2 September 2021

Market Update – 2 September 2021

House-price growth accelerated in August, with values 13 per cent higher than before the pandemic, according to the latest data from Nationwide building society. Even though August tends to be a quieter month for the housing market as schools break up and families head on holiday, annual house-price growth hit 11 per cent, with the average home now costing £248,857.

The figures came as a surprise as it was widely thought that the tapering of the stamp duty holiday from the end of June would take some of the heat out of the market. Nationwide said that the strength of price growth, with a 2.1 per cent month-on-month increase, may reflect strong demand from those buying a property priced between £125,000 and £250,000, who can still take advantage of the stamp duty break before the end of September.

The lack of stock is also contributing to the rise in property prices, combined with ultra-low mortgage rates. The latter is giving borrowers the confidence to go after the property of their dreams in the race for space. We heard earlier this week from the Bank of England that households continue to deposit significant amounts with banks and building societies, giving lenders even more ammunition to offer rock-bottom rates, and borrowers bigger down payments.

As people return from holiday and the schools go back, we expect more of the same for a while yet. With lenders reducing rates across loan-to-values, and not just for those with the biggest deposits, there are opportunities for first-time buyers and home movers alike, suggesting a brisk autumn for the housing market.

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