UK house prices could rebound after the coronavirus lockdown eases, after they grew at the fastest pace since 2017 before the crisis, Nationwide said today.
The value of British homes grew at their fastest rate since February 2017 before the coronavirus lockdown brought the market crashing to a halt, Nationwide data released today showed.
UK house prices grew 3.7 per cent on an annual basis in April, Nationwide said. That is their strongest rate of growth in 26 months.
And month to month UK house prices grew 0.7 per cent.
That saw the average UK home rise in value from £219,583 in March to £222,915 in April.
Nationwide’s data is based on mortgages approved in April but submitted earlier, hence April data showing growth despite the lockdown.
But the 3.7 per cent growth rate shows UK house prices were recovering from Brexit uncertainty before coronavirus struck.
Economic measures could save housing market
“Activity levels and price growth were edging up thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the general election,” Robert Gardner, chief economist at Nationwide, said.
But coronavirus has seen UK house prices growth “grinding to a halt” since the lockdown kicked in. Banks have also granted 1.6m mortgage holidays to worried homeowners.
And Nationwide warned the medium-term outlook is “highly uncertain”.
“Much will depend on the performance of the wider economy,” Gardner added, predicted a significant contraction in the short term.
However, estate agents and housing experts today predicted a sharp recovery in UK house prices after the coronavirus lockdown lifts.
Gardner pointed to measures including £330bn in business support and the government’s job retention scheme. He said these could keep borrowing down and allow UK house prices to bounce back.
“The raft of policies.. should set the stage for a rebound once the shock passes,” he said.
“These same measures should also help ensure the impact on the housing market will ultimately be much less than would normally be associated with an economic shock of this magnitude.”
UK house prices ‘coiled like a spring’
Lucy Pendleton, founder of independent estate agents James Pendleton, agreed.
She said sellers are holding out for previously agreed prices from buyers suddenly looking for coronavirus bargains.
“That’s a sure sign that the strong growth Nationwide reports was building before the pandemic struck could find its feet again over the summer,” Pendleton said.
“This market may be running on fumes right now. But the vast majority of the clients we are speaking to aren’t being panicked into lowering their prices.”
She added: “The market is coiling itself up like a spring just like it did during the Brexit years. This latest growth figure… has to be taken with a big pinch of salt. [But it] was the result of all that pent up energy being released.
“This time we’ll be expecting just as big a post-lockdown leap in activity to make up for all the lost time.”
Iain McKenzie, CEO of The Guild of Property Professionals, said lockdown was only a short-term obstacle to UK house prices.
Vendor enquiries ‘improving each week’
“While transactions are being hit hard and will likely be impacted for the next few months, it will be temporary,” he said. “I predict the market will start to recover shortly after restrictions are lifted.
“New vendor enquiries are starting to recover week by week. [This points] to the fact that people want to move, but are currently unable to while the fight against coronavirus continues.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said Nationwide’s figures hold hope for UK house prices.
“If, as we are finding, that most transactions have been put on hold rather than cancelled, then most could be reinstated if restrictions are eased soon and economic damage is relatively limited,” he said.