Nationwide has revealed that UK house prices rose by 1.7% in July.
This compares to the 1.6% fall in June.
As a result, annual house price growth recovered to 1.5%, from -0.1% last month. On a seasonally adjusted basis, house prices in July were 1.6% lower than in April.
Robert Gardner, Nationwide’s chief economist, said: “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 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, conducted in May (link), indicated that around 15% 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.
“The temporary increase in the Stamp Duty Land Tax (SDLT) threshold in England and Northern Ireland to £500,000 (until 31 March 2021) should mean that around 90% of owner occupier transactions in England will pay no SDLT over the next nine months.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “The housing market turned on its head this month, according to Nationwide, reversing last month’s 1.6% monthly fall into a 1.7% monthly rise, with annual increases running at 1.5% compared with a drop of 0.1% in the previous month.
“These numbers are not surprising to us as they reflect what we are seeing on the ground as pent-up demand continues to be released and new listings pick up since the housing market re-opened. Activity has been given added impetus by the stamp duty holiday and continued low interest rates. However, concerns remain as to the longer-term prospects for recovery bearing in mind the risk of further Covid spikes and rising unemployment as furlough support falls away.”
