Demand for property from new buyers entering the market has maintained pressure on house prices rising 2.6% for the year.
Annual house prices inflation rises 2.6% with no sign of slowing as new buyer demand is 39% higher than this time last year according to the Zoopla House Price Index.
This has been supported by a spike in first time buyers when the lockdown ended, however, lenders have withdrawn products and increased loan to value mortgages due economic uncertainty.
On the other hand, new home movers have increased property inventory on the market by 10% as homeowners change their lifestyles and need more space for home working in the future.
House price inflations remains steady
Across the country house prices are higher by 2.6% year on year to August 2020 with cities of Nottingham up 4.7% and Manchester up 4.2%.
House price growth is slower in the South East with London rising 2.1% compared to this time last year, Cambridge up 1.4%, Oxford up 1.1% and Aberdeen the only city reducing by -0.6%.
This table from Zoopla shows the 3-month change and annual change in house prices since the lockdown to August 2020.
| Month | 3-months | Annually |
Average price |
|---|---|---|---|
| March | 1.0% | 2.2% | £215,317 |
| April | 1.2% | 2.4% | £216,079 |
| May | 1.5% | 2.8% | £217,207 |
| June | 2.8% | 2.4% | £216,862 |
| July | 0.6% | 2.5% | £217,457 |
| August | 0.5% | 2.6% | £218,262 |
There has been a strong recovery since lockdown where new sales agreed over 9 months are 3% higher than this period a year ago.
There is a 3-4 month lag when the sales are agreed and the transaction finally completes which means housing sales are expected to be 15% lower than 2019.
For remortgage buyers with equity in their property due to rising prices and current low interest rates allows them to release capital to improve the home by increasing space such as a loft conversion or extension.
Home mover demand rising
Existing homeowners were slow to act when lockdown was removed for the housing market and now rising demand is 37% higher than before Covid-19 and 53% up on this time in 2019.
There is pent-up demand from home movers and this could continue into 2021 to support the housing market as first time buyer demand weakens due to cautious lenders.
There may be less competition from first time buyers allowing buy-to-let investors to purchase one- or two-bedroom property with a smaller deposit improving the return on their investments.
In contrast older equity release buyers can stay in their home rather than move by accessing the wealth in their property with a lifetime mortgage for home and garden improvements or consolidate debt.
What are your next steps?
Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or a buy-to-let investor.
For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to maintain your lifestyle or even give to a family member.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the equity release mortgage calculator, mortgage cost calculators, and property value tracker chart.
