Property warning: Experts share perfect time to buy as prices are now ‘highest on record’

House prices: Chartered Surveyor discusses impact of lockdown

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The average UK property price is now £262,954 – the highest on record according to the latest Halifax House Price Index. Annual house price inflation slows further to 7.1 percent and Wales remains the strongest region or nation as London continues to lag. While this isn’t good news for anyone missing to purchase a property, experts have told buyers to hold off a little longer as they expect house prices to “decline post-October”. 

HMRC’s monthly property transactions data for UK home reveals sales have decreased in July 2021.

The residential transactions in July 2021 were 73,740 – down by 62.8 percent from June’s figure of 198,420 (down 61.5 percent on a non-seasonally adjusted basis).

The latest quarterly transactions (May-July 2021) were approximately 14 percent lower than the preceding three months (February 2021-April 2021).

Year on year, transactions were 4.2 percent higher than July 2020 (1.8 percent higher on a non-seasonally adjusted basis). 

As for mortgages, the latest Bank of England figures show the number of mortgages approved to finance house purchases fell in July 2021 by 6 percent to 75,152. 

Compare that to year-on-year, the July figure was 14 percent below July 2020. 

Results from the latest (July 2021) RICS Residential Market Survey show a slightly softer month for new activity as the stamp duty holiday started to be phased out. 

New buyer enquiries dipped to a net balance of -9 percent in July, down from +10 percent previously and ending a four-month positive run. 

Russell Galley, Managing Director, Halifax, said: “Average house prices climbed again in August, with the cost of a property increasing by 0.7 percent or £1,789.

“Back-to-back monthly price gains have now pushed the cost of a typical home to a record of £262,954, topping the previous high (£261,642) recorded in May this year.

“Given the rapid gains seen over the past 12 months, August’s rise was relatively modest and the annual rate of house price inflation continued to slow, hitting a five-month low of 7.1 percent (versus 7.6 percent in July),” he added. 

“However, compared to June 2020, when the housing market began to reopen from the first lockdown, prices remain more than £23,600 higher (or +9.9 percent).

“Much of the impact from the stamp duty holiday has now left the market, as highlighted by the drop in industry transaction numbers compared to a year ago. 

“However, while such Government schemes have provided vital stimulus, there have also been other significant drivers of house price inflation.

“We believe structural factors have driven record levels of buyer activity – such as the demand for more space amid greater home working,” Russell explained. 

“These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month.

“Moreover, the macroeconomic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels.

“Coupled with a supply of properties for sale that looks increasingly tight, and barring any reimposition of lockdown measures or a significant increase in unemployment as job support schemes are unwound later this year, these factors should continue to support prices in the near-term.”

Regions and nations house prices

As Halifax expected given the trends outlined, annual house price inflation is slowing in most nations and regions.

Wales remains the strongest performing area, with annual house price inflation at 11.6 percent and the only double-digit rise recorded in the UK during August.

The South West is also still experiencing strong growth at 9.6 percent, likely reflecting the ongoing demand for rural living within the region.

Some areas do appear to have headroom for even stronger price growth, with annual house price inflation in the North East now up to eight percent.

Northern Ireland has also seen prices rise further with annual house price inflation of 9.3 percent in August, though Scotland has seen price growth slow to 8.4 percent.

Greater London continues to lag the rest of the country, registering just a 1.3 percent annual increase in prices in August and, over the latest rolling three-monthly period, was the only region or nation to record a fall in prices (-0.3 percent). 

The year-over-year rise in London was also the weakest seen in 18 months.

Though at a cost of £508,503, typical properties in the capital remain far above the national average national price.

Joshua Raymond, Director at financial brokerage XTB said: “The Halifax House Price Index (UK’s longest running monthly house price series) came in below expectations at 0.7 percent compared to the expected increase of 1.1 percent.

“Prices have been under increasing pressure after the index showed significant signs of slowdown in the last couple of months after a fairly stable increase throughout Q2.

“As overall inflation pressures continue to be a key issue followed by the Bank of England, along with other central banks, a continuation of the current trends could see the central bank stepping in and taking action even sooner than was previously expected.

“While a return to work and easing of lockdowns was expected to significantly boost property prices, it seems as if there are still some major hurdles the UK economy has to contend with.”

Ross Counsell, chartered surveyor and director at GoodMove said: “According to Halifax’s latest statistics house prices are still continually increasing.

“August’s rise was relatively modest in comparison to other monthly increases from the past 12 months.

“What’s more, the annual rate of house price inflation has also slowed down for another month, hitting a five month low of 7.1 percent. 

“This does predict that house prices should start to become more attainable as inflation continue to decrease.

“The Stamp Duty holiday came to an end in its current format at the end of June, but the impact from the holiday is no longer reflected in the market and current stats,” Ross continued. 

“In fact, increasing house prices can be due to the new way of working from home, which drives buyer demand to look for more spacious properties.

“But with the Stamp Duty holiday officially ending and returns to normal rates at the end of the month, we expect house prices to decline even further post-October, and will hopefully see house prices settle to what they looked like pre-lockdown.

“These stats should hopefully signal the start of the property market easing over the next few months, so for anyone looking to buy a property this year, I’d advise to hang fire until Autumn/Winter if you can.”

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