Nationwide House Price Index - October

ended 02. November 2021

The ancient Greek historian, Herodotus, was known for his colourful accounts of the Greco-Persian wars, most notably the Battle of Thermopylae in 480BC where 300 Spartans held off tens of thousands of Persians led by Xerxes - and arguably saved Western Civilisation in the process. You, by contrast, have been tasked to give your account of the UK property market in October, which says all you need to know about the abject banality of life today. So the usual Qs:

  • Was there much demand for property and mortgages last month?
  • Any sub-sectors of the property market that were particularly quiet or active, e.g. B2L, FTBs, holiday rentals?
  • Is the property market going to just tick over now until the Spring?
  • Could rising inflation and a potential rate rise this week cause the whole  market to collapse?

As ever, keep your responses succinct and to the point. No waffle. Bonus points if you can insert the word ‘Sparta’ into your response and it gets published.

7 responses from the Newspage community

Star Quote
"Demand for property remains strong but supply issues are the biggest sticking point, with too few properties on the market. Most now expect the Bank of England to raise the base rate in the near future, potentially this week, and we may well see a return to the pre-pandemic rate of 0.75% over the coming 12 months. But rates would still be stupendously low by historical standards and the impact on demand is likely to be negligible. Clearly, if the Bank of England presses the nuclear button and the base rate rises to above 3%, that would indeed have a significant impact on both affordability and demand."
"If there's one demographic within the property market that remains strong, it's the first-time buyer. This is especially case in areas outside London and the South East, where prices aren't silly. It also helps that first-time buyers haven’t been directly affected by the return of stamp duty as they are still exempt. If there's one stick in the spokes, it's the lack of suitable properties on the market as those wanting to move up the ladder have probably missed the prime time to do so and are staying put or borrowing to make home improvements."
"We've been somewhat spoiled of late with record-breakingly low interest rate deals of sub-1%. These are strange times indeed when a potential small rise in rates to a level they were only a short time ago is perceived as an end of days scenario. Mortgage rates may be increasing, but if they are moving from, say, 0.99% to maybe 1.34%, it's not going to suddenly make mortgages unaffordable for people and the demand for property will not collapse."
"Mortgage demand has held steady across the board, especially for the time of year where we'd expect new business to begin tailing off. We've noticed a reduction in buy-to-let activity and an uptick among first-time buyers. However, due to the fear of rate rises, we're seeing a lot of remortgage activity as people rush to secure a great fixed rate as rates begin to rise. It looks as though the market will remain steady unless there's a large economic shock we haven't planned for. Even if inflation does continue to rise the market will remain safe as brokers help their clients plan for what is ahead and battle against uncertain times. As mortgage brokers, we stand at the gates of Sparta ready to battle the Bank of England's Xerxes, Andrew Bailey, who is likely intent on increasing the base rate."
"October was our busiest month since June so we saw no slowdown at all in the property market. If there was one notable, albeit fully understandable development, it was the growing focus on remortgages as people seek to hedge against rate rises to come. The property market isn't going to collapse, as there is simply too much demand for any new property that hits the portals, with new stock being snapped up in an instant. There is simply not enough available stock on the market to keep up with demand. People want to move and there are bottlenecks everywhere. We need to make it easier for people to move home, and the conveyancing market needs a massive shake-up. Rate rises ain't going to dampen demand. Rates were higher for most of the last 18 months anyway because of COVID and the market was unbelievably busy."
"As the Nationwide data confirms, the demand for property remains strong despite the multiplicity of uncertainties ahead. The biggest issue is the lack of supply, which is threadbare. A rate rise this week or before Christmas is likely to temper demand but rates will still be extremely low. The main factor that will erode confidence is rising inflation, which makes people feel less confident and less bullish about moving home."
"Demand remained strong through October, with the sub-1% products sending a strong sentiment signal through the market. Usually demand will begin to slow around now as we enter the run-up to Christmas, but this hasn't happened yet. We do not expect to see any drastic changes in interest rates and expect demand to remain strong. The issue, as ever, is supply, especially below the £150k."