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New buyers entering the market supports rising house prices

Demand for property from new buyers entering the market has maintained pressure on house prices rising 2.6% for the year.

Annual house prices inflation rises 2.6% with no sign of slowing as new buyer demand is 39% higher than this time last year according to the Zoopla House Price Index.

This has been supported by a spike in first time buyers when the lockdown ended, however, lenders have withdrawn products and increased loan to value mortgages due economic uncertainty.

On the other hand, new home movers have increased property inventory on the market by 10% as homeowners change their lifestyles and need more space for home working in the future.

House price inflations remains steady

Across the country house prices are higher by 2.6% year on year to August 2020 with cities of Nottingham up 4.7% and Manchester up 4.2%.

House price growth is slower in the South East with London rising 2.1% compared to this time last year, Cambridge up 1.4%, Oxford up 1.1% and Aberdeen the only city reducing by -0.6%.

This table from Zoopla shows the 3-month change and annual change in house prices since the lockdown to August 2020.
Month 3-months Annually
Average price
March 1.0% 2.2% £215,317
April 1.2% 2.4% £216,079
May 1.5% 2.8% £217,207
June 2.8% 2.4% £216,862
July 0.6% 2.5% £217,457
August 0.5% 2.6% £218,262
There has been a strong recovery since lockdown where new sales agreed over 9 months are 3% higher than this period a year ago.

There is a 3-4 month lag when the sales are agreed and the transaction finally completes which means housing sales are expected to be 15% lower than 2019.

For remortgage buyers with equity in their property due to rising prices and current low interest rates allows them to release capital to improve the home by increasing space such as a loft conversion or extension.

Home mover demand rising

Existing homeowners were slow to act when lockdown was removed for the housing market and now rising demand is 37% higher than before Covid-19 and 53% up on this time in 2019.

There is pent-up demand from home movers and this could continue into 2021 to support the housing market as first time buyer demand weakens due to cautious lenders.

There may be less competition from first time buyers allowing buy-to-let investors to purchase one- or two-bedroom property with a smaller deposit improving the return on their investments.

In contrast older equity release buyers can stay in their home rather than move by accessing the wealth in their property with a lifetime mortgage for home and garden improvements or consolidate debt.

What are your next steps?

Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or a buy-to-let investor.

For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to maintain your lifestyle or even give to a family member.

Start with a free mortgage quote or call us and we can take your details. Learn more by using the equity release mortgage calculator, mortgage cost calculators, and property value tracker chart.


Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%
1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%
1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%
1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%

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  • IMPORTANT

    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.

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