Welcome to the latest edition of ARK’s Market Synopsis report covering market outcomes to the end of July and with Rightmove picking up reporting for August.
Though we like to be optimistic, it seems like COVID-19 isn’t leaving any time soon. With that said, there seems to be a unanimous theme trailing through the reporting for this month – The market seems to be pointing in a positive direction.
There are several factors in play, pent up demand through the lockdown was a significant factor in the July report period and the furlough scheme and stamp duty holiday has helped aid the positive upturn in market activity.
Most recently, Chancellor of the Exchequer, Rishi Sunak announced the end of the furlough scheme and introduced the Jobs Support Scheme. With this scheme, the Government will directly support the wages of people in work giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant.
The effects of this will most likely diminish the upturn we have seen in market activity, but only time will tell to what extent the housing market will be affected. But all of our commentators have posted caution regarding the outlook for the market.
Moving onto house prices, Halifax reports annual house price growth at 3.8%, marking the highest ever reading since the HPI started. Furthermore, Halifax reports “average house prices in July experienced their greatest month on month increase this year, up 1.6% from June and comfortably offsetting losses in 2020”.
House prices also rose for Nationwide to 1.7% in July. Annual house price growth also recovered from -0.1% to 1.5%. Nationwide identifies several factors for the increase in market activity which include the pent up in demand from decisions before lockdown now progressing and behavioural shift (people wanting more space).
However, Nationwide further adds: “Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down.”
RICS reporting, which is looking positive, pencils in “a headline net balance of +75% of survey participants noted an increase over the month” in new buyer enquiries. New instructions being listed onto the sales market also rose to a net balance of +59% of respondents reporting an increase. “Alongside this, a net balance of +57% of respondents nationally saw a rise in agreed sales over the month.”
Adding to this, “Across the UK in aggregate, a net balance of +12% of respondents reported an increase in house prices during July, a noticeable turnaround on the reading of -13% registered in the June results.”
The Hometrack report mentions “The strength of demand and sales is supporting the headline rate of UK house price inflation which slowed to +2.5% in July from +2.7% in June.”
Hometrack’s reporting evidences the behavioural shift for people wanting more space as four-bed houses are now selling faster than flats. Hometrack also identifies new supply coming in by wealthier demographics. “A soft repricing of the housing in these regions [London and South East England] over the last 5 years has improved affordability while the recent stamp duty changes will have contributed to more homes coming to the market for sale.”
Picking up reporting for August, Rightmove records the highest number of sales agreed in a month, since this data has been collected (over 10 years ago), and with a record total value of over £37billion.
Rightmove also achieved an unseasonal record high for new seller asking prices in seven regions, however London drags down the national average to 0.2%.
Click here to download report.