UK house prices recover from lockdown to hit all-time high in August
UK house prices recovered from a lockdown-inspired dip to hit an all-time high last month.
Annual UK house price growth picked up 3.7 per cent in August, according to Nationwide’s house price index.
Prices rose two per cent month-on-month, after taking account of seasonal factors.
The average UK house price rose to £224,123, up from £220,935 in July.
Robert Gardner, Nationwide’s chief economist, said: “UK house prices rose by two per cent in August, after taking account of seasonal effects, following a 1.8 per cent rise in July.
“This is the highest monthly rise since February 2004 (2.7 per cent). As a result, annual house price growth accelerated to 3.7 per cent, from 1.5 per cent last month.
“House prices have now reversed the losses recorded in May and June and are at a .
“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.
“Moreover, social distancing does not appear to be having as much of a chilling effect as we might have feared, at least at this point.
“These trends look set to continue in the near term, further boosted by the recently announced stamp duty holiday, which will serve to bring some activity forward.
“However, 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.”
Tobi Mancuso, director of property investment company Track Capital, said: “The chancellor’s stamp duty holiday has launched the sale of the century, and properties are flying off the shelves as fast as they are getting listed.
“Estate agents are rightly making hay while the sun shines, and house prices have accelerated to a new all-time high. Strap yourself in, because we’re going to see a lot of records broken in the next few months.
“The March 2021 date for the end of the stamp duty holiday feels a long way away, and it looks like the market is going to enjoy a long uplift.
“The danger is that this frenzy could create a bubble in house prices that will be quickly deflated when stamp duty returns, so buyers should be wary of prices that feel over-inflated.
“Investors need to act fast to ride the wave before prices increase to a point where yields are diminished.”
Yesterday, the Bank of England said UK mortgage lending accelerated in July, in another sign of a post-lockdown bounce-back in the housing market.
Mortgage approvals jumped to 66,300 from just under 40,000 in June and seven times higher than their coronavirus pandemic low of barely more than 9,000 in May, the data showed.
David Westgate, chief executive at Andrews Property, said: “Right now, activity in the UK property market is off the Richter scale.
“A rebound was always likely after lockdown but the level of transactions and people seeking to move is phenomenal.”
However, he warned that securing mortgage finance for buyers with smaller deposits was proving more difficult as banks tightened their lending criteria.
“The one issue is that people seeking to buy at higher loan to values are finding it considerably more difficult to secure mortgage finance.”