Annual house price growth has recovered to 1.5 per cent in July, according to the latest Nationwide House Price Index.
The figures, published today (July 31), also found that prices rose month-on-month by 1.7 per cent, in contrast to the fall of 1.6 per cent in June.
Robert Gardner, chief economist at Nationwide, said: “The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.
“The rebound in activity reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing.”
Mr Gardner added that the increased stamp duty threshold would “bring some activity forward” but also warned of a “false dawn”.
He said: “Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead”.
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| Jul-20 | Jun-20 | |
| Monthly Index (seasonally adjusted) | 435.9 | 428.8 |
| Monthly Change (seasonally adjusted) | 1.7% | -1.6% |
| Annual Change | 1.5% | -0.1% |
| Average Price | £220,936 | £216,403 |
Islay Robinson, group CEO of Enness Global Mortgages, said: “Buyer demand has been turbocharged via a stamp duty holiday, mortgage rates remain very favourable, and buyers and sellers are returning to the market in their droves.
“We’re also seeing a strong return to form at the top-end of the market and from foreign buyers. All things considered, the outlook is a positive one, and we’ve seen the dark clouds of market decline make away for the perfect storm of property price growth over the coming months.”
Jeremy Leaf, principal at estate agency Jeremy Leaf & Co, said the data was “not surprising” as pent-up demand continued to be released and new listings picked up since the housing market re-opened.
“Activity has been given added impetus by the stamp duty holiday and continued low interest rates.”
However Shaun Church, director at Private Finance, said: “Although economic activity is slowly recovering, lenders remain cautious. Cuts to rates on lower loan-to-value products suggest lenders are keen to reduce their risk appetite to offset high uncertainty in the housing market.
“This is likely to create a barrier to entry for first-time buyers, adding to the heavy financial burden the pandemic has placed on many people in this age group.”
By Chloe Cheung
Source: FT Adviser