Finance News

Annual house price growth recovers to 1.5% in July: Nationwide

Rozi Jones
31st July 2020
House sale sign sold
"The Stamp Duty Land Tax change, combined with pre-lockdown demand, have unsurprisingly produced an increase in buyers."

UK house prices rose by 1.7% in July, offsetting the 1.6% fall in June, according to the latest Nationwide house price index.

As a result, annual house price growth recovered to 1.5%, from -0.1% last month.

Nationwide says that the recently announced stamp duty holiday is likely to provide further support to house prices in the near term.

Robert Gardner, Nationwide's chief economist, said: “The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.

“The rebound in activity reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing.

“Behavioural shifts may 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 life in 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 stage.

“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, there is a risk this proves to be something of a false dawn. 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."

Anna Clare Harper, author of Strategic Property Investing, commented: "Recent and proposed policy changes combined with a release of pent-up demand (and supply) show up in this month’s house-price data.

"The Stamp Duty Land Tax change, combined with pre-lockdown demand, have unsurprisingly produced an increase in buyers. On the supply side, proposed changes to Capital Gains Tax are encouraging those who had considered selling and were waiting for ‘the right time’.

"These combined forces are increasing the rate of transactions among ordinary property owners and potential owners. It shows up in the data: annual house price growth recovered to 1.5% in July, with house prices up 1.7% month-on-month.

"What no one can forecast is what happens next, with some nerves among homeowners, investors and economists as to what the future may hold."

Jonathan Hopper, CEO of Garrington Property Finders, added: “The property market is rebooting after its sudden and enforced shutdown.

“July’s gentle surge in prices is likely to be the result of pent-up demand feeding through the system. Buyers who took the decision to buy before lockdown are at last completing their purchases, and these delayed transactions are putting a spring into the market’s step.

“The more interesting question now is how the post-lockdown spike in buyer interest will translate into sales, and whether it will maintain the upward momentum on prices.

“Three months of being cooped up in the same four walls led many people to consider a move, and to reflect on what they want from their home.

“The stamp duty holiday announced at the start of July also gave many the extra push they needed to start househunting in earnest.

“On the front line we’re seeing a steady flow of pragmatic buyers who made life-changing decisions during lockdown and are now keen to capitalise on the current soft prices.

“With many people – and their employers – rethinking the need to be in the office every day, areas that were previously off the commuter map are doing particularly well as buyers look for better value and a better standard of life.

“Like so much else that has been transformed by the pandemic, the property market map is being redrawn as people reassess what they want from their homes and when, or even if, they need to travel to work.”


Related articles
More from Finance News
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.