- In September 2020, house prices in the UK rose at their fastest annual pace since June 2016.
- In a separate data from the ONS, the average UK house prices reached a new high of £238,000 in July.
- ONS said that the value of property rose by 2.3 per cent over the year to July.
UK house prices grew at the fastest annual pace in September 2020 since June 2016 in the post-lockdown surge in the housing sector. According to the data released by mortgage lender Halifax, average prices rose by 7.3 per cent as compared to the same month last year, accelerating from annual growth of 5.2 per cent in August.
The surge in the housing prices, which triggered after mid-May, mainly being tagged to the government easing lockdown restrictions, a cut to property sales taxes and changing work culture.
Russell Galley, managing director at Halifax, said the house prices increased 1.6 per cent between August and September. He added that the house prices were low last year due to the political uncertainty hovering over the market. It is to be recalled that there was a considerable rise in tensions due to Brexit in September 2019.
The release of pent-up demand after the coronavirus-induced lockdown and a cut announced in property sales taxes were some of the other reasons that the housing market saw a surge in activity during the past few months. Industry experts believed that the behavioural shift in the buyer’s preferences could also have significantly boosted the activity. As a result of the lockdown, people were forced to stay at home and as work from home became a norm, Britons started reassessing their housing needs.
On the other hand, several analysts remained doubtful about how long the upward movement in prices would last. Halifax also believed that a downward movement on house prices is likely to be seen in coming months as the pressures of the economic slowdown would start unfolding.
Also read: What’s in store for Countryside and Crest amid the spike in UK house prices?
Key highlights from ONS on UK house prices
In a separate data from the Office for National Statistics (ONS) released on 7 October, the average UK house prices reached a new high of £238,000 in July. The value of property rose by 2.3 per cent over the year to July, declining from 2.9 per cent in June 2020. The main findings from the ONS data are as follows:
- The average house prices rose over the year to £255,000 in England (2.5 per cent growth), to £170,000 in Wales (+3.6 per cent), to £155,000 in Scotland (+0.4 per cent), and to £141,000 in Northern Ireland (+3.0 per cent).
- While the region with the highest annual growth was West Midlands at 4.3 per cent, South East recorded the lowest growth with just 1.0 per cent.
- The most expensive were houses in London where prices remained at an average of £485,000, up y-o-y by 1.3 per cent.
Let us now discuss two key players in the property market, namely Rightmove PLC and Barratt Developments PLC and check out their stock performances.
Rightmove is Britain’s largest property portal. The company aims to empower Britons regarding property decisions. Righmove provides a comprehensive online property search engine, making it easier for buyers to find their choicest homes. Considered to be one of the leading property marketplaces in the UK, Rightmove offers the largest and highly engaged audience as well as inventory of properties on its platform.
On 7 October, at 15.02 PM, the company’s stock (LON: RMV) was trading at £655.20 down 1.98 per cent from its previous day’s close of £668.40. The 52-week low high range was recorded as 400.10 and 701.20. With a market capitalisation of £5,835.81 million, the stock -provided a positive return on price, which was plus 4.31 per cent on a year-to-date (YTD) basis. The total volume of shares traded at the time of reporting was recorded at 2,792,137.
Barratt Developments plc
Barratt Developments PLC is one of the Britain’s leading house builders which is known for creating great new places to live across the country. Barratt builds both private and affordable housing. The company’s business is about acquiring land and securing planning consents, besides building highest quality homes in places that people desire to live. These activities at Barratt are assisted by its expertise in land, designing and construction planning, apart from focused sales and marketing approaches.
On 7 October, at 15.14 PM, the company’s stock (LON: BDEV) was trading at £527.80 up 0.46 per cent from its previous day’s close of £525.40. The 52-week low high range was recorded as 364.70 and 878.40. With a market capitalisation of £5,350.21million, the stock provided a negative return on price, which was minus 30.13 per cent on a year-to-date (YTD) basis. The total volume of shares traded at the time of reporting was recorded at 2,089,811.
Many industry insiders believed that pent-up demand and stamp duty holiday might keep supporting the rise in demand for houses in coming months. However, rise in unemployment would significantly reduce the demand amid the ongoing economic crisis that would compel businesses to take more cost cutting measures.
Another market estimate predicted that if there is no nationwide lockdown again, house prices in the UK could increase by around 1 per cent in 2021. In case additional measures are imposed to control the spread of Covid-19 infections, then prices could drop again.