Strong market recovery likely after lockdown, claims Nationwide

The housing market is likely to rebound relatively strongly after the Coronavirus lockdown eases, according to the Nationwide.

House prices grew at their fastest rate since February 2017 before government restrictions stopped the market in its tracks - but although those figures are from a very different period, the Nationwide believes they give cause for optimism.

Prices increased 3.7 per cent on an annual basis in April, so the average UK home rose from £219,583 in March to £222,915 last month.

Nationwide’s data is based on mortgages approved in April but submitted earlier, hence the apparent growth during lockdown.

But the 3.7 per cent annual rise indicates house prices were recovering from Brexit uncertainty before coronavirus struck.

“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” explains Robert Gardner, chief economist at Nationwide.

He continues that while the medium-term outlook is “highly uncertain” the economic intervention by the government - totalling at least £330 billion - “should set the stage for a rebound once the shock passes.”

And he adds: “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.”

Agents have picked up that theme with Jeremy Leaf, a former RICS residential chairman, saying: “Although these widely-respected and otherwise promising figures may be regarded as meaningless bearing in mind they reflect much of the beginning of the lockdown period, they could yet have more significance. 

“For if, as we are finding, that most transactions have been put on hold rather than cancelled, then most could be reinstated if restrictions are eased soon and economic damage is relatively limited.”

And the chief executive of Keller Williams UK, Ben Taylor, believes the figures show the underlying strength of the market. 

“It will take a big reversal in demand to put annual house prices into negative territory this year … with the furlough scheme evidently functioning as intended, we shouldn’t expect to see any significant backward price correction in the foreseeable future” he says.

Iain McKenzie of the Guild of Property Professionals says an end to lockdown, when it comes, will trigger a relatively rapid change for the market.

He says: “New vendor enquiries are starting to recover week by week, pointing to the fact that people want to move, but are currently unable to while the fight against coronavirus continues and restrictions remain in place. 

“Once it is safe for the restrictions to be eased, the pent up demand will be released as activity returns and people are able to move.”