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House prices recover to ‘all-time high’

UK house prices have seen the highest monthly rises in 16 years, reversing losses recorded in previous months, according to the latest Nationwide House Price Index.

The index, published today (September 2), showed UK house prices rose by 2 per cent in August, after taking account of seasonal factors, marking the highest monthly rise since February 2004 when it was 2.7 per cent.

Annual house price growth consequently “accelerated” to 3.7 per cent in August, from 1.5 per cent the previous month, the lender added.

Average house prices reached an all-time high of £224,123, up from £220,935 in July.

Robert Gardner, chief economist at Nationwide, said: “House prices have now reversed the losses recorded in May and June and are at a new all-time high.

“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.”

He added: “This rebound reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing. Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.”

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Nationwide’s House Price Index for May and June showed prices fell 1.7 per cent and 1.4 per cent respectively month-on-month, after taking account of seasonal factors.

Commenting on the latest figures, Chris Sykes, mortgage consultant at Private Finance, said: “This latest data shows that strong activity levels in the housing market are continuing to put upward pressure on property prices.

“Price rises in August may be in part the result of residual pent up demand still being released following the reopening of the housing market and the higher stamp duty threshold incentivising buyers and buy-to-let investors to push ahead with purchases.

“This has created a unique set of circumstances making it appear as if it is business as usual.”

While Mr Gardner said the trends looked “set to continue in the near term”, boosted further by the stamp duty holiday, he warned: “[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.”

Likewise, Private Finance’s, Mr Sykes said: “[This] buoyancy may not last for long. Severe uncertainty over the strength of the UK’s economic recovery is persisting, while concerns about the reintroduction of a nationwide lockdown are mounting due to an uptick in infections. This could cause the market to readjust to reflect the new economic reality.”

He added: “Lenders are beginning to hedge against high uncertainty levels in the UK economy by reducing their exposure to riskier borrowers”.

By Chloe Cheung

Source: FT Adviser

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UK house price growth strongest for 16 years

UK house prices recorded the fastest monthly increase for 16 years in August.

House prices rose 2% in August compared to July, according to the Nationwide House Price Index. This was the fastest month-on-month rise since 2004.

And over the year, house prices increased by 3.7% to £224,123 compared to August 2019.

“House prices reversed losses recorded in May and June to reach a new all-time high,” said Robert Gardner, chief economist at Nationwide.

“The bounce back reflects an unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions,” Gardner said.

He said the rebound was driven by factors including pent-up demand and people reassessing their housing needs as a result of life in lockdown.

“Our research indicates that 15% of people were considering moving owing to lockdown,” said Gardner.

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Economic uncertainty

Nationwide expected the trend to continue in the short-term, helped by the stamp duty holiday. But Gardner said: “Most forecasters expect labour market conditions to weaken significantly in the quarters ahead. This would likely dampen housing activity once again.”

Chris Sykes, mortgage consultant at brokers Private Finance, agreed: “Uncertainty over the strength of the UK’s economic recovery is persisting, while concerns about reintroducing a national lockdown are mounting.

“This could cause the market to readjust to a new economic reality.”

Sykes added that lifting the government ban on evictions in September could lead to an upsurge in evictions and negative publicity for landlords, potentially suppressing appetite in the buy-to-let market.

Miles Robinson, head of mortgages at Trussle, added: “There is a chance we’re experiencing a mini-boom ahead of the real after-effects of the pandemic.”

He urged the government and lenders to “think of ways to ensure the market remains accessible to all.”

Written by: Liz Bury

Source: Your Money

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House prices boom across West Midlands as lockdown eases

Homes in the West Midlands are going for as much as £30,000 more than their asking prices as the housing market in the region booms after the coronavirus lockdown.

Nationally, the cost of a house in the UK rose by a little over £3,000 last month as the property market hit new highs – with one estate agent believing it was down to homeowners ‘reassessed their housing needs’ while spending more time in their home during the lockdown.

House-buyers have shrugged off continued uncertainty in the economy and social distancing to send the average price of a UK home to £224,123 as restrictions ease.

The two per cent rise in August of £3,188 wiped out the losses made earlier this year as the pandemic tore through the country, according to data from building society Nationwide.

It is also the highest rise in a single month since February 2004, when prices jumped by 2.7 per cent.

Nick Berriman, a director of Berriman Eaton which has offices in Tettenhall and Wombourne, as well as Bridgnorth, said: “It is the strongest market we have seen since 2006.

“Some properties are selling for in excess of the asking price – in one case by £30,000 more. We are getting very strong prices on lots of houses. The £300,000-to-£500,000 sector is seeing the bulk of interest.”

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Mr Berriman said their Tettenhall office alone had managed 50 sales last month, which was double the average for August of 20-to-25.

He said Weighbridge Cottage, Patshull, went on the market at offers around £550,000 and was under offer within 24 hours, while Elm Gables, on Springhill Park, Lower Penn, was also on the market at offers around £525,000 and saw a sale agreed in excess of the guide price.

“June was our busiest ever month and July was significantly stronger and broke the record again,” he added. “August was slightly down on that level with holidays coming into play.

“During lockdowm a lot of people spent more time in their homes than they would normally spend and re-assessed their requirements for a home. Some now want to downsize, some upsize and others want a garden. People had the chance to see exactly what their house offers and found it does not meet requirements any more.

“The supply of houses is not drying up. In July we had more than 50 new instructions at the Tettenhall office – significantly higher than normal.”

Significant hike

Barrows and Forrester has branches in Lichfield and Birmingham and its managing director James Forrester said the latest Nationwide house price index showed a significant hike in house prices.

“Those questioning the resilience of the UK property market should be well and truly silenced by now, as the largest rate of monthly price growth in 16-and-a-half years is far from a coincidence or a one-off set of freak results,” he said.

“In fact, it’s the latest in a long line of data-based reports that shows the market has turned quicker than a pint of milk in the mid-day sun, rebounding from the depths of pandemic decline seen early in the year to return to very good health, all things considered.”

Speaking about the new report, Nationwide’s chief economist Robert Gardner said: “The bounce-back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.

“This rebound reflects a number of factors. Pent-up demand is coming through, where decisions taken to move before lockdown are progressing.

“Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.

“Our own research, conducted in May, indicated that around 15 per cent of people surveyed were considering moving as a result of lockdown.”

The holiday in stamp duty means that the trend of rising prices is likely to continue in the near term, but Mr Gardner warned that a massive rise in unemployment, which is forecast by most experts, would probably send the housing market back into a slump.

Meanwhile, official figures from the Office for National Statistics showed house prices increased by 0.2 per cent in May compared with the month before.

The ONS and the Land Registry said the average price at which a home was sold was up 2.9 per cent on the year to reached £236,000 during the month, after decreasing 0.2 per cent in April.

It is a £7,000 rise on the same month last year.

Chris Sykes, at mortgage broker Private Finance, added that as Government protections for renters come to an end, more properties could start hitting the market.

“The ending of the Government’s eviction ban in September could lead to a surge in landlords trying to remove tenants from properties,” he said.

“This may cause a great deal of negative publicity, possibly suppressing appetite for new buy-to-let purchases. Landlords may even sell some of their properties to avoid potential difficulties moving forward.”

By John Corser

Source: Express & Star

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UK house prices to ‘hold firm’ in 2020 despite Covid-19 crisis

UK house prices are set to hold firm for the rest of the year despite the looming recession and rising unemployment sparked by the coronavirus crisis.

Annual house price growth has been sustained at 2.5 per cent as demand continues to outstrip supply, despite fears that the pandemic would cause property values to plunge.

According to the latest research the UK housing market is performing at its strongest for five years, with the volume of sales agreed per agent up 76 per cent on the five year average.

The most recent UK house price index from property platform Zoopla found that house prices will end the year two to three per cent higher than the start.

Annual house price growth in London was 2.1 per cent in July, compared to the same time last year where the capital was registering house price falls of 0.9 per cent.

Zoopla research and insight director Richard Donnell said: “Housing market conditions remain unseasonably strong despite the UK moving into recession.

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“Demand continues to outpace supply and support house price growth of 2.5% per annum.

“Meanwhile, houses are selling faster than flats as we see a shift in buyer priorities in the wake of the lockdown and movers prioritise more space.

“The next important milestone for the housing market comes in September when schools reopen and the UK starts to get back towards a full reopening of the economy.

“ The ‘once in a lifetime’ re-evaluation of housing requirements on the back of the lockdown will be a counterweight to the impact of the recession on housing market activity over the rest of 2020.

“While demand has softened over August, we expect the current momentum in market activity to continue into the fourth quarter.”

By Jessica Clark

Source: City AM

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House prices recover in July

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-20Jun-20
Monthly Index (seasonally adjusted)435.9428.8
Monthly Change (seasonally adjusted)1.7%-1.6%
Annual Change1.5%-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

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UK house price growth to remain positive over the next quarter – Zoopla

The latest Zoopla House Price Index has been published, with the bulk of new pricing evidence coming from sales agreed before the lockdown.

Data on pricing for new sales agreed in the last four weeks is starting to feed through and points to a resumption in the upward pressure on house prices seen at the start of the year.

As an example, average asking prices for properties marked as sold on Zoopla, which were rising at 7% in the first three months of the year, have returned to registering a similar growth rate over the first two weeks of June.

Near-term outlook for house prices

Most of these new sales agreed are likely to complete between August and October 2020, which Zoopla expects will show sustained UK house price growth of between +2% to +3% over the next quarter, once they feed into the index.

While some have forecast annual house price falls over calendar year 2020, the portal expects any price falls in the house price indices only to crystallise in the final months of the year.

Economic impacts of COVID-19 to hit home in H2 2020

After an initial rebound, demand is expected to weaken over the summer months as the economic impact of COVID starts to materialise, with figures reported last week by the ONS indicating an acceleration in unemployment.

Caution amongst lenders and more limited availability of 90% loan to value (LTV) mortgages will reduce demand, particularly amongst first-time buyers who, over recent years, have been the engine of the housing market.

In 2019, a fifth of all homebuyers purchased a home with a deposit of 10% or less, so a decrease in the availability of 90%+ LTV mortgages could preclude this cohort of would-be buyers from entering the market, effectively reducing demand.

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Government and central bank support will continue to play an important role in how the economy fares with a knock-on impact for the strength of consumer sentiment.

Retail sales, for example, rebounded more than many expected in May.

While almost a fifth of mortgage holders have taken payment holidays, borrowers are able to take these up until the end of October 2020, meaning support is extended for the rest of the mortgaged sector up until April 2021.

Further support and innovation to support the economy and the housing market cannot be ruled out in these unprecedented times, which will limit the downside, albeit not completely.

Strongest sales rebound in northern cities

New sales agreed, subject to contract, have grown the most in England where the market is open for business.

The rebound in sales has been strongest in northern England, led by Leeds, Sheffield and Manchester where sales are up to 20% higher than in February 2020.

In cities where sales are not keeping pace with pre-COVID levels, including Glasgow, Newcastle and Cambridge, this is down to a lower supply of homes for sale.

Level of homes for sale (inventory) in these cities is significantly lower than last year.

While the new flow of homes for sale is back to pre-COVID levels, the number of homes for sale per estate agency branch is 15% lower than a year ago.

This is a result of the market closure at what is a busy time of year.

Stock levels in Cambridge, for example, are up to 40% lower year-on-year.

Zoopla says that the lack of supply supports their view of house price growth holding steady in the short term.

House price growth

UK house price growth is up 2.4% on the year, and has increased from 1.6% at the start of 2020.

The 20 city index registered slower growth over May, slowing to +2.1% from 2.4% in April as less pricing evidence dragged the growth rate lower.

The city with the highest rate of house price growth over the past 12 months is Nottingham (4.3%), followed by Manchester (3.9%).

Meanwhile, Oxford (-0.6%) and Aberdeen (-2%) have recorded modest price falls.

Regional momentum

Activity levels are expected to rebound in Scotland, Wales and Northern Ireland as these markets reopen and pent up demand is released.

These countries account for less than a fifth of UK housing sales but more activity will support headline measures of demand and market activity in the immediate term.

The Welsh market opened on Monday but demand for homes has been building since the English market reopened, gaining momentum over the last two weeks.

Demand for housing in Wales has now rebounded close to what has been recorded in England.

Sales agreed, however, remain 65% lower than pre-COVID levels in Wales as the physical viewing of property has not been permitted.

Zoopla expects sales volumes to increase over the rest of June and into July, mirroring the rebound in England.

Scotland’s market, which reopens later in June, has seen a similar trend with demand recently returning to pre-COVID levels, but with sales volumes lagging well behind.

Commenting on the findings Richard Donnell, Director of Research & Insight, said:

“The rebound in housing market activity has taken many in the industry by surprise.

“It is welcome news given the projections for falling economic growth and rising unemployment.

“Estate agents and developers are responding and using the upsurge in demand to rebuild their sales pipelines and open up their developments.

“We see returning pent up demand and new buyers entering the market creating upward pressure on prices in the face of a lower supply of homes for sale which has been exacerbated by the lockdown.

“House price growth is set to hold up in the near term and we expect the downward pressure on prices to come in the final months of the year as demand weakens.

“While the average asking price for homes marked as sold on Zoopla are 7% higher than a year ago this is down to an increase in sales in higher value markets where activity has remained subdued in recent years.

“We do not expect the rate of growth in the Zoopla House Price Index to reach this level, rather it is expected to hold steady at 2%.

“The Welsh housing market opened this week and levels of demand have already returned close to the levels seen in England in anticipation of the market reopening. Scotland, where the market reopens on 29 June has also seen demand rise back to pre-COVID levels but sales remain more than two thirds lower and are expected to rebound in the coming weeks.”

Source: Property Industry Eye

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UK house prices holding up as city folk flock to the country

The number of city-dwellers pursuing their dream of a rural idyll is on the rise. And despite the pandemic, UK house prices are holding up well, says Merryn Somerset Webb.

What do you want right now? Immediate freedom to go to the Italian lakes aside, I bet that near top of your list is a bigger garden. If it isn’t that, it will be a home office or two, or perhaps an intergenerational living annexe – so if lockdown ever comes again you won’t have to go three months without seeing your family.

Whatever is on the list, the odds are you want the house itself to be in the country. In an ideal world your new bigger garden comes with a pool, a tennis court and a teenage bunk house scattered around its many acres.

I don’t want to spend another lockdown in a city (I don’t actually want to spend another day in my city) and around the world, an awful lot of people seem to feel the same. The New York Post reported this week that “frantic” Manhattanites were spilling out of the city into the suburbs, snapping up houses real estate agents had begun to think they would never sell – sometimes sight unseen. Want a five-bedroom colonial style home in Connecticut for $1m? You’d better rush.

You can see the same feeling in the data in the UK. Listings of properties to let in London have surged. Estate agents working within a few hours of London are telling stories of buyers flooding to the countryside, willing to pay almost anything for big houses they wouldn’t mind getting stuck in (Cornwall has gone nuts too). Rightmove reports that searches for houses with gardens were up 42% last month compared with last May.

People who used to care for nothing but kitchen islands and central London postcodes are now obsessing over online photos of raised vegetable beds and croquet lawns. The interest in the market isn’t just anecdotal. Savills saw agreed deals rise 108% on the week last week and exchanges up 53%. Wider market data from TwentyCi shows a 54% increase in the number of properties marked “sold subject to contract” across the market in the past week – and a 99% increase over £1m. If you live in London now and thought that a Surrey Hills house was beyond you before, it almost certainly is now. The rich move fast.

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No real risk of a house price crash

And prices? You’d think that in the wake of a global pandemic you’d already be seeing a bit of a slump. It isn’t necessarily so. Nationwide reported prices down 1.7% in May. That’s a nasty number if you annualise it. But there were so few transactions last month that this number is all but meaningless. Of more interest should be the fact that prices now appear to be more or less flat on where they were a year ago.

So what next? In the short term at least, it seems clear that there is to be a rebalancing of city and non-city prices. What of UK house prices as a whole? Here, things are a little less obvious. House prices are about sentiment, of course. But they are more about the availability and the price of credit and would-be buyers’ incomes.

When prices fall properly it is usually when unemployment rises fast and those who can’t meet their mortgage payments become forced sellers.

Unemployment is likely to rise fast as the furlough scheme comes to an end: ask around and you will hear company after company reluctantly starting redundancy consultations. However, not only could the bounceback be stronger than expected, but a good many households are in considerably better shape than they were pre-lockdown.

Numbers from the Office for National Statistics suggest that the lack of spending opportunities should have allowed the average household to save £182 a week for the past nine weeks, while analysis from Wagestream suggests that 52.5% of those who still have jobs “feel better off than usual.” Demand for payday loans fell 61% in the first three months of this year and in March alone UK consumers paid down a whopping £3.8bn of debt.

Add to this the fact that the banks are keen to not be the baddies in this crisis. They have offered easy access to the mortgage holidays mandated by the government, taken up so far by 1.8 million people, says UK Finance. It’s a reasonably safe bet that they will be firmly encouraged to show exceptional forbearance to those who can’t pay in full when the holiday period is up, too.

At the same time, while rates on very high loan-to-value mortgages have crept up a tiny bit – and some lenders have pulled out of this part of the market – rates overall are low and likely to stay low for now (at some point the levels of stimulus we are seeing will cause inflation, but not quite yet). This week Skipton Building Society reintroduced 85% loan-to-value mortgages and cut rates on lots of products. How does a five-year fix at 1.35% sound to you? Sounds good to me. Skipton is also accepting mortgage applications from furloughed workers, which has to help.

We might also see new government schemes put in place to support prices (there’s a scheme for everything else). This is not the kind of environment in which forced sellers cause a crash.

But prices have become more affordable

The final point to note is that UK house prices aren’t as stupidly expensive as usual at the moment. They have been fairly flat in real terms for a couple of years now and have gradually become more affordable as a result. Those who think that this crisis will spell the end for prime London property (a mistake I often make) might also note that by the end of last year prime central London prices were already down more than 20% from their 2016-2017 peak. That’s not a place collapses usually begin from. They might also note that while 2020 is not 2008, prime central London prices rose an astounding 26% between March 2009 and January 2010.

You will think from all this that I am predicting rising house prices. Buy, buy, buy! I’m absolutely not (that would be out of character, for starters) and nor is anyone else. Savills sees prices down at least 5% this year and Capital Economics sees them down 4%.

There are lots of brakes on this market. The pent-up demand that is running our poor country agents off their feet will slow. The implosion of the buy-to-let sector will bump up supply. There may well be wealth taxes on the way (any liability added to a house cuts its value) and if inflation does kick off, interest rates will have to rise.

My best guess (and my hope) is that house prices will stay flattish in nominal terms and perhaps fall in real terms, a situation that will suit almost everyone. My only worry? That I am on the wrong side of the city-country trade.

By Merryn Somerset Webb

Source: Money Week

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House prices UK: where they will rise in 2020 – and where they will fall

House prices are still rising in parts of the UK, despite the property market having stood still for nearly two months between March and mid-May, when property viewings, mortgages and evaluations were finally allowed to resume.

Despite the grim prognoses by many property experts and financial think tanks, the latest house price Index by Zoopla reveals that many of the country’s regions are continuing to grow, with house prices up significantly from last year.

The most interesting finding in the latest issue of Zoopla’s monthly research is the fact that the growth trend in the north of England and the Midlands appears not to have been disrupted by coronavirus, at least thus far. Nottingham is showing a 4.1 per cent growth year-on-year in April – the highest rate in the UK.

Leicester, Manchester, and Leeds are showing house price increases of between 3.1 and four per cent, which is not surprising given that these cities have had a boost from regeneration projects and attractive buy-to-let developments aimed at students and young professionals in recent years. These cities remain a solid option for buy-to-let investors in particular.

Edinburgh is another city on the city index list that is showing strong house price growth of 2.9 per cent, which again proves that in the longer term, it’s not coronavirus that will determine house prices, but ongoing regional trends. Edinburgh has been experiencing something like a London housing bubble for quite some time, with demand for its period housing stock far outstripping the limited supply. The Scottish capital is unlikely to see a downward house price trend any time soon.

The London property market is showing signs of recovery, with a very modest rate of growth of 1.1 per cent – which is, nonetheless, a substantial improvement on last year’s drop of one per cent. It is likely that the pent-up demand now being released is boosting house prices in London, but home owners who were hoping to sell at a profit might be disappointed.

Finally, the cities that have seen noticeable house price drops in April are Oxford (-0.8 per cent) and Aberdeen (-1.7 per cent). Although they are located on the opposite sides of the UK, these two cities have one thing in common: a reliance on industries (oil and higher education) that have been severely disrupted by Covid-19, which may explain the slowing down of their property markets. If you live in either, we’d hold off selling, at least until there is some degree of a return to normal life.

BY ANNA COTTRELL

Source: Real Homes

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House prices dip by 0.6%

Average property prices fell by 0.6% between March and April, Halifax’s House Price Index has revealed.

Prices averaged £238,511 in April, after mortgage approvals fell by 24% between February and April.

Annual growth still stands at 2.7%.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Lockdown restrictions are rendering these and other housing market surveys fairly meaningless.

“It is only when you look behind the figures that a more interesting picture emerges – in other words, what we are seeing on the ground are previously agreed sales proceeding to exchange and completion without price renegotiation and a buildup of browsing interest as buyers and sellers ready themselves for easing of restrictions.

“Buyers and sellers are also taking advantage of interest rates remaining low for the foreseeable future.

“Overall, we are being told that transactions are stalled and will be revisited as soon as it is safe to do so and particularly surveyors and removers are able to gain access to properties.”

Paresh Raja, chief executive of Market Financial Solutions, said: “In my opinion, this short-term fall in house price growth is likely to open new opportunities.

“Given the drop has been nowhere near as bad as initially predicted, buying a property now could result in notable price growth once COVID-19 has passed and the market recovers. After all, history has shown that the property market is able to bounce back quickly from crises.

“The challenge for buyers, however, is finding lenders who are still receiving new loan applications and have the resources to undertake on site valuations. As a result, I’d expect to see a general increase in the number of buyers looking beyond high street banks to specialist lenders for loans during this pandemic.”

BY RYAN BEMBRIDGE

Source: Property Wire

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House price growth rose by 3.7% in April

Annual house price growth rose to 3.7% in April 2020, up from 3% in March, Nationwide’s House Price Index has found.

Monthly prices rose by 0.7% to £222,915, as Nationwide said the impact of the pandemic is not fully captured by the data.

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.

“But housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus, and where the government has recommended not entering into housing transactions during this period.”

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

“Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus.

“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 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.”

Tomer Aboody, director of property lender MT Finance, said: “Nationwide portrays a confident housing market with the fastest rate of growth in prices since February 2017. Of course, lockdown will affect sales and prices, but that is the reason – people are locked down, surveyors cannot value properties and would-be buyers can’t view them.

“There is still huge demand for property and buyers are confident about the market, which wasn’t the case in 2008. Then, the financial system was devastated; this time, lending isn’t an issue and banks remain keen to lend.

“There will be the inevitable slowdown of transactions but once lockdown has been lifted, huge pent-up demand which should take the marker back up.”

Miles Robinson, Head of Mortgages at online mortgage broker Trussle, said: “The Land Registry data released this week shows that property sales collapsed by 40% during March, which is perhaps a more representative picture of how the Coronavirus is beginning to affect the housing market.

“However, we have seen lenders that had previously hiked LTV thresholds at the beginning of lockdown begin to loosen restrictions and, with the COVID-19 exit plan due to be published next week, we could see the market start to shift back into action.”

BY RYAN BEMBRIDGE

Source: Property Wire