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U.K. House Prices Jump Most Since 2016 in Post-Lockdown Boom

(Bloomberg) — U.K. house prices rose at their strongest annual pace since 2016 last month as Britons’ changing work patterns and a tax reduction on purchases fanned a resurgence.

Average house prices rose 7.3% in September from a year earlier to a record average of 249,870 pounds ($323,000), mortgage lender Halifax said Wednesday. On the month alone, prices gained 1.6%.



chart, histogram: Housing Boom


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Housing Boom

Since the lockdown started to be eased in May, a wave of buyers have sought to sell up in urban areas such as London to move to places with bigger yards and more green space.

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They’ve been helped by a temporary tax break on home purchases that will expire next year. Prime Minister Boris Johnson signaled more support for the market this week, with a promise of more generous home loans for millions of young first-time buyers.

Real estate agents and economists are unsure how long the upswing can last. Rising unemployment, risk aversion among lenders and a potential resurgence of the virus mean the market may lose momentum in the next few months.

“The release of pent up demand and indeed the stamp duty holiday can only be temporary fillips,” said Russell Galley, managing director at Halifax. “Significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”

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DIY Boom Continues to Drive Demand for Home Improvement Stores

Home improvement stores are on track to permanently land in the essential services or daily needs category, which retail investors have focused on for years. This year, home improvement activity has increased dramatically, and 40% of consumers have indicated that they plan to continue home improvement projects beyond the recession, according to research from the NPD Group. The activity has driven home improvement store sales up 11% this year.

During the pandemic, home improvement stores have become the second fastest growing retail segment in both brick-and-mortar and online sales. In lawn and garden, tools, paint, kitchen and bath and hardware segments, each saw a double-digit increase in both online and in-store purchases. The average shopping trip also increased 10% compared to the average trip in 2019.

Home Depot Versus Lowe’s

Placer.ai, which also looked closely at shopping trends in the major home improvement brands, found that Lowe’s saw an early surge in sales in April, up 14.1% for the month. Home Depot on the other hand, didn’t see an increase in sales until May, when activity jumped 26%. In the same month, Lowe’s continued to outperform its competitor, seeing a 46.6% increase in sales. Lowe’s has continued to outperform Home Depot through the pandemic, although both have seen significant increased in activity and the gap narrowed. Notably, significant sales growth continued in June and July, well after home improvements’ normal peak season.

A Long Term Trend

Weekly visits have continued to show strong sales, all the way through early August, the most recent data available. According to Placer.ai, this indicates that the home improvement trend could be long term, as the NPD Group data also suggests. The activity has been driven in part by the fact that people are staying at home more, as well as by homeowners that may

British house price boom to fizzle out next year: Reuters poll

LONDON (Reuters) – British home prices will rise 2.0% this year following a post-lockdown boom in the housing market, according to a Reuters poll, marking a sharp turnaround in views from a 5.0% fall predicted three months ago.

FILE PHOTO: A person on a bicycle rides past houses on a street early in the morning in Islington, London, Britain, June 22, 2020. REUTERS/Simon Newman

Britain’s economy shrank more than 20% in the second quarter after the government forced businesses to close and citizens to stay home, but it is expected to rebound with 15.8% growth this quarter as some restrictions have been relaxed.

The lockdown meant people spent more time indoors and a dash for larger homes and gardens pushed up prices in September, a survey by property website Rightmove showed last week.

That chimed with other surveys that have shown a post-lockdown surge in the market, also helped by a temporary cut in property tax.

Prices will rise 2.0% this year, the Sept. 15-25 poll of 22 property experts showed, but stagnate next year after the tax break finishes and due to an expected spike in unemployment following the closure of the government’s furlough scheme.

“Those who have been hit medically or financially by COVID-19 will have bigger issues to worry about than moving for a bigger garden,” said property market consultant Henry Pryor.

“We may well run out of a pool of buyers prepared and able to move for lifestyle reasons as the flood of negative headlines about the true cost of the pandemic to individuals and the nation starts to become clearer.”

When asked about the risk of the recent surge in prices reversing by the end of the year, respondents were split, with nine saying it was high, seven saying it was low and three saying