reallymoving House Price Forecast July 2020: Post-lockdown boom prompts price surge of 8% between June and October

reallymoving House Price Forecast July 2020: Post-lockdown boom in property prompts price surge of 8% between June and October.

Headlines:
  • House prices could rise by as much as 8.1% between June and October as buyer activity surges
  • Annual growth will reach high of 11.4% in October 2020, based in sales agreed in July
  • Stamp duty giveaway and high levels of pent up demand have driven a flurry of buyer activity
Month Average price agreed Monthly change % Annual change %
June 2020 (actual) £308,280 0.2% 4.6%
August 2020 (forecast) £296,485 -3.8% -1.4%
September 2020 (forecast) £314,235 6.0% 4.7%
October 2020 (forecast) £333,331 6.1% 11.4%

 

Exceptional levels of demand from homebuyers post-lockdown are driving a sharp spike in house price growth which will become evident in Land Registry data when those sales complete this autumn, reports reallymoving in its House Price Forecast July 2020, released today.

Dissatisfaction with existing homes during lockdown, significant pent-up demand from the spring when the market was stopped in its tracks and from previous Brexit uncertainty, topped off with the boost delivered by the Chancellor’s stamp duty giveaway, have combined to deliver remarkable levels of housing market activity. This could well be short-lived however, if the wider economy and jobs market struggle to emerge successfully from Government and lender support – and considering the double threat of the impact of Covid-19 which has already pushed the UK into recession, alongside a No Deal Brexit.

As homebuyers register for quotes for home move services on the site typically twelve weeks before their purchase completes, reallymoving is able to provide an accurate property price forecast based on the purchase price agreed. Historically, reallymoving’s data has closely tracked the Land Registry’s Price Paid data, published retrospectively (see Graph 1).

Graph 1: reallymoving House Price Index (England and Wales) including 3-month price forecast

 

reallymoving House Price Forecast July 2020: Post-lockdown boom prompts price surge of 8% between June and October

Monthly price changes

Average house prices in England and Wales are on course to increase by 8.1% between June and October, from £308,280 to £333,331. The trend of post-lockdown growth is clear and shows a significant monthly surge in the value of deals agreed between buyers and sellers in June which will translate into 6% growth when those deals complete in September and a further 6.1% in October. Similar reports of heightened buyer demand have been reported across the market, with Countrywide, one of Britain’s largest estate agency groups, noting a 38% increase in buyers since the stamp duty announcement.

Annual price changes

Reflecting the spring Covid-19 property market freeze, annual growth is set to dip by 1.4% in August 2020, the first annual price fall in thirteen months, before rebounding strongly in September (4.7%) and October (11.4%). October’s data represents the most significant year on year increase in house prices seen since the House Price Forecast data began in January 2013.

Analysis and commentary

Rob Houghton, CEO of reallymoving, comments:

“We’ve seen an unusual set of factors come together this summer which has created a significant surge in housing market activity, yet we expect price hikes to be short-term.

“This perfect storm has been driven by people having recently spent large amounts of time at home – prompting them to bring forward moves in order to seek additional features such as offices and larger gardens – combined with pent up demand that has been present in the market throughout Brexit and was heightened by this year’s storming spring market being suddenly stopped in its tracks. The temporary stamp duty changes have also provided a massive incentive to buyers to move now, rather than wait.

“The UK is now officially in recession and a sharp rise in unemployment is on the horizon when the furlough scheme comes to an end in October. Combined with the recommencement of mortgage repayments for thousands of homeowners who arranged payment holidays, households could find themselves under significant financial pressure. These factors will dampen demand for property through the late autumn and winter, which is likely to reverse the current spike in house price growth.”

 

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Main article photo courtesy of Pixabay