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Commentary: Let's not get carried away with news of house price growth & rising mortgage approvals

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It’s quite easy to get carried away with the huge house price growth being shown at the front end of the transaction process via mortgage approvals and asking prices. However, the reality is that the market is moving at a far slower rate where actual sold prices are concerned.

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Don't rely on the asking price data

In response to news that house prices and mortgage approvals are rising dramatically: 

It’s quite easy to get carried away with the huge house price growth being shown at the front end of the transaction process via mortgage approvals and asking prices. However, the reality is that the market is moving at a far slower rate where actual sold prices are concerned.

Stamp duty & recession on the horizon

Although prices have still gained positive ground, this likely to be a temporary hoorah and there is a very strong chance that this growth will recede rapidly come April once the sun has set on the stamp duty holiday.

The aftermath of the current pandemic may be biting by then too, and we may begin the transition from "pandemic" to "recession". House price drops usually follow, and mortgage approvals fall. Time will tell, but I don't expect that this type of news is here to stay for very long.

"

Don't rely on the asking price data

In response to news that house prices and mortgage approvals are rising dramatically: 

It’s quite easy to get carried away with the huge house price growth being shown at the front end of the transaction process via mortgage approvals and asking prices. However, the reality is that the market is moving at a far slower rate where actual sold prices are concerned.

Stamp duty & recession on the horizon

Although prices have still gained positive ground, this likely to be a temporary hoorah and there is a very strong chance that this growth will recede rapidly come April once the sun has set on the stamp duty holiday.

The aftermath of the current pandemic may be biting by then too, and we may begin the transition from "pandemic" to "recession". House price drops usually follow, and mortgage approvals fall. Time will tell, but I don't expect that this type of news is here to stay for very long.

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October 8, 2020
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Despite house price growth, mortgage approvals continue to rise

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