years

	Nov 20	Oct 20
Monthly change	0.9%	0.8%
Annual change	6.5%	5.8%
Average price ​Not seasonally adjusted	£229,721	£227,826

October saw property transactions rise to 105,600, the highest level since 2016, while mortgage approvals for house purchase in the same month were at their highest level since 2007 at c97,500.

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. Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.

Robert Gardiner, Chief economist, Nationwide BS

At the city-by-city level

According to the Zoopla/Hometrack Cities Index -

• ​UK house price growth jumps to +3.5%, the highest for almost 3 years.
• Demand has eased, dipping to below pre-COVID levels ahead of the latest lockdown, but remains 34% higher than last year.
• House price growth forecast +4% for 2020, slowing to +1% by end 2021.
• Sales projected to be unchanged in 2021 at 1.1m, supported by the overspill of a large sales pipeline into Q1.

Following the pattern since the end of the first lockdown, the North, Northwest and Midlands have seen the greatest increases in property values. The biggest movers for October -

	Average Price	Oct 2020 y-o-y	Oct 2019 y-o-y
Nottingham	£164,000	5.3%	3.2%
Manchester	£178,400	5.2%	3.5%
Leeds	£174,400	4.9%	2.6%
Liverpool	£126,000	4.5%	3.1%
Leicester	£188,700	3.9%	4.2%

At the start of 2020, many businesses operating in the housing market were expecting a bumper year as market activity ramped up in the wake of the General Election. The pandemic put paid to that in the second quarter, but the scale of the rebound has driven a remarkable turnaround.

2021 is set to be a year of transition as the nation continues to adjust to the
pandemic and the roll out of vaccines to control the transmission of COVID-19 so life can return closer to normal and the economy can continue to recover. The cost of the pandemic has taken national debt to a record high with taxes set to increase in the years ahead to start to pay down debt.

As we emerge from the current crisis it is vital that policy makers focus more on boosting the liquidity of the housing market that can support labour mobility, economic growth and better housing choices for all households.

Housing as a store of wealth, an ageing population and faster growth in older, single person households will all act to shape how the market evolves in the years ahead.

​Zoopla