Latest Government UK House Price Index reveals jump in annual price change

The latest Government UK House Price Index has been published, showing that house prices have seen an annual increase of 4.7%.

The UK House Price Index summary for September 2020 states that the monthly price increase for a property within the UK was 1.7%. The average house price was recorded as £244,513.

Nicky Stevenson, Managing Director at national estate agent group Fine & Country, comments: “No part of the UK economy has flown over the COVID storm like the property market and the picture in September strengthened across the board.

“This is the first time the index will have included the first sales that didn’t only benefit from the Stamp Duty tax break but were prompted by it too, and it shows.

“However, the race for space is still the market’s main driver. Price growth for flats and maisonettes is muted compared to larger properties, which have been flourishing amid high demand. 

“The heavy lurch in favour of more inside and outside space is behind the 21.3% surge in residential property transactions in September, a trend already identified for us by HMRC. 

“With growth nationwide fairly evenly spread, this mini-housing boom is really taking the whole country with it. The North East and Scotland had been lagging behind but growth jumped impressively in these areas, while the South West put in a blistering performance with annual growth of 6.4%.

“Much is being made of the Stamp Duty boost at the moment but the Help To Buy scheme also becomes less generous at the end of March. This will continue to be a contributing factor as we head into next year but it’s the Stamp Duty holiday that is stealing the show at the moment. In fact, the price of new builds had been growing twice as fast as existing properties over the summer but this trend was turned on its head in September.”

Lucy Pendleton, property expert at independent estate agents James Pendleton, says: “This was the moment the market really entered fifth gear this year, leaping from the doldrums into the jet stream with the full weight of lockdown and the Stamp Duty holiday behind it. 

“After weighing on the market nationally in recent years, London is once again helping to lead the way. Buyers in the capital celebrated the Stamp Duty changes by delivering record prices that are now only a whisker away from the half a million-pound mark. 

“Expect this rate of growth to cool though. Fast forward to the autumn and renters have reverted to type and have begun putting off moves until the New Year. However, buyers are still treating vendors to a feast of offers. The bids coming in are quite business-like. There are no longer any silly offers being thrown in speculatively by those misreading the level of fear in the market. 

“Stock is still selling, as long as it’s of good quality and this is where there has been the odd wrinkle. Many landlords, spying an opportunity to get a good price for their rental, have been selling up in an attempt to ride the wave of high demand and offload their buy to let. However, there’s a lot of this stock on the market sitting around because too many landlords haven’t brought their properties up to scratch before listing them.

“We’re seeing some price reductions among those who were a bit late to the party and thought prices would continue to climb rapidly, but these homes are still attracting very healthy valuations compared with a year ago. Poor weather has had the most marked impact recently. Buyers are not as quick to make a commitment when the rain is coming down, even though they know time is against them if they are to capitalise on the Stamp Duty holiday ending in March.” 

Marc von Grundherr, Director of Benham and Reeves, says: “The property market continues to fire on all cylinders with positive movement across the board in all but one region on a monthly basis and a clean sweep where annual price appreciation is concerned. While the current Stamp Duty holiday has caused huge backlogs of sales waiting to complete, there’s no doubt that it has contributed a considerable level of fuel to the furnace. 

“Despite these backlogs, the fires of market activity should continue to burn bright and this will help carry the market through the traditionally quieter winter period.

“London, in particular, seems to have turned a corner, fuelled by international demand ahead of April’s Stamp Duty surcharge for foreign buyers. This confidence in the capital’s market makes for positive reading and a weaker pound has seen a huge influx of activity which is starting to translate to positive top-line price growth.”

James Forrester, Managing Director of Barrows and Forrester, comments: “High levels of homebuyer demand continue to grease the cogs of the UK housing market and this continued price growth is being primarily driven by second and third rung buyers looking for larger homes in the wake of lockdown restrictions. 

“A second national lockdown will only intensify this trend and as a result price growth should remain stable in the mid-term at the very least. Hopes of a vaccine will also breathe new life into the market with any chance of a downturn looking slim at present. However, the end of the Stamp Duty holiday and the furlough scheme could still pose a danger with many predicting the market could fall off a cliff as demand dries up.  

“That said, the current hopper of property transactions is overflowing with deals waiting to be done and this momentum should carry the market through any wider economic potholes that may arise over the next year. We expect the more affordable regional frontrunners to continue to lead the way both where transaction levels and house price growth are concerned.”