ARK’s Market Synopsis

COMMENTARY

Welcome to the latest edition of ARK’s Market Synopsis report covering market outcomes to the end of September and with Rightmove picking up reporting for October.

We are now beginning to see stronger evidence of what has been, anecdotal reporting over the last couple of months:

The RICS reporting relating to regional demand in East Anglia, the South West and Yorkshire & the Humber supports the anecdotal evidence of a “drive to the countryside” with greater demand starting to be evidenced in less densely populated areas.

Nationwide’s commentary supports the geographical shift reporting that “Of those moving or considering a move, around a third (35%) were looking to move to a different area, while nearly 30% were doing so to access a garden or outdoor space more easily”.

Halifax report space as a defining factor in property searches saying “There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space.”

The reports clearly evidence the need to carefully consider design and space standards in new homes across tenures.

Halifax also offer clarity on the effects of the stamp duty holiday reporting that “the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March”.

The reports of activity to date are universally positive and the market has confounded our initial thinking relating to the possibility of a recession. But the forecasts are, we are afraid less rosy, and we would draw readers attention to the following comments:

  • Halifax reflects on the positive impacts of the furlough scheme and the stamp duty holiday (section 3.3) but concludes “Therefore while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”
  • Nationwide report however, this near-term [positive] assessment is becoming increasingly at odds with the longer-term view. Indeed, twelve-month sales expectations moved deeper into negative territory, posting a net balance of -34%, down from -17% in August.
    However, the development and release of vaccines may well have the effect of raising the mood and have a consequent positive impact on the market that might outweigh other potential downsides.

HIGHLIGHTS

In September, Halifax reported annual house price growth increased to an impressive 7.3%, the strongest since mid-2016. Nationwide reported an annual house price growth of 5.0%, this is the highest since September 2016.

Also showing optimistic readings in their reporting was RICS with key indicators pointing to positive market activity. “Headline net balance of +52% of survey participants reported an increase in new buyer enquiries. This marks the fourth consecutive monthly pick-up in demand. Agreed sales also remains positive with a net balance of +55% of respondents noted an increase in agreed sales over the month”.

The RICS also adds “the regional breakdown shows that sales continue to rise across all parts of the UK, led by exceptionally strong growth in East Anglia, the South West and Yorkshire & the Humber.”

Moving on to Hometrack, the UK growth rate is +3.0%, up from +1.1% a year ago, recording the highest rate for over 2 years. Furthermore, Hometrack expects that there are “418,000 sales progressing to completion worth £112bn. This is 140,000 more sales than usual at this time of year.”

In the rental market report, Hometrack shows the average UK rents outside London rose by 0.7% in the three months to September. Rental growth remained in positive territory across most regions, however, in London rents fell by -3.2% in Q3.

For October, Rightmove reports the average price of property coming to market increased by 1.1%, this is an all-time national record of £323,530. Moreover, this is a 5.5% increase over a year ago, and the highest annual growth rate for over four years.

Rightmove also mentions a “49% increase in traffic in September compared to the same period last year, which is the biggest year-on-year jump since 2006. So far in October the number of sales agreed is still 58% up on the same period last year.”

Click here to download the report.


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