There has been a “sharp acceleration” in house price across the UK, with the exception of London where prices were reported to be mostly flat, according to a survey by RICS
Housing market activity strengthened further in August, with enquiries, sales and new instructions all continuing to rise firmly, according to the August RICS UK Residential Survey.
63% of respondents reported an increase in buyer interest over the month, however the longer-term view remains more cautious.
As buyer enquiries continued to rise, new instructions also saw a jump, with a headline net balance of +46% of survey participants noting an increase in vendors listing property to sell.
Consequently, strong growth in agreed sales was cited for a third successive month, with 61% of contributors seeing a pick-up. Looking ahead, near term sales expectations remain modestly positive, but twelve-month sales projections are still in negative territory. Anecdotal evidence suggests concerns over the broader economic climate continue to drive this subdued assessment.
Turning to house prices, the August survey feedback points to a sharp acceleration in house price inflation. At the national level, a net balance of +44% of respondents reported an increase in prices, the strongest reading since 2016. This is up from a net balance of +13% in July and marks a dramatic turnaround compared to the reading of -33% registered back in May. What’s more, virtually all parts of the UK are now seeing prices increase. The only exception is London, where prices are cited to have remained more or less flat over the past two months.
Meanwhile, the pandemic is expected to cause a lasting shift in the desirability of certain property characteristics, as 83% of respondents anticipate demand increasing for homes with gardens over the next two years. 79% predict rising demand for those properties near green space, while 68% foresee a rise in the desirability of properties with private outside space.
Simon Rubinsohn, RICS chief economist, commented: The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months. More of a concern is the pick-up in prices which could intensify issues around affordability in some parts of the country. Disaggregated data shows demand generally to run ahead of supply.
Meanwhile the results provide a further pointer to more substantive changes taking place in household behaviour in the wake of the pandemic. Increased demand for properties with garden and near green spaces has if anything increased since we tested the water in May, he said.
Managing director of Enness Global Mortgages, Hugh Wade-Jones, added: Property prices and buyer activity remain on an upward trajectory, but broader economic instability is shrouding the future health of the market with an air of uncertainty.
He said, this has caused many lenders to tighten their belts in recent weeks despite interest rates remaining extremely favourable. However, those buying at the sub £500,000 threshold are continuing to beg, borrow and borrow some more to secure a mortgage and take advantage of the current financial landscape.
While stricter lending conditions may see this activity cool over the coming months, the market will be driven forward by buyers at the top end of the market. Lenders are still willing and able to facilitate great mortgage rates for those with a particular financial pedigree and demand at the top end remains very strong as a result, Wade-Jones said.
He said, these high-end homebuyers tend to be the ones driving demand for larger homes and more outdoor space, with an eye on a potential second wave and the ensuing lockdown that could follow. As a result, this section of the market, in particular, is predicted to perform very well over the coming months.
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