Those hoping for a UK property market crash will be sorely disappointed by the August Rightmove House Price Index. The market is showing little signs, if any, of slowing down and is being boosted by record levels of buyer activity.
In this day and age, who on earth would want the job of predicting the future of the property market? Imagine being introduced on your first day of work; “These are our new property market forecasters, they’ll be working out what’s going to happen to the market, taking into account Brexit, the pandemic, business closures, redundancies and everything else the world has to throw at them.”
You can imagine one of them saying, “Which is my desk?”
“Yours is that one over there with the fancy cup on it”.
“What’s the cup for?”
“It’s a poisoned chalice, everyone gets one doing your job!”
As some of our regular readers will know, I frequently take light-hearted pot-shots at some of the experts who predicated massive falls in UK house prices by the end of the year. In all fairness, I do understand how difficult making a prediction is in these current times, given the ever-changing landscape coupled with once-in-a-generation events.
In April this year, the Centre for Economics and Business Research (CEBR), forecasted a fall of 13% before revising the number in June to smaller, but still gloomy 8.7%. In May of this year, the Bank of England was even more apocalyptic with their desktop stress test revealing house prices could fall 16% due to economic upheaval. Given all the recent positive data coming out, it would be a stretch to see anything like what’s been predicted actually happening.
What does the latest Rightmove House Price Index tell us?
In the ten years, the Rightmove House Price Index has tracked the number of sales in a month; the latest data shows an increase of 20% over the previous highest recorded number of sales during any month. It also recorded the highest number of properties coming to the market in a single month for more than a decade.
Also, weekly sales figures were up with buyers ignoring the usual summer holiday slowdown. Marc von Grundherr, Director of London based estate agency Benham and Reeves, has likened the current positivity in the market to the late-1980s: “Sales are at unprecedented levels and listings too, and so we’re seeing both sides of the property market boiling. This will be partly why the index is showing that asking prices are actually stable currently as there is a seeming harmonious balance between buy-side and sell-side.
But the ‘nothing to see here’ of price inaction is completely circumvented by the enormous spike in deals being done. Because, for agents, transactional volume is more important than price and for now at least property firms are revelling in their new-found breathlessness as they attempt to keep up with both supply and demand. It’s like the late 80’s all over again”.
The Rightmove House Price Index also shows record highs for asking prices in seven regions. As we expected, people are still continuing to move away in large numbers from congested urban areas. This out-of-city exodus is creating record buyer and seller activity and price spikes in areas such as the Midlands, the North-West and Devon and Cornwall in the South-West.
To reinforce people’s desire to leave city life behind, the number of enquiries from Liverpool residents wanting to move into villages was up by a massive 275% compared to the previous year. Liverpudlians are not alone in their desire for more open space, both Edinburgh and London are also seeing huge numbers seeking a greener environment resulting in property price spikes in some rather unexpected areas.
Commenting on the increase in regional asking prices, James Forrester of Birmingham based Barrows and Forrester said: “Buried in the numbers today we see an anomaly, one that is historically reserved for London and the south-east. That anomaly is that annual asking prices for homes in the West Midlands are increasing more than anywhere else in the UK, up 6.3% since August 2019. And they’re selling quicker than almost anywhere else too.
I’m not quite suggesting that the West Midlands is going to overtake the capital, however, with annual growth in prices at 3x that of London and the South East, it’s certainly evident that we are catching up”.
Over the past couple of months, the Nationwide, Halifax and Rightmove have all produced data that flies directly in the face of what economists predicted as recently as the start of the summer. As with anything, there’s no guarantee the positivity will stay in the longer-term. However, even with all the well-documented problems creating a large amount of economic uncertainty, Brits are still viewing bricks and mortar as a safe haven in this rather confusing world.
We’ll end this piece on the current the state of the property market with the views of Russell Quirk. A man who is known for his forthright opinions: “This latest set of numbers from the especially authoritative Rightmove must surely correct even the most morose of property market bulls, for now at least.
This explosion of activity is not just a consequence of the fuel of stamp-duty-respite but a market that has proven time and again that it is robust even in the most challenging of circumstances. You can apparently throw Brexit, political turmoil, a couple of general elections and a once in a century pandemic at it yet it still marches on. Like the proverbial cockroach, no matter what you do to kill it, it simply will not die”.
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