Annual house price growth remains strong but it has slowed significantly according to the Nationwide.
Prices dropped 0.2 per cent on average in March but this still means the annual rate of house price inflation is a buoyant 5.7 per cent. And despite this small drop, UK house prices have increased on average over £1,000 per month in the last year to £232,134.
The big question is whether this slight dip means the boom is over, or whether the market is merely pausing - this was, after all, the original end date of the stamp duty holiday and Help To Buy, which might have influenced buyer activity some months ago.
Robert Gardner, Nationwide's chief economist, says: “Annual house price growth slowed to 5.7 per cent in March from 6.9 per cent in February. Prices fell by 0.2 per cent month-on-month after taking account of seasonal effects, following a 0.7 per cent rise in February.
“Given that the wider economy and the labour market has performed better than expected in recent months, the slowdown in March probably reflects a softening of demand ahead of the original end of the stamp duty holiday before the Chancellor announced the extension in the Budget.
“Recent signs of economic resilience and the stimulus measures announced in the Budget, including the extension of the furlough scheme and the stamp duty holiday, as well as the introduction of a mortgage guarantee scheme, suggest that housing market activity is likely to remain buoyant over the next six months.
“The longer-term outlook remains highly uncertain. It may be that the recovery continues to gather momentum and that shifts in housing demand resulting from the pandemic continue to lift the market. However, if the labour market weakens towards the end of the year as policy support is withdrawn, as most analysts expect, then activity is likely to slow nearer the end of 2021, perhaps sharply.”
London agent and former RICS residential faculty chief Jeremy Leaf believes it is not necessarily the end of the bull run. “These figures reflect a market pause as many decided meeting the original stamp duty deadline at the end of March would be almost impossible, mainly due to the backlog.
“However, the announcement of the holiday extension and rapid rollout of the vaccine have acted like a shot in the arm and reenergised many, especially those new to the market. This is underpinned by a shortage of available properties even though stock levels have increased lately as owner confidence to invite visitors to their homes has improved.”
Nicky Stevenson, managing director at Fine & Country, comments: “Despite a slight softening in the growth rate in March, this is still the eighth record high for average prices since July, as valuations hammer away at the ceiling of what is possible in these unique market conditions.
“This week’s mini-heatwave is a reminder of the power of better weather which is expected to take activity up another gear over the next few weeks and beyond. The sunny surge that we see every year brings more property to market in April. Gardens start to look better and homeowners can gear up for a desirable summer move.”
And the director of London agency Benham and Reeves, Marc von Grundherr, states: “Interest rates remain low, the stamp duty holiday has been extended, the latest version of Help to Buy is about to launch and for those who don’t qualify, there’s the additional carrot of 95 per cent mortgage products dangling tantalisingly in front of them.
“What more could you ask for as a homebuyer? Expect more of the same over the coming months and as we head into spring, we should see sellers flock to the market to take advantage of these hot selling conditions.”
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