Last month, house prices surged annually by 10.9 percent, the highest level recorded since August 2014. House prices spiked by 1.8 percent in May month-on-month, following a 2.3 percent increase in April. Robert Gardner, Nationwide’s Chief Economist said the property market has seen a “complete turnaround” over the last year after the coronavirus pandemic saw the housing market “collapse”.
Last year, transaction plunged to a record low of 42,000 in April 2020.
However, market activity soon increased towards the end of last year and into 2021, reaching a record high of 183,000 in March.
Chancellor Rishi Sunak’s stamp duty land tax (SDLT) holiday extension has managed to maintain momentum across the market, however, Nationwide’s research has suggested the property tax holiday is “not the key factor”.
Homeowners surveyed at the end of April who were either moving home or looking to move, 68 percent said they would be moving even of the SDLT holiday was not extended.
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According to the research, a shift in property preferences such as an extra room or a garden are continuing to drive market activity.
Mr Gardner continued: “At the end of April, 25 percent of homeowners surveyed said they were either in the process of moving or considering a move as a result of the pandemic, only modestly below the 28 percent recorded in September last year.
“Given that only around five percent of the housing stock typically changes hands in a given year, it only requires a relatively small proportion of people to follow through on this to have a material impact.”
The survey also suggested that those considering moving, the majority, were looking to move area while nearly 30 percent said they were doing so to access a garden or outdoor space more easily.
Nationwide’s property expert is predicting that the market will remain “fairly buoyant” over the next six months as a result of the stamp duty holiday extension and additional support.
Mr Gardner even suggested that annual house price growth could “accelerate further” over the coming months.
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He added: “Further ahead, the outlook for the market is far more uncertain.
“If unemployment rises sharply towards the end of the year as most analysts expect, there is scope for activity to slow, perhaps sharply, though even this could potentially be offset by ongoing shifts in housing preferences, if current trends are maintained.”
Paul Neal, an independent mortgage broker at Missing Element Mortgage Services said May 2021 saw a “deluge of demand for property”.
But he said this demand is making it difficult for first time buyers to get a foot on the property ladder.
He explained: “Demand is off the scale and the inevitable upward pressure on prices is making it especially difficult for first-time buyers to get a foothold on the ladder.
“Many first-time buyers are seeing prices accelerate out of their affordability zone.
“The stamp duty holiday and re-introduction of 95 percent loan-to-value mortgages have played a massive part in the surge of people buying, but repeated lockdowns have also seen many buyers looking for more space now that working from home has become the new norm.
“More needs to be done to help those first-time buyers who are unable to buy their homes because they have had hiccups with credit in the past.
“We understand lenders need to be cautious, but the result of that caution is many people stuck paying rents that are substantially higher than mortgage payments.”
Rhys Schofield, Managing Director at Peak Mortgages and Protection said buyers were “falling over each other” to snap up new properties coming to the market.
Mr Schofield said there was one property in the local area of Derbyshire that came to market for £600,000 and managed to garner 20 offers in a week.
He added: “First-time buyers are especially keen to move out from under their parents’ feet, where they have been for the past year, and are using the savings accrued during lockdown to get onto the ladder.
“Any property with a price in reach of first-time buyers is seeing phenomenal demand.”
Jonathan Hopper, CEO of Garrington Property Finders, said “records are melting” during the property market boom.
He explained: “Estate agents in desirable rural and coastal areas continue to be deluged with enquiries and prices are spiking.
“The Nationwide’s double-digit reading of the annual pace of price growth is no fluke – the official Land Registry data is similarly frothy.
“Crucially the Nationwide’s data gives a more up to the minute picture of price trends, and it’s clear the influence of the stamp duty holiday is falling away.
“Many buyers are making fundamental changes to the way they live and work, and the vanishing prospect of a stamp duty saving is now no more than a catalyst, a reminder that the time has come to move.”