- Nationwide reported house prices rose 0.8% month-on-month in October, which was a fourth successive robust monthly gain; this lifted the year-on-year increase to 5.8%, the highest since January 2015. The three-month/three-month gain of 3.5% in house prices in October was the strongest for 11 years
- House prices have strengthened as housing market activity has maintained the buoyancy evident since mid-May when the easing of restrictions on activity released pent-up demand. This buoyancy has been reinforced by the Chancellor raising the Stamp Duty threshold to £500,000 from mid-July through to 31 March 2021
- Yesterday, the Bank of England reported that mortgage approvals for house purchases increased to a 13-year high of 91,454 in September
Howard Archer, chief economic advisor to the EY ITEM Club, says:
“Nationwide reported house prices rose for a fourth month running in October, with the rate of increase robust.
“House prices increased 0.8% month-on-month in October. This followed monthly gains of 0.9% in September and 2.0% in August (the strongest month-on-month rise since February 2004). There had also been a strong increase of 1.7% month-on-month in July.
“The year-on-year change in house prices rose to 5.8% in October, the highest since January 2015. This was up from 5.0% in September, 3.7% in August, 1.5% in July and a dip of 0.1% year-on-year in June which had been the first annual decline in house prices since December 2012.
“House prices were up 3.5% in the three months to October compared to the three months to July. This was the strongest three-month/three-month gain since October 2011.”
Housing market activity has picked up since restrictions were eased from May, reinforced by the Stamp Duty break
Howard Archer observes: “Housing market activity in the UK has progressively picked up since the easing of the lockdown restrictions began in England in mid-May and then progressed across the UK. There was an immediate pick-up as pent-up activity was released.
“The lift to housing market activity coming from its re-opening was then reinforced by the Chancellor’s raising of the Stamp Duty threshold to £500,000 from mid-July until 31 March 2021.
“Interestingly, Nationwide has also observed that “Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.” Indeed, the Nationwide reported that “around 10% of those surveyed in September said they were in the process of moving as a result of the pandemic, with a further 18% considering a move for the same reason. This pattern was evident across the country, especially in London. Of those moving or considering a move, around a third (35%) were looking to move to a different area, while nearly 30% were doing so to access a garden or outdoor space more easily.””
Howard Archer continues: “Yesterday, the Bank of England reported that mortgage approvals for house purchases accelerated for a fourth month running in September to be at a 13-year high of 91.454. This was up from 85,530 in August and a record low of 9,338 in May.
“The monthly RICS residential monthly survey for September observed that its findings “continue to point to a strong upturn in activity across the market, as indicators on enquiries, agreed sales and new listings all remain strongly positive.”