SUMMARY

House prices rose by 0.9% in November, according to Nationwide. This puts annual growth at 6.5%, the highest it’s been since 2015. Even if December ends up being weaker, 2020 is on track to exceed our forecast growth of 4.0% for the UK mainstream market.

This price growth has been driven by high levels of demand. In each of the last five months, the increase in buyer enquiries has been more widespread than instructions to sell, according to the RICS Survey. The number of surveyors reporting rising activity has been falling since its peak it July, but it remained high in November, despite the national lockdown. The number of sales agreed also remained high in November at 35% above last year’s level. However, this was down from the September high of 60% above last year. 

Sales agreed are gradually filtering through to completed transactions, which rose to 24% above last year’s levels in October. This was supported by the continued rise in mortgage approvals, which exceeded 100,000 in October for the first time since 2007.  We expect to continue seeing high completion numbers until the end of the stamp duty holiday next March.  

Last week saw the start of the Covid-19 vaccination program.  Oxford Economics anticipate social distancing to relax from Q2 onward, and has boosted its UK GDP forecast for 2021 from 5.4% up to 6.3%, although this is assuming a deal on Brexit is reached. The pandemic restrictions have driven many households to seek larger homes this year, particularly those with access to green space. Our latest survey of Savills buyers and sellers suggests this will continue next year, with a net balance of 19% of respondents claiming the vaccine rollout would boost their commitment to move. These ambitions may be tempered by rising unemployment, which is expected to peak in Q2 2021, and a renewal of Brexit anxiety.

The average UK rent increased 1.4% over the year to October, according to the ONS. Rents grew the most in the East Midlands, up 2.4%, and were weakest in Scotland, up 0.6%. Data from Zoopla shows that rents have been falling in London, down -5.2% during the year to September.

During the year to August, house price growth was strongest in the local authority of Broxtowe in Hertfordshire (9.4%) followed by East Renfrewshire near Glasgow at 9.3%. House prices fell most over the same period in Aberdeen (-6.7%), followed by Clackmannanshire (-1.4%).