Now prices are going UP again, says latest Nationwide index

The Nationwide says annual house price growth has recovered to 1.5 per cent.

Its July house price index says the fall in house prices seen in June has been sharply reversed with average prices up 1.7 per cent over the month, mostly thanks to suppressed demand and the stamp duty holiday encouraging sellers and buyers. 

Robert Gardner, Nationwide's chief economist, says: “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 are 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 … in May indicated that around 15 per cent 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.”

Agents are delighted, of course. 

North London agency chief Jeremy Leaf, a former RICS residential chairman, says: 'The housing market turned on its head this month … These numbers are not surprising to us as they reflect what we’re seeing on the ground as pent-up demand continues to be released and new listings pick up since the market re-opened.”

Sam Hunter, chief operating officer at portal Homesearch adds: “These figures capture a market getting firmly back on its feet. My concern though, is that with mortgage affordability becoming ever-more stretched, and the potential of a downturn in the autumn, this summer rebound could be short-lived in terms of price growth.”

And the director of London agency Benham and Reeves, Marc von Grundherr, comments: “London in particular has now turned a corner and will see the vast majority of buyers benefit from a stamp duty reprieve. This will help accelerate the capital return to form and see the region regain its seat at the helm of the UK property market, helping to drive house price growth in the right direction.”

Not for the first time, house price analyses have contradicted each other, however.

The day before the Nationwide figures, Lloyds Bank - the UK’s largest mortgage lender - cut its house price forecasts amid concern for the housing market, which it feared would be hit badly by rising unemployment.