Several major banks and lenders across the UK have released data suggesting a faster-than-expected housing market recovery is well and truly underway. Nationwide has reported exceptional house price growth for October of 5.8%, the highest recorded since January 2015.
Nationwide’s latest House Price Index has painted a positive picture for the UK’s real estate market, indicating further month-on-month growth of 0.8% for October. This followed a further 0.9% increase in September, resulting in a new average home price of £227,826.
Despite having acknowledged the somewhat sluggish pace of the UK’s general economic recovery, Nationwide insisted that the housing market is performing with unexpected strength. Economic growth for August fell to just 2.1% from July’s 6.4%, indicating that the government’s Eat Out to Help Out scheme was not quite as effective as expected.
“Market conditions also weakened with the unemployment rate rising to 4.5% in the three months to August, still low by historic standards but up from an average of 3.8% in 2019,” said Robert Gardner, Nationwide’s chief economist.
“Nevertheless, housing market activity has remained robust. Mortgage approvals for house purchases climbed to 91,500 in September, the highest level since 2007.”
“The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve, as well as the efficacy of policy measures implemented to limit the damage to the wider economy.”
Additional lender support is required
Commenting on the data published by Nationwide, Steve Seal suggested that lenders in general will need to do more to support prospective buyers in the foreseeable future.
“While the housing market continues to recover from the impacts of the pandemic, it is likely that many customers, particularly those who face further financial hardship beyond October, will require additional support from lenders over the coming months,” he said.
“For these borrowers, this has the potential to impact their credit score and, subsequently, their ability to secure a mainstream mortgage in the future.”
“This is why the specialist lending market will be essential for supporting underserved customers over the long term, providing them with financial solutions to cater for their specific needs.”
Ongoing economic uncertainty is likely to increase lender scrutiny when processing applications, resulting once again in delayed transactions and further challenges for borrowers. Some have called for the government’s stamp duty holiday (scheduled to expire March 31) to be extended indefinitely to boost confidence in the housing market and support sales activity.