UK House Prices Make History – November 2020 Property Roundup

The SevenCapital Property Roundup is all the headlines you need to know about the property market over the last month, brought together in one handy place. For the November 2020 Property Roundup, we see how the UK market has made history, why the stamp duty extension might actually happen and how sales pipelines have skyrocketed since 2019. 

Average UK House Prices Hit £250k for the First Time Ever

New data from Halifax released in October shows that the average UK house price has topped £250k for the first time in history.

Representing the strongest growth in over four years, this incredible feat has been largely driven by the mini-boom following the end of the UK’s first lockdown.

House prices between August and October saw a 4.0% rise against the previous three months, while prices in October specifically were 7.5% higher than the same month in 2019 – the strongest growth we’ve seen in the market since June 2016. 

According to Russell Galley, Managing Director of Halifax, “This level of price inflation is underpinned by unusually high levels of demand, with latest industry figures showing home-buyer mortgage approvals at their highest level since 2007, as transaction levels continue to be supercharged by pent-up demand as a result of the spring/summer lockdown, as well as the Chancellor’s waiver on stamp duty for properties up to £500,000.”

Property Growth Remains Strong Despite Seasonal Slowdown

While the UK property market naturally sees a slowdown at this time of year, demand remains strong.

According to the UK House Price Index, the average UK house price increased by 4.7% over the year, highlighting how the market continues to go ‘against the grain’ of what we’d usually expect. 

In fact, data from Chestertons shows that enquiry levels are 40% higher than they were last year and still remain at a five-year high, demonstrating the confidence in the market despite the second lockdown.

Is the Stamp Duty Deadline Driving Demand Amid Calls for Extension?

In a word, yes. While stamp duty changes always skew the figures somewhat, this ‘once-in-a-generation’ opportunity has been a massive driver of increased property transactions.

Recently released government property data shows that the number of stamp duty transactions in Q3 were 68% higher than in the previous three months. 

With history suggesting that around 25% of sales agreed in Q1 complete in the same quarter, it’s no surprise we’re seeing a huge rush now that will likely die down after January 2021.

That said, the government is facing strong calls to consider an extension of the stamp duty holiday amid fears the UK market will hit a steep slump following the deadline on 31 March 2021.

With several financial support schemes – including the furlough program – set to end on that same date, many financial experts are suggesting ministers will be forced to extend to avoid a ‘damaging downturn’. 

If this is the case, when we consider an extension may coincide with an unprecedented number of buyers re-evaluating their housing situation and the market’s natural buying period, there’s no reason why the UK property market’s current success couldn’t continue into 2021.

Sales pipeline 50% bigger than 2019

It’s estimated that there are around 50% more property sales progressing through the system than at the same time in 2019 – equalling approximately 418,000 sales worth £112 billion. 

Driven by the increased demand, we’re seeing throughout the market; this is also nearly 140,000 more sales than is typical during this season. 

Of course, more buyers means there’s also an increase in the amount of supply – sales inventories are 18% higher than a year ago across the UK. 

Despite this increase, the UK is still facing a chronic undersupply of property – particularly in regional areas – which is contributing to their continued success. 

It should also be noted that with the number of new sales agreed since June 2020 being 40 – 60% higher than the same time in 2019, operational pressures are being placed on agents, lenders and valuers, which may put pressure on the mortgage market as a whole.

Timelines Suggest ‘Agree on a Sale By Christmas to Complete in Q1’

In normal market conditions, the time between a sale and completion averages just under 100 days – most sales agreed in Q4 of the year will complete by the end of Q1.

However, the volume of business in the current pipeline means this period will typically increase, which buyers will need to consider. 

Savvy buyers will look to agree on a sale by Christmas with a view to completing at the end of Q1 2021, which will support sales volumes over the rest of the year.

Those that are thinking about buying later into January should consider that 54% of sales agreed in-month would complete by the end of Q1, but that number falls to less than 20% if sale is agreed in February.

If you’re buying in January, experts suggest finding an agent well before Christmas and getting as much of the paperwork together as possible to increase your chances of a sale.

As we head towards Q1 2021, and an array of vital deadlines for the property market, it’s more important now than ever for investors to consider the broader trends surrounding the UK property market.