Is Britain’s property market like Wile E Coyote going off a cliff or the cockroach that survives nuclear winter?
Defying all expectations, large parts of the housing market have gone bonkers after the early lockdown freeze.
House prices have jumped instead of falling, buyers are contending with asking-price-and-above offers, and a rush of people have decided the worst recession in living memory is a good time to move home.
House prices across the major indices have climbed in lockdown. Nationwide’s figures here show the average house price bouncing over summer to more than £225,000
(I should hold my hand up at this point and admit I’m a statistic here, we moved home in July – albeit in a sale that was agreed in February having already sold our old flat.)
When the first wave of the coronavirus pandemic slammed into Britain’s shores and we went into lockdown, the shutters were pulled down on the property market and predictions were widespread that when it reopened things would head south.
Five months later, the latest set of figures from the Halifax House Price Index landed yesterday, claiming that prices are up 7.3 per cent annually to £249,870.
That means that the average home is £17,000 more expensive than it was in September 2019; a month which for all its no-deal Brexit-based pessimism and rows over parliament prorogation looks like an oasis of sanity compared its 2020 cousin.
I’d take Halifax’s house price figures with a pinch of salt – they are based on its own mortgage figures and this long-running and venerable index has been rather optimistic of late – but there’s no denying a property market mini-boom does appear to have taken place.
Britain’s biggest mortgage lender said: ‘Across the last three months, we have received more mortgage applications from both first-time buyers and homemovers than any time since 2008.
‘There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space, while the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March.’
As a major High Street bank, it can’t just make statements like that up.
And there is a wealth of evidence from elsewhere, ranging from estate agents, to surveyors, to mortgage brokers and other lenders, also highlighting a buoyant market.
The ONS house price figures are based on Land Registry sold orices and lag the mortgage lenders’ reports – but it also shows house prices climbing
This is the complete opposite of what I expected after the freeze – and almost everyone in the property industry that I spoke to also expected lockdown, furlough, mass job losses and coronavirus fears to be the thing that finally knocked UK house prices on the head.
That didn’t happen. An initial buyer’s market swiftly turned into a seller’s market and things have been stoked up further by the stamp duty holiday until next March – this effect has been particularly pronounced in the parts of the country where family homes can easily cost £500,000.
What makes the mini-boom all the more remarkable is that it is set against the backdrop of lenders pulling up the drawbridge on smaller deposit buyers, with the 90 per cent mortgage market decimated.
This is particularly galling for first-time buyers in that bracket who may have diligently saved a deposit only to find out they now need to find more, just as prices appear to be climbing away from them.
The theory now is that this can’t last.
Economic reality will bite, the stamp duty break rush will end and at that point things will fall. Hence, the Wile E Coyote comparison.
Of course, this is not the first time this has been made. Yesterday, Google unearthed for me a story I had written back in December 2007 Should you believe the property doom? that drew the same analogy just before the financial crisis house price tumble hit.
The mini-boom flipping into price falls would appear to make sense. And anecdotal reports suggest that the market has already slowed as local lockdowns eat into more of the country and some sellers in popular areas are getting overly optimistic with asking prices.
However, predicting Britain’s property market is nigh-on impossible.
Recent events have shown that defying all logic, house prices in this country and people’s desire to move home might have more in common with that cockroach you just can’t kill than RoadRunner’s unlucky pursuer.