Property price growth rebound in 2021
- Published: Wednesday 03 March, 2021
- By: Commercial Trust
Nationwide Building Society have released their House Price Index for 2021, and it shows a surge in property prices of 0.7%.
After a disappointing January, Robert Gardner, Nationwide’s chief economist, admitted the increase was unexpected.
“It seemed more likely that annual price growth would soften further ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase,”
As we learnt today, the stamp duty holiday has been extended until the end of June so it may be possible we see a further spike ahead of this new deadline.
Another factor from the Budget announcement, that could affect this price growth moving forward, is the introduction of the mortgage guarantee scheme.
Incentivising lenders to bring back 95% loan to value residential mortgages which have disappeared during the pandemic, it aims to help people with small deposits get onto the property ladder and is not limited to first-time buyers.
Andrew Turner, Chief Executive of Commercial Trust Limited, commented on the impact the residential scheme will have on the buy to let sector:
“This government scheme will help some people, but I do not see it as an influencing factor on the private rental sector.
“It is unfortunate but true, that generation rent will be most impacted, negatively, by the coronavirus pandemic.
“Credit scores will have declined whilst on furlough, redundancies will have impacted many and those with small businesses will have been especially vulnerable to closure.”
“This means individuals affected won’t be eligible for a mortgage, irrespective of a guarantee from the government on the top slice.
“In this scenario, the need for rental properties will heighten, as so many people will need to stay renting, longer.
“I expect landlords to be much needed in the time ahead.”
Prices were up 6.9% from 6.4% in January, raising the average property price to £231,061, the highest on record.
Nationwide, taking into account the monthly decline of 0.2% recorded in January, shows that house prices rose 0.7% month-on-month.
“Many peoples’ housing needs have changed as a direct result of the pandemic, with many opting to move to less densely populated locations or property types, despite the sharp economic slowdown and the uncertain outlook.”
“As a result, the outlook for the housing market is unusually uncertain.”
“Nevertheless, if labour market conditions weaken as most analysts expect, it is likely that the housing market will slow in the months ahead.”
Property on the up
Despite fears that the pandemic would have a negative effect on the property market, it looks like house prices are continuing to rise.
This is the best news for those looking to release equity from their properties to finance new projects, but also reassures those landlords who will be looking to remortgage in the future.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.