Annual house price growth hit 3% in March before Covid-19 lockdown

Annual house price growth increased to 3% in March, up from 2.3% the previous month to the highest level since January 2018, according to the latest Nationwide house price index.

Related topics:  Finance News
Rozi Jones
2nd April 2020
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"In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum."

The figures show that prices rose by 0.8% on a monthly basis, with most regions recording small price gains over Q1.

The sample period doesn't include the end of March, and therefore excludes recent disruption related to Covid-19.

Robert Gardner, Nationwide's Chief Economist, said: “It is important to note that, while we use a full month’s worth of data to generate the index, the cut-off point is slightly before the end of the month. This means that developments following the UK government’s lockdown will not be reflected in these figures.

“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.

“Indeed, a lack of transactions will make gauging house price trends difficult in the coming months. 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 strong 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."

Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: "These figures would have been interesting in the normal run of things as they confirm that the market was gathering momentum in early 2020 but they have become academic in view of what has happened since.

"However, they do raise expectations that when restrictions begin to ease, hopefully relatively soon and without too much damage to the economy, there is every chance that activity will pick up nearly where it left off.

"On the ground, nearly all our exchanges have happened in the past week, with more expected in the next few days. We are finding that only those industries particularly badly affected by coronavirus are having to pull out of transactions, such as those working in the travel, hospitality or entertainment industries."

Lucy Pendleton, director of James Pendleton estate agents, added: “House prices have become irrelevant. That’s something no agent would ever expect to say.

“Even before an outright housing market freeze was declared, we had been forced to furlough more than half of our staff. Last week the number of sales being agreed was down 84.2% annually, exchanges were down 66.6%, the volume of offers had fallen 70% and viewings had ceased altogether.

“It wasn’t so long ago that commentators talked of Brexit uncertainty putting transactions on ice but that feels like ancient history now. Covid-19 has brought brutal new meaning to a frozen market.

“The only silver lining to this situation is that political uncertainty and underlying economic weakness play no part in this chaos. The housing market will come roaring back to life as soon as the lockdown ends, aided by interest rates that are significantly lower than when it began."

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