How much longer can the housing market defy the Covid-19 gloom?

Residential property prices in the UK increased at the fastest pace in four years in September despite the uncertainty caused by the coronavirus pandemic and Brexit as people working from home look for more space, but is the existing rate of growth sustainable?

The post-lockdown property surge meant home prices in September increased by an average of £17,064 year-on-year to a total £249,870.

Separate data lagging the Halifax report, released by the ONS yesterday, based on Land Registry sold prices data delayed by lockdown, also revealed a rise in property prices.

The ONS data showed house prices up 2.3% in the year to July, with average prices stood at £255,000 in England, £170,000 in Wales, £155,000 in Scotland, and £141,000 in Norther Ireland, and yet there could still be more room for growth, thanks in part the current stamp duty holiday.

Miles Robinson, Head of Mortgages at online mortgae broker Trussle, said: “It’s not a surprise to see a reported 1.6% increase in house prices from August to September. It’s clear the housing market is relatively buoyant at the moment, and with nearly six months still left of the stamp duty holiday we expect this trend to continue until the end of the year.”

Trussle’s own data suggests that existing home buyers are the ones propping up the market with an increase of 23% in mortgage approvals for next-time buyers from August to September.

Robinson continued: With rising house prices and so few high loan-to-value mortgage products available to first time buyers, it’s those that have a deposit of 15% and higher who are able to take advantage of the current incentives. In fact, for those with greater equity in their homes, some may be buying before having sold to ensure they don’t miss out. By doing so, there’s less on the market for first-time buyers and competition is fierce – both in terms of housing availability and mortgage lending.”

However, despite the recent uptick in the market, there are growing signs that the boom could soon run out of steam.

Guy Harrington, CEO of property lender Glenhawk, said: “The question now is how much longer can the housing market defy the Covid-19 gloom?  

With furlough, mortgage holidays and credit card payment holidays all coming to an end this month some experts have a gloomy outlook on the economy, which could lead to a fall in property prices.

Harrington commented: “Growing consensus suggests we are in for a nasty shock, unless the doom-mongers have got it very wrong and the economy can ride out an unemployment-led economic slump. As history has shown us, when it comes to the UK housing market, all bets are off.” 

Halifax said that it is “unlikely” that the UK housing market will “remain immune” to the economic slowdown.

Russell Galley, managing director at Halifax, commented: “The release of pent up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane.

“And as employment support measures are gradually scaled back beyond the end of October, the spectre of increased unemployment over the winter will come into sharper relief.

“Therefore while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”

Although the market could be starting to cool, there is unlikely to be a “cliff edge scenario at the end of March when the stamp duty holiday ends”, according to David Westgate, of Andrews Property Group,

He said: “The growing conservatism of lenders who have one eye on rising unemployment and a potentially unprecedented fiscal pinch is playing a major role in cooling the market down.

“For now, we have a huge pipeline of property transactions tied up in solicitors’ hands, all waiting to complete before the end of the year to avoid increased stamp duty charges.”

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  1. AlwaysAnAgent

    It’s difficult to see how 2021 and 2022 will play out.


    I’m convinced there is still a huge amount of pent up demand out there. People are saving more, staying at home more, they haven’t been able to go on holiday, get married, and many have been too daunted to move house.

    At some point this pent up consumer energy / demand will be unleashed. The question is whether it will dwarf the negative factors such as rising unemployment.

  2. Bless You

    I’ll tell you when. It will be the day after I recruit some more staff to help my burnt out staff!

    All or nothing with the tories. Absolutely useless.

    1. debbiedoesalot

      How is Covid the Tories fault?!!

      1. jan - byers

        Debs if you vote Labour everything in the world is the Tories fault they are tedious

  3. James White

    What else can you spend your money on right now?

    It may as well be your house or a new one…..all those tenants with spare cash that are now able to save for a deposit.

    How many people are now saving on commuting for example…..Covid has changed the world not just the housing market.

    The market will endure for as long the lenders remain active and engaged….

    1. majortom1

      Developers still buying land and lots of it. Maybe a sign of confidence?

  4. WiltsAgent

    Until midnight 31st March 2021.

  5. surrey1

    It’s done in my patch. As many price reductions as new instructions.

  6. Hillofwad71

    At the EA Masters  this morning  RM announced that 1 in 7  properties are selling within a week .That sounds like a lot  of busy agents

    no doubt many posting here tucking into a feast  but  that pattern is not evenly distributed


    Yet there are many areas of London where 1 in 7 properties have been sitting in agents inventory unsold for 12 months or longer  Some areas like Clerkenwell acc to ZPL 1 in 5

    Amongst those  vendors certain to be some who are”highly motivated”sellers .Any more deterioration in economic conditions likely to make some even more .That is a bit worrying .


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