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UK house prices surge the most in 11 years as lockdown lifts

UK house prices jumped the highest in 11 years this month, adding to signs that parts of the economy are rebounding rapidly as coronavirus restrictions are eased.

Mortgage lender Nationwide said average house prices leapt by 1.7% in July, above all forecasts in a Reuters poll of economists and the biggest monthly increase since August 2009, when the market was recovering from the financial crisis.

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

The Bank of England reported that mortgage approvals – a first step to house purchases – quadrupled in June after hitting a record low in May, though they remained more than 40% below pre-pandemic levels.

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Prices are now 1.5% higher than they were a year ago, though Nationwide said that on a seasonally adjusted basis, they were 1.6% below a peak reached in April.

The mortgage lender said it expected price gains to continue in the short term, helped by a temporary cut in property purchase tax which finance minister Rishi Sunak announced this month to help what he saw as an ailing market.

But these price increases risked proving a “false dawn” if unemployment surged later this year when temporary job support measures end, Nationwide’s Gardner warned.

Britain’s economy shrank by a quarter over March and April due to the unprecedented hit from the coronavirus lockdown.

Some Bank of England officials fear that while there might be an initial rapid bounceback, this will rapidly slow and it could take years for the economy to regain its former size.

Retail sales are almost back at pre-pandemic levels, for example, but many pubs, restaurants and entertainment venues are closed or operating below capacity due to social distancing restrictions and public concern about the coronavirus.

Reporting by David Milliken

Source: UK Reuters

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UK house price inflation hit two-year high prior to lockdown

In Q1 of 2020, UK house price inflation increased by 3.3% compared to a year earlier, the best reading since the early months of 2018, according to IHS Markit’s analysis of the Halifax House Price Index.

The previous quarter had seen an increase of 2.3% on a year earlier, in comparison.

The acceleration in Q1 2020 has been attributed to increased economic and political stability.

Seasonally adjusted figures show house prices jumped by 2.1% over Q1, compared the preceding quarter, when they increased by just 1.1%.

Stronger increases in prices were recorded across all buyer and property types during the first quarter of 2020; for example, first time buyer inflation hit a three year high, increasing by 3.8%, while for house movers inflation increased by 3.0%.

Existing properties (3.4%) recorded a stronger price increase than new houses (2.6%).

Broken down by region, Northern Ireland showed the strongest outright price gains, followed by the North West, West Midlands and Scotland.

In each case, inflation rates were at or above 4% year-on-year during Q1 of 2020.

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Wales (3.9%) and Yorkshire and the Humber (3.5%) both also registered stronger inflation rates than the national average.

Inflation rates across the south of England remained below the UK average, but London and the South East recorded their first annual price gains since late 2028, with inflation increases of 2.3% and 2.8%, respectively.

For Western England (1.2%) and the South West (1.7%), inflation rates were the strongest in over a year.

Despite recording the slowest annual increases in the UK, the South of England continued to show the highest property prices in the country.

London remains well ahead of all regions, with typical house prices moving towards £500,000 in Q1.

Despite strong price gains, Northern Ireland remains one of the cheapest places to purchase a house in the UK, with prices remaining below £150,000.

The recent uptick in house prices led to a related increase in the price-to-earnings ratio at the beginning of 2020, up to 6.19 from 6.10 at the end of 2019.

This ratio is currently tracking its highest level since Q3 of 2018, and remain the most acute in Greater London and the South East.

Paul Smith, economics director at IHS Markit, said: “Although the latest data provide an indication of an improving housing market following the strong uplift to activity afforded to buyers and vendors from the greater political certainty seen at the end of 2019, it’s hard not to look ahead to the coming months given the outlook is now dominated by the COVID-19 pandemic.

“With that in mind, the first quarter data feel backward looking.

“Whilst confirming the market was on a positive trajectory, as activity strengthened following a clarification over Brexit and the decisive general election result, the direction of travel is now characterised by considerable uncertainty.

“Amid reports of viewings being cancelled and movers encouraged to put transactions on hold, the market is currently in deep-freeze.

“More worryingly, the challenging macro-environment, with business closures, joblessness rising and cuts to incomes occurring, all points to a general downward pressure on prices in the near-term.

“The ultimate scale of the impact of the pandemic on the market will ultimately depend on the speed in which it can be brought under control.

“Encouragingly, however, actions by government and the Bank of England are likely to provide strong support to the economy – and in turn the housing market – when some form of normality resumes.”

By Jessica Bird

Source: Mortgage Introducer

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UK house prices surge post-election, but Covid-19 dampens outlook

House prices hit a fresh high in February, data published on Monday showed, as consumer confidence improved following last year’s decisive general election.

According to Rightmove, the UK average new seller asking price hit a record high of £312,625, a 1.0% month-on-month increase that pushed annual price growth up to 3.5%.

The number of sales agreed rose by 17.8%, the highest for the time of year since 2016. Overall, properties sold an average of 6% faster nationally and 15 days more quickly in London.

The UK housing market – and the capital in particular – has struggled in recent years. Ongoing political turmoil over Brexit and successive general elections dampened consumer confidence and saw prices dip as sales fell away.

The Conservative’s decisive general election victory and the UK’s subsequent departure from the European Union have helped ease that uncertainty, however.

In London, the price of property coming to market jumped 5.1% year-on-year, to an average of £638,826, the highest annual growth rate since May 2016. The number of sales agreed ratcheted ahead 34.4%, the highest level for four years.

However, the survey conceded that going forward, the outlook was now less certain.

“The market has been waiting for several years for a window of certainty, and 2020 seemed set to be the year when many would look to make a move and satisfy their pent-up housing needs,” said Miles Shipside, Rightmove director and housing market analyst.

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“However, the current fast pace of the housing market could now be temporarily affected by the spread of the Covid-19 coronavirus. We expect that housing market statistics, like other economic indicators, could be prone to volatility over the spring and summer.”

Marc von Grundherr, director at London estate agent Benham and Reeves, said: “London is now back with a bang. An annual increase in asking prices of 5.1% is the highest level that we have seen in years, and is as a consequence of buyer demand coming back strongly in all price ranges.

“Covid-19 is of course a significant issue, albeit that enquiry levels and viewings do seem to be holding up for now, and we should remain optimistic for swift resolution to the pandemic followed by a robust response from markets including property.”

Rightmove measured 111,464 asking prices, which it said was around 95% of the UK market, for its latest monthly survey. The properties were put up for sale between 9 February and 7 March.

By Abigail Townsend

Source: ShareCast