November saw the highest rise in house prices in nearly six years – despite the rest of the economy suffering from various Covid-19 lockdowns.

This was the headline figure in the mortgage lender Nationwide’s latest House Price Index, published towards the end of November. It recorded the property rise as 6.5% year-on-year, bringing the average cost of property in England and Wales to £229,721 – that’s an increase of £14,000. The monthly jump from October to November was 0.9% (or £1,895).

Mortgage lending highest in 13 years

But it’s not only house valuations that are up; mortgage approvals are higher than they have been in 13 years too, according to the Bank of England. Their most recent figures, revealed at the end of October, showed that there were a total of 91,454 mortgage approvals in September – the highest 
since 2007.

This has astounded many economists who had predicted the surge in interest and applications would have declined by this point in the year. However, there is no doubt the extension of the furlough scheme, together with Chancellor Rishi Sunak’s July announcement of a Stamp Duty Holiday, has helped maintain the buying momentum. Very low interest rates are also having an effect.

One economist, Samuel Tombs, attributed much of the property market boom to: “A relatively narrow cohort of well-off households, who already own their homes with little debt.” He said they had then managed to augment their savings by working from home thus saving on commuting costs.

Tombs is referring to the trend to move from cities and town centres to areas offering more greenery, countryside and space. Families, in particular, were keen to “upsize” to homes with more bedrooms and a garden – properties that are inevitably further out in the suburbs or in villages.

This is reinforced by another Nationwide survey that showed almost one third of those questioned were thinking of moving because they wanted more outdoor space. Around one quarter of people said they found city life too noisy and fast. This has resulted in property within national park boundaries costing 20% more than similar sized properties outside park boundaries.

Could the Stamp Duty Holiday be extended?

In order to mitigate the gains made by the robust property market, Tombs said he could see the chancellor extending the Stamp Duty Holiday scheme beyond the end of March. He also suggested that another speculated mortgage guarantee scheme could have an equally positive effect on the property market.

The call for a Stamp Duty extension is gaining momentum amongst industry professionals. Certainly, it was echoed by Tom Scarborough, chief executive of Movewise. Referring to the fact there is a big backlog of house sales transactions still to go through, he said he was aware of “growing calls for the deadline to be extended”.

The Stamp Duty deadline panic has meant that both empty properties and those that aren’t in a chain have become very highly sought after by those buyers looking to move quickly and take advantage of the £15,000 saving for the first £500,000 of a property.

First-time buyers increasingly worse off

Meanwhile, first-time buyers are still being priced out of the market after finance lenders pulled 90% of low-deposit mortgage deals from the market. An increase in second-home ownership in villages and “greener” areas has also resulted in escalating house prices.

However, it may not all be doom and gloom for the younger generation looking to get on the property ladder. The buoyant housing market is having a positive effect on the construction sector, meaning more new builds are going up, which should help to rectify the shortage of supply. Of course, understandably this is also something that is attracting landlords keen to expand their existing property portfolios.