The Office for National Statistics (ONS) has reported that average house prices in the UK during October 2021 increased by 10.2% in the year to October 2021, down from 12.3% in the year to September 2021.
The average UK house price was £268,000 in October 2021, which is £24,000 higher than this time last year.
Average house prices increased over the year in England to £285,000 (9.8%), in Wales to £203,000 (15.5%), in Scotland to £181,000 (11.3%) and in Northern Ireland to £159,000 (10.7%).
London is the region with the lowest annual growth at 6.2%.
Kevin Roberts, director at Legal & General Mortgage Club, said: “Despite the end of the Stamp Duty holiday, the market seems to show little sign of cooling down. A strong labour market, as well as the prospect of locking into record low mortgage rates, have combined to keep housing activity particularly buoyant. As the Bank of England seeks to keep a lid on resurgent inflation, borrowers may well be tempted to get a foothold on the property ladder before any rate rise comes into effect.
“Whether the current level of house price growth will extend into the new year, is an uncertain matter. Although the labour market remains secure following the end of government support, inflationary pressures, exacerbated by the emergence of the new Omicron variant, may place household budgets under significant strain. Against this ever-changing backdrop, the value of advice remains paramount. Independent and experienced advisers are well-placed to help borrowers navigate a potential knock to their finances, and help customers lock into a deal that is well aligned with their unique needs.”
The average asking price of property coming to market has dropped by an average of 0.7% in December so far compared to last month, the largest monthly fall since January, according to Rightmove.
Strong buyer demand is carrying forward into 2022, with November showing buyer numbers 41% up on election-subdued 2019, and still 3% up on 2020, while fully available stock for sale has hit a new record low this month.
Tomer Aboody, director of property lender MT Finance, commented: “Even with the strongest property market we have seen in over 14 years and values hitting all-time highs, the December dip in asking prices isn’t surprising, and has been the norm over the years.
“Sellers are in an extremely strong position with multiple buyers for nearly every home, which is pushing up prices, but lack of stock is still a huge issue for buyers. Some are ultimately realising that patience is key, hoping the next year will bring more properties to the market.
“While estate agents are enjoying one of their best years in terms of the volume of sales, 2022 is expected to see a return to normality in the market. Prices will still rise, as buyers make the most of cheap mortgage rates but the pace of increase will be slower and lower, which will make for a calmer, less frenzied market.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, added:“The big story for the housing market this year – and the past few months in particular – has been lack of supply.
“We are still registering many more buyers for each available property so don’t expect any significant price correction soon despite concerns about the rapid spread of the Omicron variant and imminent interest rate rises. On the contrary, we believe the new rules on mask wearing and home working will result in release of further pent-up demand as buyers continue to seek more flexible homes reflecting changing working patterns and lifestyles.
“We expect more balance between demand and supply too if our recent significant increase in requests for market appraisals and early January listings are anything to go by.”
The average UK house price hit a new record high of £272,992 in November, says the latest index from Halifax.
This means a monthly change of 1% – the fifth month in a row that house prices have increased – and an annual growth rate of 8.2%.
Halifax also notes that the quarterly change – up by 3.4% – is the highest seen since late 2006.
In Wales specifically, yearly growth totalled 14.8%, leading to the average house price in the country pushing past £200,000 for the first time ever.
And Scotland saw significant yearly growth, too. Here, the average house price went up by 8.5%, putting the average house price at £191,140 – also a newly minted record.
The report states that since March 2020, which it deems the start of the pandemic, house prices have increased by £1,691 a month on average, a total of £33,81 so far.
Halifax managing director Russell Galley believes that a stock shortage is driving the market, with a “strong labour market and keen competition among mortgage providers keeping rates close to historic low.”
He also points out that for first-time buyers, house prices have increased by 9.1% over the year compared to 8.8% for homemovers.
“We see this across different property types too,” he says, “with double-digit annual price inflation for flats (10.8%) over the last year compared to slower gains for detached properties (6.6%).
“This could suggest the ‘race for space’ is becoming less prominent than it was earlier in the pandemic, with industry data also showing the overall number of completed transactions has fallen back since the end of the stamp duty holiday.”
On the subject of flat prices outpacing that of houses, Hargreaves Lansdown personal finance analyst Sarah Coles says: “There are a few forces at play here. The ‘fear of missing out’ plays its part.
She explains: “Once prices start to rise quickly, anyone trying to get onto the property ladder starts to feel that unless they buy soon, prices will rise out of the reach of their deposit. It means they’re asking for help – both from government schemes like the Lifetime ISA and Help to Buy equity loan, and from their families.
“The Bank of Mum and Dad have seen the value of their own home rise, so they’re more comfortable about dipping into the equity in order to find a deposit for their offspring.
“And once they have the deposit in place, rock bottom mortgage deals are a major attraction, because first timers can fix at such low rates that it makes their monthly payments manageable.”
Coles continues: “But it’s not just first timers. Some of these smaller properties are likely to be second homes and buy-to-lets.”
This is a view shared by UK Finance, which just yesterday stated that an increasing amount of equity being withdrawn peaked in June 2021 – at the same time as when house purchasing activity was at its highest.
The peak amount being withdrawn – £106,000 – “together with the timing of this peak, suggest strongly that much of this has indeed been used to fund or part-fund additional property purchases,” UK Finance comments.
Quilter mortgage expert Karen Noye says: “At this stage, two months post stamp duty holiday withdrawal, it was hoped we might finally see a downtick in house prices.
“The still rising prices demonstrates that while the scheme did have an impact on house prices, it was not the only driver. The race for space appears to still be going strong, and when combined with the current demand outweighing supply, prices are still being pushed higher.
“Interest rates will be key over the coming months, and an increase would push mortgage rates up which will likely put potential buyers off. However, the new Omicron variant may have thrown a spanner in the works of any major changes planned by the Bank of England, meaning we are unlikely to see a rate rise just yet.
“While that may be the case, rock bottom mortgage rates are likely to creep up as an interest rate rise is still anticipated, it is just a question of when.
“Those waiting out the housing market boom in hopes of lower prices will likely have to wait a while longer yet.
“Regardless of whether house prices begin to drop, the likely increase in mortgage rates will contribute further towards the unaffordability of homeownership.”
On a non-seasonally adjusted basis, transactions are 30.1% lower than October 2020 and 48.4% lower than September 2021.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “After a stonking September where buyers rushed to complete on their property purchases in order to take advantage of the last vestiges of the stamp duty holiday, October was bound to see a drop-off in transactions.
“The markets continue to price in an interest rate rise in December although the Bank of England is hinting that the situation is ‘finely balanced’ with slowing growth and the energy supply squeeze, which won’t be helped by a rate rise. In the meantime, the dynamic nature of mortgage pricing has paused a little as lenders take stock. Not all mortgages are becoming more expensive – generally, rates on lower loan-to-value mortgages have been rising but on higher LTVs they have been falling. A 95 per cent LTV two-year fix is cheaper now than it was two years ago, making life easier for first-time buyers, who are so important to the overall health of the housing market.”
Anna Clare Harper, chief executive of property consultancy SPI Capital, commented:“Housing transactions are important because they drive house prices, which both reflect and affect our confidence, and the economy.
“In the first month following the end of the temporary stamp duty reduction, UK housing transactions were down 28.2 per cent compared with October 2020 and 52 per cent lower than September 2021.
“In short, a 10-year peak in transactions last month was followed by a 10-year low.
“This is unsurprising, because stamp duty is a significant influence on affordability. Whilst buyers can borrow more from banks to pay more for housing, stamp duty has to be paid outright. For this reason, it can act as a catalyst for decisions to buy or not to buy.
“As for what next: we can expect a general slowdown in housing transactions, but a significant reduction in house prices is unlikely. This is because the cost of buying a new property is now higher, and the cost of holding on to a property remains low due to low interest rates and wide availability of low cost, fixed rate mortgages.
“Perhaps the biggest problem the housing market faces going forward is the shortage of available stock, which means that even as housing transactions fall, prices are likely to remain strong.”
Rob Barnard, director of intermediaries at Masthaven, added: “Despite the end of furlough and the stamp duty holiday, it’s encouraging to see that property transaction figures remain robust. Against a challenging financial backdrop, prospective buyers continue to push ahead with purchase plans. The release of pent-up demand has shifted the housing market up a gear and the very much enduring “race for space” continues to play its part, reflecting the extent to which our lifestyle changes have kept the market particularly buoyant.
“However, with an imminent rate rise now widely expected, the industry needs to work together to navigate this new environment head on. For many homeowners, this could present newfound financial challenges, leaving them in need of guidance from brokers more than ever before. Supporting brokers during this time and ensuring that they are well-equipped to meet the evolving expectations of customers will be essential. In the face of high inflation and rising house prices further stretching affordability, specialist lenders must collaborate closely with the broker community to take this new era of lending in our stride.”
Rents on larger properties are rising at a faster pace than smaller homes, according to the latest housing index from Hamptons.
Rents on four-bedroom properties are showing the strongest growth having increased by 10.6 per cent over the year to October. This gives an average rental cost of £1,949 per calendar month. This is three times the rate of growth seen for one-bedroom properties, where rents have increased just 3.7 per cent year-on-year, to £875 pcm, according to Hamptons’ monthly letting index.
The estate and letting agent said the shift towards working from home as a result of Covid had fuelled demand for more living space and larger properties. As a result the cost of trading up to gain this additional space had substantially increased.
The gap between the monthly rent of a one and two-bed home now stands at its widest point since 2013, when Hamptons starting compiling this index, with the monthly cost of renting a one bed property now equivalent to the cost of renting a two-bed property in 2016.
In total, the cost of trading up from a one-bed to a two-bed rental property has doubled over the last three years. Last month it cost £144 or 16 per cent more to rent a two-bed home, more than double the gap (£68 or 8 per cent) recorded in October 2018.
This equates to an extra £1,728 each year on average in rental payments. The cost of moving from a two-bed to a three-bed has also risen.
London is the costliest region in the country to trade up, both in absolute and percentage terms. Last month the average two-bed in the capital cost £567 or 42 per cent more each month than a one-bed. The North East is the cheapest region to swap a one-bed for a two-bed, where it will cost an extra £102 a month, equivalent to a 20 per cent increase.
Compared to last year, the cost of trading up has risen the most in the East Midlands. Here it cost 12 per cent or £63 more each month to trade a one-bed for a two-bed home than in October 2020. This is because rents on one-bed properties in the region have fallen by 0.2 per cent year-on-year, while two-bed rents have risen by 9.7 per cent.
London is the only region where it’s cheaper to trade up than it was last year. This is because rents on one-bed properties in the capital have risen faster than two-beds. Much of the demand for one-bed homes in London has been driven by younger tenants and pied-à-terre hunters returning to the capital, which in turn has bolstered rents.
Hamptons head of research Aneisha Beveridge says: “The pandemic has marked the first time that we’ve seen such a big divergence in rental growth by property size.
“Usually, rental growth remains fairly uniform no matter how large the home is, but over the last year the gap between rental growth on smaller and larger properties has widened to around 5 per cent. But as more tenants make their return to city centres, many seeking smaller properties, it’s likely that the gap will begin to shrink in the new year.
“There are few signs that rental growth is slowing as the year ends meaning that if growth continues at current rates, we are likely to see rents outside the capital hit £1,000 per month by the middle of next year.
“Rents in London are starting to recover their pre-pandemic momentum which will serve to bump up the headline rental growth figure nationally.”
Stamp duty jumped 67% to £10.2bn in the first half of the tax year, compared to 12 months ago, according to HMRC monthly data.
It said the rise was due to the slump in the property market caused by the pandemic in the first half of last year, followed by the surge sparked by the last July’s launch of the government’s stamp duty holiday.
Last month, stamp duty on property was up a record 76% from October last year, and 25% higher from the same month in 2019.
However, HMRC says: “Comparisons against receipts in the same period last year are not representative as they were heavily impacted by the effects of the Covid-19 pandemic.”
The overall tax take from the Treasury jumped 34% to £392bn in the first half of the current tax year between April and October, with higher receipts from a range of taxes, including the three largest revenue earners – VAT, income tax and national insurance.
The rise reflects more people leaving the government’s furlough scheme and returning to the workforce after the disruption of the pandemic.
Inheritance tax only made up £3.6bn of the tax take, but is a 20% rise on the same period a year earlier.
Hargreaves Lansdown personal finance analyst Sarah Coles says: “The enormous jump in stamp duty this tax year demonstrates the impact of the stamp duty holiday. And while the taxman may be rubbing his hands in glee, buyers are more likely to be wringing theirs.
“Tax is up a third in the first half of the tax year and stamp duty has soared by two thirds. And while the figures are distorted enormously by the impact of the pandemic, the dramatic impact of the stamp duty holiday is clear.
“It’s difficult to compare tax years, because the government brought in a set of rules to try to make it easier to manage tax bills, and another set to get us to spend more money and buy more property.
“However, we can see the enormous impact of the stamp duty holiday. It has pushed the average house price to a record high of £270,000 – up £28,000 in a year, and driven transactions higher. This year we had the busiest ever September in the property market, as buyers rushed for the final stamp duty holiday deadline.
“In terms of stimulating the market and generating tax, the move was clearly effective. However, if you’re trying to get onto the property ladder, or move up it, the impact is likely to be far less welcome.
“As the tax break dies away, buyers now have nothing to gain from the short-term measure, and in the process it has made the challenge of buying a home even harder.”
The number of people moving home more than doubled (132%) to 265,070 in the first half of 2021 compared to the same period last year, according to the latest Halifax data.
There were an additional 151,040 transactions in the first six months of this year, in contrast to the same period in 2020, where 114,030 home moves took place.
In the 12 months to June 2021, 461,010 home moves took place, up by more than 50% on the previous 12 months. The total number of moves in the last year is almost 100,000 more than at any point in the last 10 years.
This leap in property transactions comes after several years of flat or falling numbers and brought the annual total to the highest it’s been since 2007, when it hit 716,650.
First-time buyers also returned to the market in force during the first half of the year, with 210,900 transactions, an increase of 74% on the same six months last year. Those getting their first foot on the housing ladder accounted for nearly half (44%) of all sales in the period.
Across the UK there was a year-on-year doubling of the number of homemovers (132%). Every region in England and Wales saw transaction numbers double in the first half of 2021 compared to the same period last year, while Scotland saw an 86% increase.
The regions with the largest increases in home movers were the South East (169%) and London (165%). Northern Ireland has seen the greatest long-term increase, with a 182% rise over the last 10 years. In comparison, London has experienced a 64% rise over the same period.
A ‘race for space’, as workers adjust to a future where working from home more frequently, is reflected by changes in the mix of property type bought. Detached homes were the most popular for movers (30%), slightly ahead of semi-detached properties (28%). The largest rise in detached home purchases over the last ten years was in the West Midlands (+14%), while its neighbour, the East Midlands, experienced a fall of almost 9% in semi-detached sales.
The average price paid by homemovers rose 11% in the 12 months to September 2021, to £387,485.
Wales (£276,849), East Midlands (£320,715) and Yorkshire and the Humber (£284,268) all saw prices rise by 16% over the year, whereas Greater London (£699,864) saw prices rise by just 5%, the lowest of any region.
Homemovers put down an average deposit of £134,227, equivalent to 35% of the purchase price. Average deposits were worth at least 30% of the property in all UK regions. Highest deposit levels are in the South West (38%), with the North having the lowest at 30%.
Andrew Asaam, mortgages director at Halifax, said: “The rate and scale of the growth of the homemover market is quite remarkable. After several years of flat transaction numbers then a marked fall at the start of the pandemic, we’re now at a level not seen since 2007.
“There are many factors that have driven this activity, perhaps the biggest of which is the ‘race for space’ amongst those planning to work from home in the long term. The timing of some these moves will also have been influenced by people wanting to benefit from the stamp duty holiday.
“It is important to recognize the boom in sales was not limited to movers. There were more first-time buyers in the first six months of this this year, than in the first half of any of the last 10 years. Those getting on to the housing ladder accounted for almost half of all mortgage-backed purchases, which is in line with the long-term average.”
The challenge of selling a property that has been garishly decorated over the Christmas period is one many agents will be familiar with.
Now an industry website, GetAgent, has produced guidelines which agents may want to give to sellers to reduce the risk of ‘inappropriate’ decorations.
1. Stick to white lights – Coloured, flashing lights aren’t everyone’s preference, and whilst some like the spirit they bring, it can put people off. Avoid the bright, coloured flashing lights for your tree and for any area around and instead opt for a more tailored and sophisticated palette with white lights. This creates a more neutral, all-round aesthetic appealing to more.
2. No exterior decorations – Avoid the large inflatable decorations or reindeer on the roof. Opt for white lights again if you want some festive cheer and keep it classy with a single welcoming door wreath or holly and ivy. Less is more when it comes to exterior decorations, especially if you have a for sale sign in the garden.
3. Use festive scents – Use the smells of cinnamon and mulled wine to your advantage over Christmas viewings and try festive candles, oil burners or have something festive baking. A real tree can also add an extra homely smell to your home.
4. Don’t cover the beauty –Be mindful not to cover up any structure or feature in your home which may be of interest to potential buyers. This could be something as simple as an oak stair rail or the mantelpiece. Remember less is more.
5. Light is everything – Natural light is essential for viewings, so make sure your decorating efforts don’t block any natural light, for example your tree in the middle of a bay window. Try placing your holiday pride away from any windows, and if you must, make sure the natural light still flows in.
6. Neighbourly love – Unfortunately it’s not just your own decorations that can put buyers off, it’s your neighbours too. Neighbours are a huge part for people moving house, and to see loud and garish decorations next door could certainly put potential buyers off. If you know your neighbours well, perhaps just let them know you are trying to sell over the festive period and to be mindful of potential buyers.
The Bank of England has revealed that individuals borrowed £9.5 billion of mortgage debt, on net, in September from £4.4 billion in August.
This is the highest since June 2021 when net borrowing reached a record of £17.1 billion.
The central bank said that September’s increase was driven by borrowing ahead of the complete tapering off of lower Stamp Duty from October.
The net borrowing in September was £2.9 billion above the 12-month average to June 2021, when the full stamp duty holiday was in effect. Gross lending increased sharply to £30.7 billion in September, from £20.9 billion in August. Gross repayments also increased to £20.7 billion from £17.7 billion in August.
Approvals for house purchases, an indicator of future borrowing, fell to 72,600 in September, from 74,200 in August. This is the lowest since July 2020, but remains above pre-February 2020 levels.
Approvals for remortgaging (which only capture remortgaging with a different lender) rose slightly to 41,500 in September. This remains low compared to the months running up to February 2020, but is the highest since March 2020.
Toni Smith, chief operating officer at PRIMIS, said: “Today’s figures highlight the ongoing strength of our housing market. Whilst the September numbers were likely boosted by the extended Stamp Duty holiday, the drivers motivating people to buy or move home remain strong.
“However, as we start to see an increase in the cost of living and a potential rate rise looming, many households will find their finances squeezed. Within this context, the role brokers play in supporting their customers to access the best possible deal for their circumstances will be vital.
“With the last quarter of the year also set to bring a surge in remortgage activity, there is huge opportunity for those brokers proactively having conversations with their clients. As borrowers across the country look at their refinancing options, having the support of a broker who can guide them to a product that suits their specific needs, will be invaluable – and it will likely further strengthen their relationship with the broker for years to come.”
The proportion of properties selling above asking price has dipped according to Propertymark – a likely sign the market is softening at last.
Even so, the proportion is still 27 per cent, albeit down from 37 per cent in August.
The trade body’s latest market snapshot, reflecting the position at the end of September, says activity is still strong as sales agreed per branch rose from nine in August to 11.
The number of properties marketed stays at 23 per branch in September, the same as in August. This figure is uncharacteristically low and is a 44 per cent decrease from September 2020.
Agents attribute this low figure to what they call “unrelenting” demand meaning properties sell faster than new ones are coming to market.
Meanwhile the average number of house hunters registered per branch stood at 458 in September, a steady increase from 435 in August and 428 in July.
The number of sales made to first time buyers is holding steady at 27 per cent, a marginal fall from 28 per cent in August; the number of buy to let sales fell from 11 per cent in August to nine per cent in September.
Propertymark’s chief executive, Nathan Emerson, says: “Figures from September tell an interesting story of a market that may be beginning to shift. Sales being agreed has increased, but the number of sales achieving over the asking price has reduced, meaning we may start to see an end to the bidding wars that have been so prevalent.
“It’s also interesting to note that although the number of properties available to buy is lower than we have seen before in September, it hasn’t dropped since August meaning that just enough properties are coming to market to satisfy demand.”