15 Sep September in the UK property market

The property market in the UK has been as busy as we’ve ever seen it and as we head into the Autumn and the end of the Furlough scheme and Stamp Duty Holiday, we have seen very little in the way of let up. In fact, with more buyers coming to market looking for properties, it is very much a sellers’ market.

Across the country, there was a small dip in the number of transactions recorded in July but this is thought to be due to the phasing out of the Stamp Duty Holiday. In this article, we’re going to take a look at some of the other factors affecting the UK property market.

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House Price Rise

According to Nationwide Building Society, house prices rose by 2.1% in August bringing the annual house price growth to 11%, even after July’s dip of -0.6%. We believe the market in the UK is on track to outperform many leading property experts’ predictions of 9% growth for 2021.

Mortgage data suggests that even while the UK recovers off the back of a global pandemic and the economic uncertainty of Brexit lenders were still approving mortgage products across the board. While the lower risk borrowing (those with big deposits) garnered the quickest turnaround, the approval rate has increased by 28% compared to the same period last year.

Demand

We looked at the levels of supply and demand in a previous blog and while this demand has softened it is still well above the rate of new properties coming to the market. Across the country, the number of new instructions in certain levels of the market has been falling for four months. One of the online portals found in their research that while sales agreed had increased by nearly 10% year on year in August, new instructions were down by 19%.

This gap between supply and demand is likely to continue to be the key driver behind house price growth as we enter 2022.

Financing

In our niche of the UK property market, we saw lots of movement. The prime property market is thought to be slightly less risky for lenders than that of the first-time buyer market, this is due to a number of factors. Lower loan-to-value mortgages products carry less risk as buyers usually have substantial equity in their existing property or they have a high net worth. This protects lenders from house price falls as the hit is usually taken by the existing equity.

The average loan-to-value percentage for this niche of the market fell from 73% last June (2020) to 69% in August.

Conversely, the first-time buyer market increased by 63% in June compared to pre-covid numbers; however, their share in the market has fallen – counting for just ¼ of all mortgages approved in 2021. While the Government-backed mortgage guarantee scheme has enabled some first-time buyers to get on the property ladder, many are unable to pass lender affordability criteria or cannot afford higher interest rates that come with high loan-to-value mortgage products.

Generally, it has been a strong year for the property market in the UK, and we see no let-up in terms of house price growth as we head into the final quarter; we will keep you up to date with any breaking news.

Get in Touch

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