Housing "Mini Boom" Continues

Here's a roundup of how the housing market is performing during the month of July from Twenty EA, Zoopla, Savills, Nationwide and the Royal Institute of Chartered Surveyors (RICS) (based on June data). This builds on what we already shared from Rightmove - more on that here.

Summary

In summary, these industry insights continue the theme reported by Rightmove - we're in a mini boom. Housing activity has continued to improve in July with the average house price increasing by 1.7% to ￡220,936. This is as a result of seller demand outstripping housing availability as well as the beneficial impact of the stamp duty holiday. The impact of the pandemic has not been as severe as originally anticipated although there is caution on the outlook for the end of this year and into 2021. This is due to a number of factors, the end of the:

• furlough scheme on 31 October 2020 and the potential ramifications on employment levels. There will of course be a Budget in the Autumn which may look to offset some of the impact of this
• stamp duty holiday on 31 March 2021. Historically the end of the respective stamp duty holiday has resulted in significant spikes in housing activity as evidenced below

Before we review the industry insight, there are other factors to consider:

• the revision to the Permitted Development rights to allow two-storey upwards extensions to blocks of flats which came into effect on 1 August
• the radical plans that are proposed to the way leasehold arrangements works by the Law Commission

and most notably:

• the "build, build, build" mandate from government which is due to come into effect from 1 September 2020 relating to further fundamental changes to the Permitted Development rights.

Learn more about this here.

Now, let's look at the insight from various industry experts ...

TwentyEA

• New instruction levels were 3% higher in June 2020 compared to June 2019
• In July (before month end was hit), there were 20% more sales agreed compared to July 2019

TwentyEA indicate that the market may slow down but based on their data, this looks unlikely. For them, the key indicator for the outlook, is the end of the furlough scheme in October.

Read more here.

Zoopla

Zoopla's latest insight, reiterates what they've shared previously - the number of sales agreed is significantly higher than in early March, although sales levels are 20% lower than 12 months ago. They expect overall transaction levels to be around 15% lower by year end, a modest decline given the pandemic.

The number of households putting their home on the market is approaching three times the available inventory and this is one of the key reasons why prices have increased from 2.4% in May to 2.7% in June. The other factor as we've touched on is the stamp duty holiday. 

Zoopla have confirmed that there is an increased demand in areas adjacent to cities. This will be relevant for those who will no longer have to do the "daily commute". Interestingly though, Zoopla believe this is a ‘one-off’ rather than a seismic shift. The rationale they give, is for many city markets, the highest demand is for properties within the city limits. This is certainly a change from the insight we've seen before where households were looking to escape from cities. Here's a review of the results of a recent Rightmove survey giving insight on buyer and renter preferences.

Since the stamp duty announcement, Zoopla confirm that this has clearly boosted sales activity. London has seen the highest demand at 27%. However the general impact has been to increase sales level activity elsewhere too.

Zoopla conclude that they expect the annual pricing to remain within the 2-3% level by year end and that unsurprisingly the economic position will influence the pricing in 2021.  

For more detail, click here.

Savills

Their June update indicates a continued recovery in market activity. They focus on the stamp duty holiday and the potential saving to buyers of up to ￡15,000. This benefit also applies to both second home purchases and Buy-to-Let investors.

They report that HMRC transaction figures (there's a lag in these being reported) for May were at 48,000, 16% above the April figure.

Scotland has seen the strongest quarterly growth, up 2.5%, with Wales having negative growth and dropping to -2.2%.

Savills confirm that pricing data should be caveated given the smaller level of available samples.

Read more on this here.

Nationwide

Nationwide's House Price Index reports the following:

• annual house price growth has recovered to 1.5% in July
• house prices are up 1.7% month-on-month, reversing last months' decrease
• the stamp duty holiday is likely to provide further support in the near term
• the average house price is at ￡220,936, up ￡4,000 on June

Source: Nationwide

Below is the average UK house price over the last 10 years, evidencing the impact of the pandemic so far in 2020, then the boost which occurred when the housing market opened on 13 May 2020 and then the positive impact of the stamp duty holiday in July.

Source: Nationwide

Robert Gardner, Nationwide's Chief Economist, says:

“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions."

And:

“Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown. Our own research, conducted in May, indicated that around 15% of people surveyed were considering moving as a result of life in lockdown."

Nationwide suggest that the stamp duty holiday is likely to lead to an increase in volatility of transactions levels, especially when the stamp duty holiday ends on 31 March 2021. This is based on historic trends, see below data from HMRC, which clearly highlights significant spikes in activity following the end of the respective stamp duty holidays.

For further details, select here.

RICS

The June 2020 RICS UK Residential Survey results identify a recovery emerging across the market based on buyer demand, sales and fresh listing indicators. However, survey respondents remain cautious on the outlook over the next 12 months - they anticipate a flat to marginally negative outcome.

RICS share a number of graphs and of note are the following selection - the first is the level of new vendor instructions. This shows a dramatic deviation in estate agent instructions as a result of the lockdown and again once the housing market re-opened on 13 May 2020.

New Vendor Instructions

Source: RICS

The second graph shows the agree sales, again a sharp drop at lockdown followed by a sharp increase once the housing market re-opened on 13 May 2020.

Agreed Sales

Source: RICS

To learn more, click here.

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