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Nationwide house prices: property market delivers serious curveball in August

ended 01. September 2021

The UK property market delivered one of its biggest curveballs for some time in August, with growth of 2.1% — the second highest monthly rate of growth in 15 years according to the Nationwide.

The consensus was for a cool-off in August but then the property market never really did logic. It's about as logical as an Alfred Jarry play.

Ocean's Eleven

Annual growth, meanwhile, came in at 11%, which was as outrageous as the casino heist in the movie starring that smooth-looking geezer who likes coffee, forget his name.

So what was the real insight that we can take from this data? Probably that the market is being driven less by one-off fiscal savings, i.e. the stamp duty holiday, and more by lifestyle changes.

Translate: people are moving away from their offices and looking for space and properties that suit a WFH culture.

Supply is the other key driver of house prices, of course. In short, there isn't any. 

OK, slight exaggeration that but stock levels are insanely low, which means whatever comes onto the market can command a strong price. Even if it's got no roof. 

Rising unemployment a threat

Dirt-cheap mortgages are also driving activity. Hell, it's cheaper to borrow money from banks than it has ever been, even at higher loan-to-values. History will probably deem mortgages rates today to be borderline criminal.

But there are still reasons to be cautious, as Robert Gardner, Nationwide's Chief Economist, points out:

“Underlying demand is likely to soften around the turn of the year if unemployment rises, as most analysts expect, when government support schemes wind down.”

Thanks for that, Robert. Now for the more important views of the Newspage community, below. Businesses who are on the front line, not sat in their Ivory Towers dissecting the property market as if it were a giant lab rat.

5 responses from the Newspage community

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Lewis Shaw
Owner and Mortgage Expert at Shaw Financial Services
"August wasn't as quiet as I'd expected and prices in our area, despite the end of phase one of the SDLT holiday, were relatively stable. We still had a steady flow of new enquiries and remortgage activity, but the lack of stock remains a key roadblock. We're expecting the fourth quarter of the year to be business as usual due to the mass vaccination rollout dulling the sharp teeth of COVID."
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Aaron Strutt
Product and Communications Director at Trinity Financial
"There is still huge demand for property and buyers are as keen as ever to get on the housing ladder and that is reflected in the strong August house price data. We expect the property market to be extremely active over the coming months as more borrowers look to take advantage of the super cheap rates on offer and the greater availability of low deposit mortgages. Lenders are lowering their rates to attract borrowers and they still have huge lending targets to hit. That bodes well for the property market moving forward."
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Robert Payne
Director at Langley House Mortgages
"August is always a quieter month for property purchases but compared to previous years there was still a significant amount of interest and property prices have shown no sign of cooling just yet. With rates as low as they are and lenders showing a willingness to lend, it is a recipe for continued high levels of activity in the market and I suspect this will be the case for the rest of the year."
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
"August was a lot quieter in terms of new enquiries and people starting the purchase process. People know that the stamp duty holiday boat has sailed at this point. Combine this with the natural August lull and the market was as quiet as expected. The big question now is whether we will see the usual September pick up or will it be scuppered by those who brought their plans forward to capitalise on the stamp duty holiday. The mortgage market as a whole will still be very active. The latter part of 2021 sees a huge number of people come the end of their current mortgage deals and so, despite the potential reduction in property purchases, we will still see lots of activity in the mortgage world as people look to get one of the record low rate deals, or maybe extend and improve their current property."
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Dashly.com
"As summer went out like a damp squib, property prices softened. With government incentives such as the stamp duty holiday coming to and end, a fall in demand for three and four bedroom family homes, and people taking time out for a holiday, it's unsurprising things cooled. Come autumn, and with the end of the furlough scheme just around the corner, we may see this trend continue. But make no mistake, the bottom end of the market, fuelled by first-time buyers, is still running hot."