UK Market Maintains Surprise Momentum – September 2020 Roundup
As we leave one lockdown and potentially head for another, we’re taking a moment to step back and analyse the property industry going forward. With the surprise resurgence of UK property still happening up and down the country, find out what the future could hold for the market in our September Property Roundup for 2020.
UK Property Maintains Surprise Momentum
Last month we described UK property as ‘defying gravity’ and wouldn’t you know it, the market is continuing its miraculous recovery – even while everything else around it appears to be struggling.
Momentum across the industry remains high, although experts warn that it’s unlikely the market will be able to ride its luck forever.
The headline news? On average, the average price of a UK property has risen 5.2% year-on-year according to Halifax.
Similarly, Nationwide research found that prices rose by 2.2% over the last month, the highest monthly increase since February 2004.
Mostly driven by pent-up demand and supported by various government measures (which are due to end soon), Halifax warns that this level of growth is likely ‘unsustainable’, although for now it’s a positive sign.
Another major driver of this increased demand is the market’s pursuit for gardens and ‘greenery’ spaces.
The last week of August saw the highest number of exchanges since the end of 2019 – likely due to lockdown giving potential movers and shakers plenty of time to make up their minds about a change.
It seems like the number one priority is a garden or a green space – 83% of respondents to a recent Royal Institute of Chartered Surveyors (RICS) survey believe that demand for these particular qualities will grow over the next two years.
Knight Frank Remain Positive
If there’s one clear example of how active the current market has been since the introduction of the stamp duty holiday, we need only look at mortgage approvals.
According to the Bank of England, mortgage approvals have risen by 66% since June, bringing the numbers closer to pre-pandemic levels.
In turn, Knight Frank has adjusted their predictions for the future accordingly.
They now believe that ‘double-digit price falls will not take place, despite an assumption of a rise in unemployment and second wave of COVID-19’.
While they expect property transactions to fall by 15% this year compared to last year, they also expect prices to remain broadly flat, with slight upwards trends in developments with more outdoor space.
Prime London on the Rise
London is another surprise winner since lockdown, after a year of lagging behind the wider market.
With prices in central London up by 0.3% last month and outer London prices up by 0.5% – the highest rise since June 2015 – it seems as if the capital is finally on the road to recovery.
Despite the rally, Knight Frank’s revised predictions expect a 3% fall across the entire London market in 2020 before it recovers in 2021.
Property Viewings Reach Ten-Year High
On the lettings side of the market, the outlook is positive. Activity is typically robust and the number of tenancies agreed has risen 9% higher than the five-year average.
Property viewings have reached a ten-year high, which should have a knock-on effect of decreasing the downward pressure on rental prices.
Rental growth as a whole has seen a slight increase – 1.4% in the year to July – with the South West seeing the largest increases at 2.5% and Scotland seeing the lowest at 0.6%.
Finally, RICS data shows that 75% of surveyors have reported rising levels of demand from tenants, illustrating the strength of the UK market during this unprecedented time.