House prices look set to continue their meteoric rise over the summer as demand soars offset by a limited supply of stock.
The Nationwide House Price Index (NHPI) has reported a further rise in annual house price growth in May 2021 to 10.9pc, the highest level recorded since August 2014. Monthly house prices increased by 1.8pc in May, following a 2.3pc rise in April. Yorkshire and the Humber saw the greatest annual leap in prices of 14pc, according to the ONS House Price Index (ONSHPI). The North East came second with growth of 13.7pc followed by the North West with a 12.8pc increase in prices.
As housing market demand exceeds supply, putting upward pressure on prices, house prices continue to rise. In April, 32pc of properties sold for more than the original asking price.
Rightmove recently reported that housing market demand was 52pc higher in April 2021 compared with April 2019. Stock is still low, despite increased demand, with Zoopla recording a 21pc fall in the year to mid-May compared with the 2020 average.
Nicky Stevenson, MD of Fine and Country UK, comments that the supply shortage is especially noticeable in the market segment of family homes with three or more bedrooms. Compared with the same period in 2019, available stock for sale in April 2021 fell by an average of 50pc. To a lesser degree, the availability of houses with one or two bedrooms fell by 24pc.
Housing market demand to remain bullish
Nonetheless, the overall outlook for the property market remains positive. Stevenson believes the momentum in the housing market has been maintained following the original stamp duty deadline in March 2021, which caused a tremendous uptick in transactions. An estimated 117,860 transactions completed in April 2021, 21pc higher than the average from April 2014 to April 2019, according to HMRC.
Mortgage approvals also remain high, with 86,921 approved in April 2021, 30pc higher than the average between April 2014 and April 2019, and an astonishing 439pc higher than last year. Recent research by Nationwide found that the stamp duty extension in England and Northern Ireland was not the primary factor sustaining the buoyancy of demand in the housing market. Of those surveyed who were either moving home or considering moving, 68pc said they would have done so even if the stamp duty holiday hadn’t been extended.
Stevenson adds that the present state of the housing market will most likely withstand the reduction in potential savings from the stamp duty holiday in England and Northern Ireland at the end of June and its termination in September.
Looking to the future, she says the high level of housing market demand in 2021 has resulted in £149bn of homes sold STC in the first 15 weeks of the year, according to Zoopla. Furthermore, with lockdown restrictions due to ease and foreign summer holidays likely to be postponed until next year, housing market demand is expected to remain bullish over the summer. Zoopla estimate that total sales completions will be 1.52m this year, making 2021 one of the busiest sales markets since the global financial crisis in 2008 and one of the top ten most active years since 1959.
Largest sales pipeline in 10 years
Stevenson points to the fact that agents continue to be positive when reporting on house prices, with three-month price predictions showing a greater than 51pc net balance. Agents forecast upward pressure on prices remaining firm over the next twelve months, with the latest net balance standing at in excess of 68pc.
According to Rightmove, thousands of optimistic buyers are forging ahead with their plans to buy a home regardless of the approaching stamp duty holiday deadline this month, resulting in the largest sales pipeline in ten years.
The latest data from the property portal show more than 700,000 homes marked SSTC are moving through the conveyancing process across the UK, a stupendous jump from 613 at the beginning of the year. Yet the hyperactive market over the past few months has resulted in homes being marked as sale agreed at a faster rate than they are completing.