House prices to rise 14%, but boom 'short-lived': Reallymoving | Mortgage Strategy

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Annual house price growth could hit 14 per cent by November, Reallymoving has forecast.

The website captures the purchase price buyers are planning to pay when they search for conveyancing quotes through its comparison service.

Buyers typically search for quotes twelve weeks before their purchase completes, which provides an indicator of house price trends over the months ahead.

Based on this data, Reallymoving says that annual growth was 7.2 per cent in July, with the average purchase price £316,753, however prices went into negative territory, falling by 1.4 per cent in the year to August.

The data then points to steadily increasing annual growth of 4.7 per cent for September, 11.4 per cent in October and 14 per cent in November, taking the average purchase price to £336,946.

However, like many commentators, Reallymoving’s analysts expect the boom to be short-lived.

There have been several gloomy forecasts which suggest that once the pent-up demand has worked its way through the system and the stamp duty holiday ends on March 31, prices could flatline or fall in 2021.

The Centre for Economics and Business research last week predicted property prices will plunge by 14 per cent next year.

Reallymoving says that conveyancing quote volumes were 55 per cent higher during the three months from June to the end of August than over the same period last year.

But the website says that economic forecasts remain unfavourable and with a second national lockdown now being mooted, this is extremely likely to be only a short-term hike driven by strong demand from equity-rich homebuyers seeking extra space.

Reallymoving chief executive Rob Houghton says: “Buyers are determined to make their move now, despite the fact that the current spike in prices will in many cases wipe out the stamp duty savings. 

“For those higher up the ladder with secure finances, a healthy level of equity in their property and little other debt, gloomy economic forecasts are only encouraging them to press ahead with the move rather than sit tight and wait out what could be a long and painful recession.

“More than ever people’s homes are their castles and their offices – and with borrowing costs likely to be rock bottom for the foreseeable future, paying over the odds on a purchase isn’t too painful if you’re also getting over the odds on your sale and making a stamp duty saving. 

“It’s a different story for first-time buyers though, who aren’t benefiting from stamp duty savings in most areas and who have seen low-deposit mortgages all but wiped out. 

“This explains why the proportion of first-time buyers in the market has dropped by 19 per cent since May.

But he warns: “We anticipate that this boom will be relatively short-lived. 

“With the end of the furlough scheme around the corner and the prospect of further lockdowns on the horizon, not to mention the growing likelihood of a no-deal Brexit, demand is likely to drop off through the late autumn and winter, reversing the current spike in house prices.”


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