The latest house price index for April from Nationwide shows that house prices increased 3.7% annually last month, up 3% from March alone, the fastest rate of growth since February 2017.
Although the bye-line is positive, it should be noted that Nationwide has been quick to highlight that some 80% of transactions on which the figures are based would have been pre-pandemic. So the data doesn’t necessarily reflect an up-to-date picture of the market.
Over the past month or so, doom-mongers have been predicting carnage and devastation to property prices across the UK. Although we are still at an early stage, the signs are still unclear if the property market will see a significant drop in prices if at all.
Many well-known names in the property-world have been pessimistic on the future of the property market including an analyst at Deutsche Bank who told The Times: “UK house prices could fall by 20 per cent or more.” This is a somewhat different view held by Lloyds Bank, who stated it expects prices to slide by -0.7 per cent over the next three years with others holding a far rosier outlook and predicting a strengthening in prices.
The simple fact is no one has a crystal ball, so second-guessing what might happen is simply down to opinion much like holding a finger in the air. Although there will likely be more property coming onto the market due to the impact of the Coronavirus (probates, divorces etc.) the fundamentals supporting the market remains the same – more demand than stock.
With Nationwide’s latest house price index out, we turn to the experts for their opinions on the near-term and which direction the UK property market is headed.
Ben Taylor, CEO of Keller Williams, the largest estate agency globally, comments: “While this Nationwide data is a snapshot that mainly represents mortgage applications made prior to lockdown, it demonstrates the underlying strength of the property market going into the pandemic.
It will, therefore, take a big reversal in demand to put annual house prices into negative territory this year.
Of course, the market’s health will, as ever, depend upon the fundamentals of employment, the cost and availability of mortgage monies and consumer sentiment.
However, with the prime minister’s announcement this week that he will soon start to set out how many of us can begin to get back to work and with the furlough scheme evidently functioning as intended, we shouldn’t expect to see any significant backward price correction in the foreseeable future.”
Property expert from Moving Home Advice, Russell Quirk, commented: “Many were looking to this index to provide a first glimpse on the pandemic’s impact on the UK property market, but this hasn’t quite materialised.
Announced plans of a lockdown exit strategy will at the very least bring hope to a market that has otherwise frozen over for the large part, and many within the industry remain cautiously optimistic that some degree of heightened market activity will return in the coming months.
These latest figures themselves demonstrate the rapid return to form a beleaguered market can make after months of stale movement, with the best performance registered in over two years coming in the wake of December’s election. Rest assured while the current landscape is problematic, even the slighted return to normality will bring a notable boost in sentiment, confidence and property values.”
Founder and CEO of GetAgent.co.uk, Colby Short, commented: “We wait with bated breath for some concrete data on the impact of Coronavirus on house prices across the UK. However, it looks as though we will have to wait a while longer, potentially until June or July when the Land Registry has processed their March and April indices based on actual transactions.
In the meantime, we do know that listings coming onto the market have all but ground to a halt, and this will have an impact on price as the number of sales reduces.
The silver lining for the time being, at least, is that this remains a Government induced market freeze and not a financial one, which should see a swift return to health once the dust settles.
Of course, any financial impact may take some time to materialise on all sides and should sellers flood the market with stock they can no longer afford, prices will take far longer to recover than they would have otherwise.”
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