Housing Market Summary
Quarterly update of housing market activity.
- The first half of 2021 has seen the strongest year-on-year house price growth since 2004, with June’s 0.7% growth (Nationwide) bringing the total so far this year to 13.4%.
- Transactional activity has also been remarkably high in the first half of the year. The provisional (non-seasonally adjusted) estimate of 449,030 UK residential transactions during Q1 was the highest since statistics started being recorded in their current format in 2005.
- Since peaking in March at 183,670, transactions levels have been falling back with 119,540 provisionally reported for April and 114,940 for May. However despite the slowing, these levels are still well ahead of the 2013-19 average.
- According to the RICS Residential Market Survey, buyer demand has cooled over the last few months which is reflected in the slowing transaction levels. New buyer enquiries remains still firmly positive though, which will help to underpin continued strength in the market in the coming months.
- Another factor which will help support price growth is declining supply. The RICS survey in June reported that the majority of surveyors saw a decline in the level of new instructions.
- With the unwinding of the SDLT holiday, we expect wider macro-economic factors to return as the key drivers of the housing market. Our near-term economic outlook is broadly positive and our view is that the inflation we are seeing is transitory and will not impact interest rates.
- The economic backdrop combined with a continuation of demand resulting from reassessment of housing needs will support continued house price growth and transaction levels through the year. Although this will be at much more moderate levels than we have seen so far.