Houselungo 11 July 21

Published 11th of July, 2021

A lungo length look at this week's housing market news

House prices fall by 0.5%

Halifax house price graph twindig Housing Hailey

The Halifax House Price Index was released this week

What they said

House prices fell by 0.5% in June

But are up 8.8% over the last year

We expect annual house price growth to have slowed somewhat by the year end

Twindig take

House prices dip by 0.5% in June as the stamp duty holiday winds down, according to the Halifax, but annual house price inflation stands at +8.8% and house prices have risen by just over £21,000 over the last year. One month of falling house prices does not buck a trend and that trend, for now, is still up not down. For some, the easing of lockdown and the prospect of a summer holiday may take some heat out of the housing market, but others will be keen to move before the end of September and cathartically put COVID behind them. No need for house price panic just yet

Mortgage rates falling faster than house prices 

mortgage rate graph by mortgage LTV

The Bank of England published the latest average mortgage rates for popular mortgage products this week

What they said

75% LTV mortgages 1.37% down 6.2% in the month

90% LTV mortgages 3.09% down 6.9% in the month

95% LTV mortgages 3.75% down 2.6% in the month

Twindig take

Falling mortgages rates normally means one of two things, either: 

Banks are looking to sell more mortgages and are therefore lowering the price - simple economics to grow sales, or

Banks believe the risks of future house price falls and economic decline are lower than they were. Lower risk leads to lower prices.

Both reasons are good news for homebuyers and those remortgaging because lower mortgage rates leads to lower mortgage payments.

Perhaps in this context, for homebuyers, lower house prices are the icing on the cake as this means a smaller mortgage and lower mortgage rates, but let's not forget that too much of a good thing can lead to indigestion.

The Catch-22 creating a shortage of homes for sale 

The latest RICS UK housing market survey was published today. The new data suggests that whilst homebuyer demand may start to wane as the stamp duty holiday runs its course, the paucity of supply is likely to underpin house prices. But those wanting to buy before putting their own home on the market are partly responsible for the shortage of supply

From Purplebricks 1.0 to Purplebricks 2.0

Online estate agent Purplebricks released its full-year results this week

What they said

Launching a money-back guarantee scheme this month

Instructions up 19% in their second half (against a market up 53%)

Average fee up 7% to £1,501

Twindig take

There were two highlights in the Purplebricks results this morning. The growth in instructions and the launch of a money back guarantee.

Instructions may have increased by 12% in the year to April 2021, but for the market as a whole transactions were up 14% and if we look to the second half, which was fuelled by the Stamp Duty Holiday, Purplebricks instructions increased by 19% but overall housing transactions increased by 53%. In a market where homes were selling like hotcakes Purplebricks was feeling the cold.

The Money Back Guarantee sounds like a good idea and it might address my former concerns, it applies to properties marketed at the agreed valuation, allowing customers a full refund on their full fee if they have not received a proceedable offer within 10% of their valuation. The key will be the definition of a proceedable offer and does the ‘full fee’ include the ancillary services.

The CEO described the changes and advances announced today as Purplebricks 2.0, but is the money back guarantee just a case of Estate Agency 1.01, where you only pay if you sell your home?

Housebuilder round up

As the Euros reached fever pitch this week with much talk of things coming home, it was a busy week for UK housebuilders with half-time reports from Persimmon and Vistry and full-time updates from Countryside and Redrow. If you don't want to see the score, look away now, all are still in the game and if you want to read our full match reports.. click on the link below 

Housing Hailey

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