House prices in the UK rose 1.5 per cent on an annual basis in July, reports Nationwide in its latest index.
On a monthly basis, prices rose by 1.7 per cent when seasonally adjusted.
This is a marked difference to the annual fall of 0.1 per cent and monthly fall of 1.6 per cent seen in June and leaves the average house price at £220,936.
Nationwide chief economic Robert Gardner points to the obvious factors for this, such as the demand that was forced into the background during the lockdown and the less “chilling effect” of social distancing that was previously assumed, while adding that further Nationwide research shows that 15 per cent of people are considering moving as a consequence of lockdown.
Other market commentators say that the recent Stamp Duty holiday announcement have helped demand.
“On the supply side,” adds Strategic Property Investing author Anna Clare Harper, “proposed changes to capital gains tax are encouraging those who had considered selling and were waiting for ‘the right time’.”
Barrows and Forrester managing director James Forrester strikes a confident tone. He says: “While the current pandemic continues to dampen many aspects of life, homeownership isn’t one of them, and we should continue to see some very positive price trends play out over the year.
“Those that were so quick to talk the market down seem to have now entered into an unseasonal hibernation. While they will no doubt emerge from their boltholes of negativity to forecast yet further Armageddon in the event of a second-wave, it’s quite clear that the market isn’t prepared to lay down and die as they might have hoped.”
Others are more wary. Private Finance director Shaun Church says: “The loosening of lockdown restrictions that are seeing some people return to work may have resulted in a larger proportion of households viewing their short to medium term financial position more favourably, encouraging them to push ahead with property purchases. However, many households are still under financial strain due to reductions in working hours and income.
“Although economic activity is slowly recovering, lenders remain cautious. Cuts to rates on lower LTV 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.”
OneSavings Bank group managing director Alan Cleary comments: “The risk is that this boom in activity will be short-lived. The chancellor was clear in his statement that the Stamp Duty holiday is only a temporary measure with buyers having to act quickly to make the most of this limited window of opportunity.
“With the continued uncertainty around how the UK economy will recover from the pandemic as the furlough scheme winds down and job losses hit later in the year and the possibility of a second wave, all these factors will play a part in how the market shapes up in the coming months.
“The government’s immediate response to coronavirus has proven to be effective in stimulating transactions but the lack of available housing stock cannot be overlooked. The government needs to align its short and long-term strategies for the housing market to put an end to the cyclical pattern the market currently finds itself in.”
And Glenhawk chief executive Guy Harrington goes even further. He comments: “The UK housing market is in a honeymoon phase: post lockdown, with sentiment boosted as both banks remain desperate to lend and by government stamp duty and Help to Buy proposals.
“The reality is very different. The UK is staring down the barrel of a period of unprecedented pain, underpinned by mass unemployment as the furlough scheme ends and a likely second spike, which will hit consumer confidence in unimaginable ways and undo all the gains seen in recent months. If you think we’ve seen the worst, 2021 may just top it.”
