UK housing market: Housing market continues to hot up despite lenders trying to put on the brakes

Remarkably, despite the rising house prices and increasing mortgage lender down valuations, housing transactions in August were 21% higher than they were in July – almost back to pre-Covid levels! It seems that, currently, nothing can halt the strength of the property market.

This week, the HMRC released their provisional data for housing transactions in September 2020. The HMRC have said that housing transactions totalled 98,010 in September 2020 – 21.3% higher than August 2020 and only 0.7% lower than September 2019. This further showcases the strength of the market with the levels more or less matching the pre-Covid market.

The Land Registry also released its house price data for August 2020 this week. Their data shows that UK house prices have increased by 2.5% in the last year and have increased by 0.7% in August 2020 alone. The latest Land Registry House Price Data shows that house prices across England and Wales increased again in August 2020 to £251,439 – an increase of more than £8,900 since the start of lockdown.

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The UK mortgage market down valuations are on the up. Zoopla and Bankrate create a ‘Devaluation Report’ – this report looks at how mortgage lenders have reacted to the recent surge in house prices. Bankrate and Zoopla found that 46% of buyers had been subject to down valuations by their chosen mortgage lender. 50% of buyers aged 18-34 received a down valuation and 37% of buyers aged 45 and over received a down valuation.

Due to the savings as a result of the Stamp Duty Holiday, homebuyers can offer more on the home they are putting an offer on. As a result the house price is rising, which mortgage lenders have decided isn’t justified, hence they are not willing to lend the full amount asked for. This is unfortunate for first time buyers as they will be the hardest hit as they are typically the ones wanting to use a higher loan to value mortgage than a homeowner and they usually have less access to smaller deposits.

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