Halifax House Prices July

"We were expecting a fall in transactions as the public were let loose by the powers that be, but in reality the exact opposite happened in July. With the extreme lack of stock, people have been rushing to secure properties the moment they hit the market, with many homes being sold on a first come, first served basis. Given the current level of demand, first-time buyers are either being stretched or pushed out of the market altogether by soaring property prices."

"The market, like the weather, was incredibly hot in July and showed no signs of cooling down. The primary driver was huge demand from first-time buyers, who are savings rich following 18 months of no holidays and being cooped up at home desperate to flee the nest. The bank of mum and dad is also increasingly keen to chuck money into the pot to get rid of them... "Transaction levels seems to be holding up, if not quite as frantic as before the first stamp duty deadline, with the only real bottleneck being lack of supply and not enough houses on the market, although historically this is always the case in the summer holidays. "Predicting what will happen with house prices is not rocket science. As long as the supply of housing does not keep up with demand, house prices will continue to rise and the two are poles apart at the moment."

"While the number of enquiries we received in July dipped slightly, house prices continue to sky rocket due to a complete lack of supply. "Demand is outstripping supply to a level not seen since the London market went crazy six or seven years ago, and this is forcing first-time buyers and home movers to offer far above the asking price to have even a chance of securing a property. "Though prices will continue to soar, transactions levels will certainly fall as the vast majority of clients we have seen who were considering moving at some stage in the next few years have expedited their plans and moved in the past six months."

"The rate of price growth may be cooling but the property market is as strong as Thor’s hammer. First-time buyers in particular are itching to get onto the property ladder with savings made during the lockdowns of the past year and family assistance. As long as they are able to be approved for a mortgage, activity levels should remain strong until the end of the year. "The second half of the year should still see plenty of activity, but there will be a lower number of transactions given the stamp duty holiday is coming to an end. "The key driver of property prices at the moment is weak supply and rampant demand. We're seeing an average 16 buyers for every home that comes to the market, which is why I am all for incentives to encourage people to downsize which in turn can allow families desperate for more space to upsize. So perhaps scrapping stamp duty for all property transactions up to £500,000 may not seem such a crazy idea to enable greater movement within the property ladder. One thing that could apply downward pressure on prices would be a rapid rise in unemployment."

"There are certain developments unfolding in the mortgage market at present that could shape the direction of house prices in the months and potentially years to come. For example, a lot of self-employed small business owners who took out a Government-backed loan are starting to see that getting a mortgage is becoming increasingly difficult. Lender criteria increasingly include restrictions on those who have had a Coronavirus small business grant, Local Authority discretionary grant, Business Interruption Loan or Bounce Back Loan. "This means that many people who are looking for a mortgage now are finding it difficult to obtain one through no fault of their own. Some lenders even have the requirement for self-employed business owners that the business is back to the same position as it was pre-Covid and are requiring supporting evidence. This is proving difficult for many small businesses to achieve. House prices in the months ahead could come under pressure as a result."

"There was a definite reduction in the volume of new mortgage enquiries in July, but that's not to say the property market is quiet, far from it, it's just quieter than what was an unprecedented first half of the year. "The change in working patterns, with more of us now able to work at least some of the time from home, is causing many people to look at moving. This has been further fuelled by the stamp duty holiday. "With the end of the stamp duty holiday on the horizon, subject to no further market stimulus from Government, then I can see the market plateauing later this year. Property prices will not drop below their current levels in most areas, but will certainly stop rising at the rates they have through 2020 and 2021 to this point. "Transaction volumes are also going to reduce slightly, but if the new hybrid work pattern embeds in the medium to long term, I can see it still being busy as people move further out in search of better value and space."

"The volume of mortgage enquiries definitely decreased in July but there is still a lot of demand relative to the number of properties on the market at present. "If house prices are to drop, there needs to be a lack of demand and I can't see that happening in the immediate future but as stock is replenished over the coming year it is likely house prices will plateau and may even fall."

"Though July activity softened slightly due to the end of the first phase of the stamp duty holiday, and the usual seasonal reasons, specifically schools breaking up and people going on holiday, demand is still strong. "Without a shadow of doubt, house prices are going to continue to rise, albeit at a reduced rate. Will the rate of increase slow down? Yes. Will it stop? Not yet. "We are facing the largest gap between buyer enquires and new or available housing stock since 2013 and it is this supply/demand imbalance, along with very cheap mortgages, which is fuelling the current price growth. Of course if there is a big jump in unemployment figures once the furlough scheme is unwound, this may lead to a momentary stumble. "One thing that will naturally limit house price growth is the ability to get the mortgage required to buy the property. Given that house price inflation has consistently outstripped wage growth over the past 30 years, there will come an equilibrium that holds prices down until wage growth catches up, however that is likely some time away."