ONS Figures Show Increase In House Price Index Ahead of COVID-19 impact

Lee Pickett, Real Estate Partner at global legal services business DWF, comments on the ONS House Price Index for March 2020.

“Today’s figures show that there was an increase in UK average house prices over the year to March 2020. This only captures the beginning of the COVID-19 pandemic hitting the UK economy so won’t be reflective of the true impact that the UK housing market has faced over the past few months.

“Looking at comparative data, the latest data from the Halifax in April were 2.7% higher than in the same month a year earlier but house prices in April were 0.6% lower than in March. The Nationwide index showed that the annual house price growth increased to 3.7% in April, up from 3% in March. These figures, including those from the beginning of the year, showed that the housing market had been steadily gathering momentum. 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.

“However, we can already see the impact of the pandemic on mortgage approvals. Bank of England figures show that the number of mortgages approved to finance house purchases in March 2020 was 24% lower than February 2020, following four consecutive rises.

“With the housing market activity largely grinding to a halt over much of March to mid-May, the property market is stalling, while homeowners and house hunters alike assess the impact of the pandemic, and wait for calmer economic and health conditions before acting.  Given the current economic conditions and public safety concerns few homeowners will be putting their property up for sale willingly, most will be doing so out of necessity. They may yet struggle to find a buyer in the current market, even with bargain basement mortgages rates. This may in turn have a positive impact on the rental market, with those who might have otherwise moved into home ownership staying longer in PRS accommodation.”

Kindly shared by DWF Law