House prices hit all-time high

UK house prices have accelerated to a fresh record high, as the property market rebounds after the Covid-19 lockdown.

Nationwide has revealed that average UK house prices have continued to recover during August and saw the highest monthly rise in more than 16-years.

According to the lender, annual house price growth picked up to 3.7% in August with prices rising 2% month-on-month, up to £224,123 from £220,935 in July.

August’s increase was the highest since February 2004, when house prices rose by 2.7%.

Robert Gardner, Nationwide’s Chief Economist said, “UK house prices rose by 2.0% in August, after taking account of seasonal effects, following a 1.8% rise in July. This is the highest monthly rise since February 2004 (2.7%). As a result, annual house price growth accelerated to 3.7%, from 1.5% last month.

“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.

“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% 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.”

Director of Benham and Reeves, Marc von Grundherr, commented: 

“The demise of the UK property market has been greatly over prophesied in recent months and these latest figures are yet further proof that it will take far more than a period of muted activity to alter its impenetrable nature.

With many home buyers and sellers presenting two fingers to COVID, we should see this positivity prevail over the coming months and such heightened levels of demand will also start to show where transactions are concerned.

Once transactions start to regain stability, it will be the final nail in the coffin for many property market naysayers who will have no choice but to return to their darkened rooms, only to emerge during the next property price wobble with their regurgitated claims of market collapse.”

Managing Director of Barrows and Forrester, James Forrester said, “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 sixteen and a half years is far from a coincidence or a one-off set of freak results.

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.”

Group CEO of Enness Global Mortgages, Islay Robinson added, “Yet more positive figures to reinforce yesterday’s news from the Bank of England that buyer demand is booming and they are returning to the market in their droves with serious intent to purchase.

While some lenders may be tightening their belts in anticipation a bump further down the road, this certainly isn’t the case across the board and many remain happy to facilitate buyers at all levels of the market.

With the cost of borrowing remaining very favourable, and with the added carrot of a stamp duty holiday, many buyers continue to scramble to secure a purchase in what remain some of the most favourable conditions available.”