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Annual house price growth accelerates to 6.5%: Nationwide
Dec 01, 2020
Annual house price growth accelerated from 5.8% in October to 6.5% in November – the highest rate since January 2015, according to the latest Nationwide house price index.
House prices rose by 0.9% month-on-month in November after taking account of seasonal effects, following a 0.8% rise in October.
Robert Gardner, Nationwide's chief economist, said: “Data suggests that the economic recovery had lost momentum even before the latest lockdown came into effect. Economic growth slowed sharply from 6.3% in the month of July to 2.2% in August and 1.1% in September, even though the economy was still around 8% smaller than its prepandemic level at that point. Rising infection rates and tighter social restrictions will have resulted in a further hit to growth in October and November.
“Labour market conditions also weakened with the unemployment rate rising to 4.8% in the three months to September – still low by historic standards, but up from an average of 3.8% in 2019. The extension of the furlough scheme to March 2021 will help limit job losses in the short term by enabling firms to retain more staff that they would have done otherwise.
“Despite these headwinds, housing market activity has remained robust. October saw property transactions rise to 105,600, the highest level since 2016, while mortgage approvals for house purchase in the same month were at their highest level since 2007 at c97,500.
“The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy. Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.
“However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March."
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: "November may usually be a quieter month for the housing market as buyers’ and sellers’ attention starts to turn towards the festive period but not this year. Activity remains robust with the stamp duty holiday focusing buyers on getting those deals done before the end of March.
"The last time the market was buzzing like this was back in 2007 before the credit crunch. But this time around there is far more scrutiny on mortgage underwriting and the assessment of affordability. This, combined with historic low interest rates, mean we should not see a repeat of that crisis, despite the continued flurry of activity.
"There has been some good news for mortgage borrowers in recent days as 90 per cent loan-to-value mortgages become more readily available. This should hep bring down rates on high LTVs, making those deals more accessible, and further boosting the market, at least in the short term."
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