Record house prices likely to go higher still says leading agent

Record house prices recorded this week by the Nationwide index are set to go higher still according to a leading agent.

Nationwide says rose two per cent month-on-month in August after taking account of seasonal factors. This means the average UK house price rose to £224,123, up from £220,935 in July.

“The Nationwide data continues the trend noticed in July with the property market emerging strongly from lockdown. In fact, property prices accelerated in August - they began to take into account not only pent-up demand but the stamp duty holiday announced in July” explains former RICS residential chairman and London agency owner Jeremy Leaf.

“Certainly, we are seeing more buyers and sellers shrugging off concerns about rising unemployment and the unwinding of the furlough scheme, continuing to benefit from low mortgage rates and plenty of product choice.

“Looking forward, we see no signs of activity easing off. On the contrary, the recovery seems to be fairly broad-based and will be given another lift by schools and more businesses re-opening.”

Leaf’s optimism is buoyed by the Nationwide figures which showed the highest monthly rise since February 2004. As a result, annual house price growth accelerated to 3.7 per cent now, from 1.5 per cent last month.

Robert Gardner, Nationwide’s chief economist, says: “House prices have now reversed the losses recorded in May and June and are at a new all-time high. 

“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.”

He continues: “This rebound reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing.

“Behavioural shifts may also 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 per cent of people surveyed were considering moving as a result of 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 point.

“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, 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.”

Mike Scott, chief analyst at online agency Yopa, echoes caution about the months ahead. 

"There are likely to be some headwinds this autumn as the furlough scheme ends and unemployment rises, but we nevertheless expect that the market will remain strong and active for the rest of this year, as people rush to beat the stamp duty deadline."