SUMMARY

House prices grew by 2.1% in April, according to Nationwide. This was the strongest month-on-month increase since February 2004 and puts annual UK house price growth at 7.1%. 

House price growth is likely to reach double digits during the summer. Demand remains strong as buyers seek to take advantage of the SDLT holiday. But the supply of homes for sale has not kept pace with the level of demand, as shown in the March RICS survey. Instructions to sell have been 5% lower than sales agreed since the start of the year, according to TwentyCi. This continuing imbalance will drive price growth over the next few months.

Completed transaction numbers hit a post-GFC record with over 180,000 transactions completed in March, according to HMRC. This number was boosted by sales aiming to complete before the end of the SDLT holiday. Fewer sales were agreed in the early part of 2021, so transaction numbers are likely to be lower in April and May. But increased activity following the extension of the SDLT holiday is likely to create another surge in June.
Sales agreed in April were 55% above the 2017-19 average, according to TwentyCi. They were particularly strong where buyers benefit from the maximum £15,000 saving on SDLT. This part of the market is mostly mortgaged home movers, whose numbers in February were 73% higher than the 2018-20 average, according to UK Finance. The proportion of mortgaged home-movers and first time buyers (FTBs) was approximately equal at the start of 2020. But home-movers now make up 58%, with FTBs at only 44%. The dynamic may shift again following the end of the SDLT holiday, assuming mortgage products aimed at helping FTBs become more easily accessible.

Rents have continued to fall in some city centre locations over the year to February. Rents have been hardest hit in London, down -8.0%, whilst Edinburgh, Birmingham and Leeds saw rental falls of -3.1%, -3.0% and -1.2% respectively. Annual rental growth for England excluding London was 3.4% over the same period, with the North East performing the strongest amongst the regions, up 4.8%. 

The RICS survey for March indicated positive tenant demand outpacing landlord instructions in the majority of regions, suggesting a continuation of rental growth over the coming months.