Rightmove: Housing market mini-boom defies seasonal slowdown
Although there is normally a slowdown in housing market activity over the summer months, the August 2020 Rightmove House Price Index found home movers had put more property on the market and agreed more sales than in any month for over 10 years, worth a record total of over £37bn.
There have been monthly price increases in 10 out of 12 UK regions, with a record high in new seller asking prices in seven.
Prices usually fall at this time of year, with the national average monthly fall for the last 10 years being 1.2%.
While there is a slight monthly fall of 0.2% (-£768), this is due to London’s more normal seasonal fall of 2.0%, reversing what would otherwise have been an unseasonal national rise.
The average national average asking price in August was £319,497, compared to £320,265 in July.
The biggest regional change in house prices was in Wales (2.9% monthly), followed by the North East (1.7% monthly); the only areas to see a negative figure were London and the South East.
The number of monthly sales agreed is the highest measured since Rightmove began tracking this figure 10 years ago, up by 38% on 2019, and 20% higher than the previous record, set in March 2017.
Sales agreed are up across all sectors of the market: 29% in the first-time buyer sector, 38% in the second stepper sector and 59% for larger, top-end homes.
This number is continuing to rise, with the latest weekly figure for number of sales agreed having grown by 60% compared to the same week a year ago.
There are 44% more properties coming to market compared to the same period a year ago.
Miles Shipside, director and housing market analyst at Rightmove, said: “There have been many changes as a result of the unprecedented pandemic, and these include a rewriting of the previously predictable seasonal rulebook for housing market activity and prices.
“Home movers are both marketing and buying more property than we have recorded in any previous month for over ten years, helping push prices to their highest ever level in seven regions.
“Rather than just a release of existing pent-up demand due to the suspension of the housing market during lockdown, there’s an added layer of additional demand due to people’s changed housing priorities after the experience of lockdown.
“This is also keeping up the momentum of the unexpected mini-boom, which is now going longer and faster.
“We associate this time of year with diving into the pool rather than the property market, and of sand and sun rather than bricks and mortar, but buyers have had a record £37bn monthly spending spree.”
He added: “More property is coming to market than a year ago in all regions, and at a national level the new supply and heightened demand seem relatively balanced.
“However, those expressing most desire to move on are unsurprisingly in London and its commuter belt.
“London has 69% more properties coming to market, with the South East at 60% and the East at 56%.
“With work and transport patterns potentially changing most around the capital, commuter-belt properties need to have more appeal to prospective buyers than just proximity to a station.
“Many buyers do appear to be satisfying their new needs in these regions, as the number of sales agreed in each is also at a record level.
“The out-of-city exodus has helped push prices to record levels in Devon and Cornwall, for example, where working from home means a different lifestyle much closer to your new doorstep.”
Shipside concluded: “Not only are we seeing an unusually busy summer period, but also parts of the lending and legal sectors are having to cope with capacity constraints, as some staff will still be on furlough while many will still be working from home.
“Patience will be required, especially with some lenders limiting their product ranges due to capacity constraints in their ability to process mortgages.
“To minimise the risk of missing the 31 March stamp duty deadline it’s best to plan well ahead.
“This busy pace of the market looks set to continue in the short term, and although the market has proven resilient since reopening we still need to be mindful of the wider economic concerns as the year progresses.”
Tomer Aboody, director of MT Finance, said: “The shift from quiet summer for the housing market to a manic one isn’t surprising due to quarantine rules imposed on travelling abroad so the vast majority are staying in the UK and getting on with buying and selling.
“This buoyant surge in sales and properties coming to market underlines the shift in priorities in terms of buyers’ attitude to moving and their requirements.
“Outside London, the housing market has been busy with workers looking for commuter belt homes which are cheaper than the capital but also bigger for working from home and with outside space for the children.
“The market is set to be busy for a while, due to the stamp duty holiday and with possible further stimulus to come in the Autumn Budget, which could make Risihi Sunak more popular than Santa come Christmas.
“While the suburbs and country are proving popular, there are those who need to stay in London for schooling and family commitments.
“For them, the stamp duty changes don’t go far enough as £500,000 sadly doesn’t buy much within these areas.
“Mortgage lenders have probably never been busier, and with liquidity still good, mortgage products are still competitively-priced.”
Jeremy Leaf, north London estate agent and former residential chairman of the Royal Institution of Chartered Surveyors (RICS), said: “The housing market is receiving added impetus not just from buyer and seller post-lockdown pent-up demand but from others bringing forward moving decisions prompted by the stamp duty holiday.
“Despite some suggestions the momentum may fizzle out, there is not yet any sign of bad economic news raining on the parade.
“On the contrary, a more broad-based sustainable recovery may be underway with increased activity in most price ranges.
“If anything, the market is more likely to be restrained by lender delays in mortgage underwriting than a drop in buyer enthusiasm.
“Prices are not rising significantly as the increase in listings is helping to balance the market and in any event most buyers seem aware of the risks of overpaying in generally uncertain times.”
Marc von Grundherr, director of Benham and Reeves, said: “The ‘nothing to see here’ of price inaction is completely circumvented by the enormous spike in deals being done because, for agents, transactional volume is more important than price and for now at least property firms are revelling in their new-found breathlessness as they attempt to keep up with both supply and demand.
“It’s like the late 80’s all over again”.
Russell Quirk, property expert at MovingHomeAdvice.com, said: “This latest set of numbers from the especially authoritative Rightmove must surely correct even the most morose of property market bulls, for now at least.
“This explosion of activity is not just a consequence of the fuel of stamp duty respite, but a market that has proven time and again that it is robust even in the most challenging of circumstances.
“You can apparently throw Brexit, political turmoil, a couple of general elections and a once in a century pandemic at it yet it still marches on.
“Like the proverbial cockroach, no matter what you do to kill it, it simply will not die.”