"Previous records are tumbling in this extraordinary market, and there are still some legs left in the upwards march of property prices."
The average price of property coming to market increased by 1.1% this month to a new record high of £323,530, according to the latest Rightmove house price index.
This is 5.5% (£16,818) higher than a year ago, the highest annual growth rate for over four years.
The momentum caused by the combination of pent-up and new demand has led to new records in several key metrics and, as a result, Rightmove forecasts that the annual rate of increase will rise further before the year-end and peak at around 7%.
Despite the effective market closure between late March and mid-May, 2% more sales have been agreed so far this year than in the same period in 2019.
As well as the new price record, September saw three new records for market activity.
Firstly, the average time to sell is now 50 days, which is 12 days faster than the same period last year. For the first time ever, estate agents now have more properties marked as sold than they have as available for sale.
Finally, the number of sales reported by agents also set a new record, and was 70% higher than the same period a year ago.
Rightmove also recorded a 49% increase in traffic in September compared to the same period last year, which is the biggest year-on-year jump since 2006. So far in October the number of sales agreed is still 58% up on the same period last year. The number of active buyers contacting estate agents also continues to run at a high level, up by 66% in September compared to 12 months ago, and only marginally down on the peak of +67% seen in July.
Tim Bannister, Rightmove’s director of property data, commented: “Previous records are tumbling in this extraordinary market, and there are still some legs left in the upwards march of property prices. We predict that the annual rate of growth will peak by December at around 7% higher than a year ago. Many buyers seem willing to pay record prices for properties that fit their changed post-lockdown needs, though agents are commenting that some owners’ price expectations are now getting too optimistic, and not all properties fit the must-have template that buyers are now seeking. Not only is the time left to sell and legally complete before the 31st March stamp duty deadline being eaten away by the calendar, but more time is also needed because the sheer volume of sales is making it take longer for sales that have been agreed to complete the process. Sellers and their agents should therefore be wary of being too optimistic on their initial asking price, as whilst activity levels continue to amaze there are some signs of momentum easing off from these unprecedented levels.
“Prospective buyers are seeing properties selling fast and prices rising as they search for their next home , adding to momentum and spurring them on to act quickly. With the number of buyers contacting agents still up by two-thirds on a year ago, there is plenty of fuel left in the tank to drive further activity in the run-up to Christmas and into next year. There have also been government promises of additional low-deposit mortgage support for first-time buyers, which could prove to be timely as we run up to 31st March. It appears that the current momentum, assisted by the prospect of stamp duty savings, is helping to keep the housing market healthy. Estate agents have worked hard to give confidence to sellers and buyers alike that property viewings can be conducted safely, and early signs show that market activity still remains high in areas with stricter local lockdowns.”
Tomer Aboody, director of MT Finance, added: "It’s a real boost to see how the market has performed year-on-year as we move towards year end. With house prices higher than this time last year, there is confidence and optimism. However, we should not forget where we were 12 months ago. It wasn’t a confident end to 2019 with uncertainty over Brexit and a pending general election that presented the possibility of a Corbyn-led government.
"An upsurge in sales and valuations at the start of this year attributed to the ‘Boris bounce’, which saw confidence at its highest for a long time. But that was short-lived and seemed like a distant memory once Covid started to take its toll.
"This current boom is a good sign, with buyers looking for more space and understanding that it comes at a premium. The stamp duty stimulus, along with cheaper than ever mortgages, means more people have greater confidence to take the plunge and buy a home.
"Cheap money, high loan-to-value mortgages, well-capitalised banks happy to lend and plenty of buyer demand, are the main reasons for the uptick in sales. There is also a desire to act quickly before a potential widespread deterioration in people’s credit ratings due to looming uncertainty over job security caused by the pandemic.
"The market will need further assistance and hopefully encouragement from government to offer higher LTVs will have a real positive impact, along with any potential further extension to the stamp duty break."