House prices are continuing to rise at record rates as buyers take advantage of the stamp duty holiday to move to more rural surrounds.
Nationwide’s latest monthly house price index revealed house prices went up by 0.9% month-on-month in September, which compares to a 2% increase in August.
Annually, house prices soared by 5% according to Nationwide. This is not only the highest level since September 2016 but comes following annual growth of 3.7% in August.
Robert Gardner, Nationwide’s chief economist, said: “The rebound reflects a number of factors. Pent-up demand is coming through, with decisions taken to move before lockdown now progressing.
“The stamp duty holiday is adding to momentum by bringing purchases forward. Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown.”
Rural retreat
Nationwide’s report also focused on a trend towards more rural homes as people living in cities or more built-up areas seek more outdoor space following the lockdown.
A survey by Nationwide revealed while 19% of would-be buyers had put off plans to move because of the pandemic 10% were moving because of the impact of Covid-19, with many hoping to find a home with a garden or outdoor space.
The majority, said Gardner, were looking to move to less urban areas.
Andrew Montlake, managing director of mortgage broker, Coreco, said: “A lot of people have decent equity and remain in secure jobs and we expect this demographic to maintain a certain level of transactions during the next 12 months as people move out of cities in search of bigger houses and more outdoor space.
“The countryside is the new city, rural the new urban.
“Demand is still strong given the great lull of lockdown and the stamp duty holiday, but unemployment is rising by the day and the economic outlook is highly uncertain.”
First-time buyers
It’s not only uncertainty which is putting a damper on today’s figures – there are also concerns rising prices can prove a hindrance to some buyers.
Indeed, Miles Robinson, head of mortgages at online broker Trussle, said the current mini boom did not make the situation any easier for first-time buyers.
“[They] are continuing to face increased scrutiny from lenders, tighter criteria and a shrinking range of high loan-to-value (LTV) products,” he said.
“92% of deals have been pulled from the market since March this year, and as of this week, there are only 74 mortgage deals available for mortgage applicants with a LTV over 90%. By comparison, this time last year there were over 2,000.”
“To put this into context, from September 2019 to September 2020 the number of 90% or higher LTV mortgage products has decreased by 79%.”
Robinson added: “Getting a mortgage is often one of the biggest financial and emotional commitments a person will make in their lives, and ensuring the government and the industry is supporting first-time buyers as they take this step is crucial.”
