UK Property: House price growth highest in two years before coronavirus hit the market

One of the UK’s biggest lenders, Nationwide, published its monthly property price report yesterday which suggests that, prior to the outbreak of the Covid-19 coronavirus crisis, annual average house price growth was at its highest since January 2018, with most regions around the UK experiencing a modest increase in values over the first three months of 2020. This feels like a world away from where we are now, as many prospective home movers have been forced to suspend their plans, while the UK property market grapples with the reality of the current health crisis and its impact both immediately and in the longer term.


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Current emergency guidelines issued by the Government mean that estate agents and surveyors cannot undertake physical visits to homes for sale which are currently occupied.

Add to that the fact that many potential buyers are, understandably, concerned about their income and therefore need to put moving on hold, and it’s easy to understand why the majority of the UK property market is now in hibernation for the foreseeable future.

The latest Nationwide figures give us a tantalising view of ‘what could have been’, as Robert Gardner, Nationwide’s Chief Economist explained: “Annual house price growth increased to 3 per cent in March, up from 2.3 per cent the previous month; the fastest pace since January 2018 when annual growth was 3.2 per cent. The last six months have all seen month-on-month increases, after taking account of seasonal effects.

“It is important to note that, while we use a full month’s worth of data to generate the index, the cut-off point is slightly before the end of the month.

“This means that developments following the UK government’s lockdown will not be reflected in these figures.

“In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum.

“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.” 

As for what this could mean for property values for the rest of 2020, Robert suggested: “A lack of transactions will make gauging house price trends difficult in the coming months.

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“The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy.

“But the raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a strong rebound once the shock passes, and help limit long-term damage to the economy.

“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.”

Given the circumstances, the current mood around the rest of the UK property industry is sombre, if not pragmatic.


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Jeremy Leaf, north London estate agent and a former RICS residential chairman explains, “These figures would have been interesting in the normal run of things as they confirm that the market was gathering momentum in early 2020 but they have become academic in view of what has happened since.

“However, they do raise expectations that when restrictions begin to ease, hopefully relatively soon and without too much damage to the economy, there is every chance that activity will pick up nearly where it left off.”

There are still those who are continuing with their sale or purchase regardless as Jeremy confirmed: “On the ground, nearly all our exchanges have happened in the past week, with more expected in the next few days. We are finding that only those industries particularly badly affected by coronavirus are having to pull out of transactions, such as those working in the travel, hospitality or entertainment industries.”

Ben Johnston, director of property app Houso added: “The market was going strong in the first quarter of the year as pent-up demand from years of deliberation over Brexit was released once we had more political certainty and a feeling that things would get done. So, we are hopeful it will return to this upwards trajectory once the coronavirus is behind us.” 

“Buyers and sellers need to sit tight and stay safe until they are in a position to move forwards, perhaps listing their property off-market to gain interest in the meantime.”

There are positives in the mortgage sector too. Mark Harris, chief executive of mortgage broker SPF Private Clients suggested that, “While purchase numbers will inevitably dip going forward as the housing market is constrained from operating as ‘normal’ due to the lack of viewings, lenders remain keen to lend, despite some having to pull back from high loan-to-value deals.

“In most instances this is a temporary move while they get to grips with the inability to carry out valuations, plus re-direct their staff to deal with mortgage payment holiday enquiries.”

Of course, all markets are driven by sentiment, and property is no exception. It’s impossible to forecast with any accuracy where we could be six months from now.

Some suggest that there will be a significant economic rebound in the second half of the year once normal business is resumed, others suggest that the events of the last few weeks will create a long-lasting and significant downwards pressure on property values and the number of transactions.

Either way, it could be a while until both sellers and buyers decide ‘the price is right.’

Follow Louisa on Twitter: @louisafletcher

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