UK Property Still Breaking Records – October 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 October 2020 Property Roundup, we examine how UK property is continuing its extraordinary rise, what local lockdowns might mean for the future and an update on Birmingham’s Commonwealth Games efforts.
UK Property Hits Extraordinary Levels
Following on from the unexpected mini-boom currently occurring across the UK property sector, Rightmove has announced ‘extraordinary’ activity during the last month.
The average price of a property hitting the market has increased by 1.1%, contributing to an all-time national record of £323,530.
On top of that, Rightmove says that this is 5.5% higher than the same period during 2019 and represents the highest annual growth for over four years.
It also seems the ‘prediction rulebook’ has been torn up – Rightmove’s original forecast of 2% growth has been surpassed, meaning new predictions which place growth peaking at 7% before the year-end are now in place.
Property Transactions Reach New High
Following on from a record-breaking period post-lockdown, transactional activity continues to rise above previous records.
The number of active buyers contacting estate agents was up 66% on last year, showing clear signs of demand that isn’t set to stop.
While these indicators have all fallen from the record breaking levels they achieved in July, Savills have now updated their forecasts accordingly, highlighting the positive growth they expect in all regions throughout the rest of 2020.
Local Lockdowns Exposing ‘Unstable Foundations’?
Despite high-flying price rises, experts believe that the stamp duty holiday ending in March and rising unemployment means this growth is built on ‘unstable foundations’.
The potential for local lockdowns are also having a huge impact on the market, building on the uncertainty that has been plaguing buyers since last year.
With high-street estate agents in Wales closing their doors once again, and property viewings banned until 9th November, the potential for this to spread throughout the market is contributing to uncertainty for buyers.
According to Jamie Durham, an economist at PwC, new lockdown measures would likely drive uncertainty both locally and nationally.
“Uncertainty may cause people to delay major financial decisions such as moving home and lead to weaker house price growth over the coming months.
“Assuming there is a relatively limited second peak in Covid-19 cases, with no nationwide lockdown, house prices could grow nationally by around 1% in 2021. If further measures are introduced to control the spread of the virus, house prices could fall in 2021.”
Mortgage Market Struggles for First-Time Buyers
While the housing market is thriving for homebuyers, for first-time buyers it’s a different story.
Further restrictions on first-time buyer mortgages – driven in part by cautious lenders – means that many more young households face years of renting.
With 95/90% mortgages now difficult to find, many young households are finding they need a 15% deposit to get on the property ladder, a tough ask for would-be buyers.
Research by Hamptons International shows that for the average first-time property, a household income of £37,096 is required. The analysis was performed using UK earning figures, adjusted to reflect the earnings that a 22 – 29 year old would typically receive.
The research also showed that at these rates, a deposit of £29,458 would usually be required.
Birmingham Announces Commonwealth Games Transport Plan
Following on from the introduction of the ‘Birmingham Transport Plan 2031’, Birmingham has also announced a separate ‘Games Transport Plan’ ahead of the 2022 Games.
The Games Transport Plan will look to support the transportation of spectators, athletes and workers with minimum disruption to normal service.
Over £320 million is expected to be funnelled into local transport projects, in an effort to assist both local communities and the economy.
This follows on from the announcement of the Birmingham Transport Plan 2031 in June. This long-term project is looking to reduce Birmingham’s impact on the environment while also revitalising travel around the city.
With measures focused on both mitigating the effects of COVID-19 and maximising green standards, the Birmingham Transport Plan 2031 has an end-goal of creating a carbon neutral city by 2030.