UK house prices rose by 3.7% in the year to April, their strongest rate of growth in more than two years, new figures from the Nationwide have shown.
The data relates to mortgages approved in April but applied for earlier in the year. It reveals that UK house prices were recovering from the effects of Brexit before the lockdown brought the market to a halt.
Robert Gardner, Nationwide’s chief economist, said: “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.”
According to Mr Gardner, measures to control the spread of the virus have seen, “market activity grinding to a halt,” and the medium-term outlook, “highly uncertain”.
However, he added that: “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 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.”
Iain McKenzie from the Guild of Property Professionals, said that vendor enquiries are starting to recover, pointing to the fact that people want to move once they are able to do so. He said: “While transactions are being hit hard and will likely be impacted for the next few months, it will be temporary. I predict the market will start to recover shortly after restrictions are lifted.”
According to Miles Shipside from the property portal, Rightmove, what happens to house prices after lockdown is difficult to predict. However, a combination of pent-up demand and low borrowing costs could lead to a return to the growth seen after December’s election.
He said: “I do think there’ll be a slow-motion period where people get used to the new social distancing rules, and where housing might not be at the top of everyone’s list.
“This might last for several months but my gut feeling is that, after that, we’ll see a continuation of upwards price pressure.”