UK Housing

UK Housing Market Chart Book

UK Housing Market Chart Book

Little sign of momentum in prices abating

The end of the stamp duty holiday has had remarkably little impact on buyer demand. If anything, the imbalance between strong home purchase demand and limited supply is intensifying. Indeed, Rightmove reported that the average time to sell a home continued to drop in October. That’s consistent with strong competition between buyers bidding up prices further in the near term, although in London these pressures appear to be weaker.

19 November 2021

UK Housing Market Chart Book

Residential demand returns to London

While the UK has seen house prices boom over the past year, central London has not joined in as increased remote working led buyers to shun the capital for more space in the suburbs and further afield. But indicators of demand show that it is far too early to call time on city living, with demand now returning to the purchase and rental market despite prices remaining far higher relative to earnings than in other regions.

18 October 2021

UK Housing Market Chart Book

Prices to continue rising as stamp duty holiday elapses

There is no doubt that demand cooled after the stamp duty discount was reduced. But a collapse in new listings has eclipsed the decline in new buyer demand, suggesting that prices will at least hold their ground in Q4 when stamp duty returns to normal. Moreover, with elevated household saving still supporting deposits, mortgage rates falling as competition between banks intensifies, and many households reassessing their homes in light of remote working we suspect demand will continue to surprise to the upside. Indeed, web search activity increased in September suggesting that the inevitable dip in transactions in Q4 will be short-lived. As a result, we expect house prices to rise by 10% y/y in Q4 2021 and by 5% in Q4 2022, above the consensus of 6% and 3.5% respectively.

21 September 2021
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UK Housing Market Chart Book

Robust demand and limited stock to support prices

The housing market cooled in July as the stamp duty holiday began to unwind. Newly agreed sales and buyer enquiries dropped back, annual house price growth began to stabilise, and transactions fell. However, the RICS balances compare activity to the previous month when transactions hit a record high so while activity may have softened, it has by no means collapsed. Web searches for the property portals Rightmove & Zoopla remain well above pre-virus levels, providing further evidence that the stamp duty holiday was just one of many reasons for strong home purchase demand over the past year. Meanwhile, the amount of second-hand stock on the market is very limited, so competition between buyers is set to remain strong. As a result, we continue to expect house price inflation to cool rather than collapse when the stamp duty holiday ends altogether in October.

25 August 2021

UK Housing Market Chart Book

Demand shifts towards outer London

London house prices have underperformed the national average over the past year as the pandemic has led to a shift in demand away from inner cities. Arguably London was due a period of weaker price growth even before the pandemic hit, following the outperformance of the capital in the 2010s. That said, price falls have been focused in the most central boroughs, while the best performing outer boroughs have seen price rises akin to the national average.

2 July 2021

UK Housing Market Chart Book

Movers drive up sales to highest level since 2007

The housing market has had its busiest start to the year for 14 years as changing preferences due to the pandemic, forced saving, low mortgage rates, and the stamp duty holiday have led swathes of existing homeowners to enter the market. We estimate that around 160,000 existing homeowners moved in Q1, almost double what has been the norm over the past decade.  But looking ahead sales instructions dropped in May, suggesting that the end of the stamp duty holiday will reduce home mover demand. That said, with high LTV mortgage availability improving at the same time first-time buyer demand could strengthen, intensifying the mismatch between strong demand and limited supply. As a result, house price inflation is set to rise further in the near term.

17 June 2021

UK Housing Market Chart Book

Underperforming, but not by much

While London house price growth and transactions volumes have underperformed their national equivalents over the past year, they have been robust in absolute terms. Indeed, the peak in house price growth of 6.7% y/y in November 2020 marked a four-year high. Even in boroughs where house prices benefit most from proximity to offices, such as Westminster and Tower hamlets (Canary Wharf), falls have been modest. And prices in other central boroughs have risen despite the likelihood of more regular remote working in the future. In contrast, rents have dropped sharply, but there are signs that rental demand has recently started to recover.

1 April 2021

UK Housing Market Chart Book

Tight market could drive prices higher still

There were signs that buyer demand would hold up well this year even before the government announced the extension to the stamp duty holiday in the Budget. Since then, Google searches for property portals have surged to a six-year high. A further strengthening in buyer demand when sales were already very high, and supply limited, suggests that house price inflation could accelerate further in the near-term.

17 March 2021
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