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January 2021 Market Update

Updated: Mar 6, 2021


INTRODUCTION


As we come towards the end of the year, it’s important to reflect on what has been an incredibly uncertain year for the industry


This update is designed to shed a light on both the sales and rental market and to provide some statistical takeaways to inform your property decisions


KEY STATISTICS


The latest up to date official figures from The Office For National Statistics & HM Land Registry are now at a stage where they can start to reveal what impact lockdown measures have had on the market; the figures tell a different story to what many might have expected.


HOUSE PRICES - UK House Price Index (October 2020)


The UK HPI is based on completed housing transactions. Typically, a house purchase can take 6 to 8 weeks to reach completion. Therefore, the price data feeding into the October 2020 UK HPI will reflect sales agreed in August.


UK


- Average Price UK £245,443 - October 2020

- Annual Price Change 5.4% - October 2020

- Monthly Price Change 0.7% - October 2020


London

- London Average Price = £490,936

- London Annual Price Change = 3.9%

- London Monthly Price Change = -1.2%


HOUSE PRICES - HALIFAX HPI (November 2020)


The Halifax House Price Index is the UK's longest running monthly house price series with data covering the whole country going back to January 1983


The Halifax uses its own database of approximately 300,000 mortgage approvals per annum (ca. 25% of all mortgages) as a basis for its monthly house price reports. Because it uses approved loans rather than completed mortgages, the Halifax can obtain data earlier than the Land Registry


UK


- Average Price UK £245,243 - November 2020

- Annual Price Change 7.6% - November 2020

- Monthly Price Change 1.2% - November 2020


TRANSACTIONS (October 2020)


(Transactions involving the creation of a new register, such as new builds, are more complex and require more time to process)


- Estimated number of UK residential transactions, 105,630 - October 2020

- Annual Transaction Volume Change = 8.1% increase - October 2020

- Monthly Transaction Volume Change = 9.8% decrease - October 2020


RENTAL MARKET (November 2020)


Data is gathered from our tenant referencing service, and our rental amounts are based on actual achieved rental prices with accurate tenancy start dates in a reported month, rather than advertised costs


- Average rent in UK = £974

- Annual Variation for the UK = 2.9% (year on year)

- Average rent in London = £1575

- Annual Variation for London = -4.4% (year on year)

- Rental affordability (single earner in UK) = 31% (10 year average is 32.1%)

- Rental affordability (single earner in London) = 45% (5 year average is 48%)

- Time to rent = 17 days (19.4 days a year ago)

- Time to rent in London = 17 days


“Outside of the capital we’re seeing UK rents rise at the highest rate we’ve ever reported, yet in contrast rents in London are now decreasing at the highest rates that we’ve ever reported. This is a continuation of a theme that started back when the country exited the first national lockdown, with declines in central London boroughs being the most pronounced”


MORTGAGE MARKET


- After a huge reduction in mortgage product choice at the higher loan to value end of the market, lenders are now beginning to offer higher loan to value products again



- The number of mortgage products across the whole of the market stood at 5,222 in March this year. By May it had dropped to 2,566, it has now increased to 2,782


- This included the return of high loan to value mortgages, as the number of 85% LTV products rose from 344 to 396 and 90% LTV deals increased to 88 from 56.

- Overall, product availability is still 44% down on the 4,966 that were on the market this time last year


- The average rate of two-year fixes has also gone up, with the return of high LTV deals bringing the average to its highest point in five years.



OTHER NEWS


  • The latest version of the help-to-buy equity loan scheme opened on Wednesday, with first-time buyers now the only people allowed to apply for government assistance to get on to the housing ladder.


  • Rightmove forecasts a robust 4% national average house price growth in 2021 as there is strong evidence that people will continue to have their reprioritised housing needs high on their life agendas.


  • The Government has announced that owners of flats and buildings without cladding will no longer require an EWS1 form (an external wall fire review process) when selling or re-mortgaging their property.


SUMMARY


As illustrated above, it is clear to see that house prices and transactions have risen at an incredibly fast rate since lockdown measures were lifted


The market has been manufactured and supported by government measures such as furlough, bounce back loans, stamp duty holidays and government regulation, once these safeguards are taken away, it’ll be interesting to see how price growth is affected


Mortgage product choice has picked back up and rates have started to become more competitive, which is welcome news for first time buyers


2021 predictions have started rolling in, however based on the year we’ve had in 2020, you’d be a brave man to guess what house prices may or may not do in 2021


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