UK housing market continues strong recovery as prices surge

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UK house prices rose by five per cent in September compared with a year previous according to the latest data from Nationwide.

The building society said the annual rate of growth was at its highest in four years as the post-lockdown recovery continued.

Its lending data revealed that there had been a 0.9 per cent increase in house prices from August, following a 2.0 per cent rise on the previous month, taking annual growth from 3.7 per cent to 5.0 per cent.

Read more: Official figures confirm jump in UK house prices

It cited the lifting of restrictions on viewings as well as the stamp duty holiday as key factors for activity “recovering strongly”, with the latter “adding to momentum” as purchases were moved forward.

Prices were up 1.7 per cent in the quarter ending in September and the average cost of a house in the UK now stands at £226,129, the data said.

“The rebound reflects a number of factors. Pent-up demand is coming through, with decisions taken to move before lockdown now progressing,” said Robert Gardner, Nationwide’s chief economist.

“Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown,” Gardner added.

Most regions saw growth in the third quarter, although this was highest in the south west at 5.5 per cent.

Growth in London stood at 4.4 per cent for the quarter, with an average house price of £480,857.

“Annual house price growth in London continued to edge higher, with prices up 4.4 per cent in Q3. Average prices in the capital hit a record high of £480,857 and are now 57 per cent above their 2007 levels (UK prices are 21 per cent higher than their 2007 peak),” Gardner said.

Mortgage approvals for house purchases also rose from around 66,000 in July to almost 85,000 in August – the highest since 2007.

However, Nationwide suggested young people were putting off moves more than older people due to job uncertainty.

Unsustainable growth

However, some experts have questioned whether this growth can be continued, with concerns for the medium-term outlook.

Garrington Property Finders chief executive Jonathan Hopper said: “Prices are rising fastest among coastal and country properties as buyers aiming for a new work-life balance built around less commuting seek more green space, fresh air and better value.

“Elsewhere however, we’re starting to see local lockdowns apply the brakes, slowing activity and even softening price growth.

Read more: London house prices stabilise as buyers take advantage of stamp duty holiday

“Meanwhile in the hotspots, stiff competition is pushing up prices at a rate which is clearly unsustainable, and the local markets there now risk getting further detached from the wider economy.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said “recovery could not be more evident” but “whether this momentum can be maintained throughout the winter is another matter”.

“The economic outlook is not encouraging with the end of the furlough scheme and mortgage payment holidays potentially exerting some financial pressure on homeowners,” he added.

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