UK-based P2P lending platform Blend Network reports that annual house price growth in the country surged to 11.0% in July 2021 from around 10.5% in June 2021. This, according to the updated figures from the Nationwide House Price Index.
In MoM terms, house prices increased 2.1%, which is notably the second-largest gain in 15 years. As noted by Blend Network:
“Overall, taking into account the price momentum witnessed over the past 18 months, house prices are now around 13% higher than when the pandemic began. Consequently, average house prices nudge further towards the £250k mark, a record high.”
Robert Gardner, Nationwide’s Chief Economist, pointed out that “the bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market.”
Gardner thinks that the strength may indicate steady demand from those acquiring a property “priced between £125,000 and £250,000 and who are looking to take advantage of the stamp duty relief in place until the end of September, though maximum savings are substantially lower.”
The overview provided by the Nationwide House Price Index appears to be consistent with the one shared by the Halifax House Price Index: house prices in August “were 7.1% higher than the same month a year earlier and 0.7% higher than the previous month.”
As a result, house prices reached record highs in August 2021. Compared to June of last year, “when the housing market began to reopen from the first lockdown, prices are up by £23,600.”
Russell Galley, MD at Halifax, says that structural factors like the demand for additional space amid greater home working have “driven record levels of buyer activity.” Galley believes that these key trends “look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break ends.” Moreover, the macro environment is “becoming gradually positive, with job openings at a record high and consumer confidence returning to pre-Covid levels.”
The Blend Network team further noted:
“HMRC monthly property transactions data for UK home sales decreased in July. UK seasonally adjusted residential transactions in July were 73,740 – down by 62.8% from June’s figure of 198,420 but 4.2% higher than July 2020.”
They added that non-residential transactions were “also down by 5.9% in July compared to the previous month, but again 21% higher than July 2020.” The latest quarterly transactions (May-July) were “approximately 14% lower than the preceding three months (February-April).”
The updated Bank of England (BoE) money and credit figures “show that the number of mortgage approvals for house purchase were 75,200 in July, down from 80,300 in June,” the report added while noting that this is “the lowest since July 2020 but remains above pre-February 2020 levels.”
The most recent IHS Markit/Chartered Institute of Procurement and Supply Purchasing Managers’ Index (PMI) for the construction industry, which covers the sector’s economic health and sub-indices like inflation, “more than four fifths of UK construction firms have reported price increases.”
As noted in the blog post from Blend Network, this index shows that the United Kingdom’s construction sector is being “hit by unprecedented shortages of raw materials and labor, the costs of which are also rising at rates far in excess of anything previously recorded in over two decades of PMI survey history.”