"With the furlough scheme ending last month, October could see some of the steam come out of the market."
On a non-seasonally adjusted basis transactions were 165,720, 67.3% higher than September 2020 and 59.7% higher than August.
Anna Clare Harper, CEO of property consultancy SPI Capital, commented: "Housing transactions are important because they drive house prices, which both reflect and affect our confidence, and the economy.
"This boom in transactions - the highest level in over 10 years - is unsurprising. Investors, homeowners, solicitors and banks pushed hard to get transactions done before the end of September, so that buyers could make the most of the final stage of the temporary stamp duty relief. This was combined with lockdown-led upsizing, a flight to safer assets and cheap finance due to long-term low interest rates, all encouraging people to buy a home.
"So what next? Unlike in the stock market or cryptocurrencies, where Bitcoin has just reached a new high too, people don’t tend to sell at a lower price than they paid, unless they really need to. Many homeowners are fixing their rates now, since interest rates (and therefore mortgage repayments) are low, and expected to remain so. This makes a mass sell-off from property owners seems unlikely.
"As a result, although it’s expected that transactions slow over the next year, prices are not expected to fall."
Richard Pike, Phoebus Software sales and marketing director, said: “We are all on a bit of a roller-coaster ride at the moment. One moment we’re up and the next we’re down. The housing market climbed quickly to the top during the stamp duty holiday, then it dipped as expected, and now we’re heading up again. In reality, we’re still riding pretty high and house prices, as reported by the ONS, continue to climb as demand for properties with more space and away from city centres remains.
“Inflation may yet play its part and the Monetary Policy Committee will have a lot to think about in its next meeting. However, the economy is still fragile and, although raising interest rates may be the conventional way to put a lid on rising inflation, the question is, can we afford to hamper growth after such a long period of stagnation. We may well see interest rates rise in the coming months, but it is by no means a certainty.
“Coming out of the pandemic was always going to be a tricky time, but for now our market is weathering the storm while many other industries are taking the brunt.”
Peter Beaumont, CEO of The Mortgage Lender, added: “With demand outstripping supply, fierce competition is keeping the fire burning in the housing market. Buyers are scrabbling to make the most of record-low mortgage rates, seizing a window of opportunity before they may disappear off the market. What’s more, with hybrid working establishing itself as a fixture of post-pandemic working life, the race for space rolls on.
“But with the furlough scheme ending last month, October could see some of the steam come out of the market. Coupled with the anticipation that the Bank of England may raise interest rates before the end of the year, it could soon be a less attractive time for buyers to get on the housing ladder. Locking in a fixed-rate mortgage now is certainly the goal for many buyers, but in the longer-term, we need to see more flexible, affordable mortgage options. Lending ought to be for real life, which won’t always correspond to trends in the market.”
