What Has Happened to House Prices During Coronavirus?

In March, many people would have predicted that house prices would have fallen significantly because of Coronavirus. In fact, the figures tell a very different story.

Prior to lockdown, there were reports that house prices had increased by 2.1% up to March 2020. Due to the effect that Coronavirus would have on housing transactions, the Office of National Statistics (ONS) decided to suspend the House Price Index (HPI) from April 2020.

Crash Time?

It would appear not. The Halifax House Price Index reported that house prices only fell 0.2% between April and May. Although this was a fall, it was nowhere near what some had predicted.

Moving into June with lockdown restrictions eased for Estate Agents and Solicitors, Rightmove reported that asking prices were up 1.9% compared to pre-lockdown levels.

A report from Zoopla stated that property sales were set to recover to pre-lockdown levels. It went on to say that prices were 6% when compared to the June the previous year.

Boom Time?

As we moved into July, the Chancellor announced a temporary stamp duty holiday for properties up to £500,000.

Rightmove reported a ‘mini boom’ with asking prices up 2.4% compared to pre-lockdown levels.

Zoopla followed this by reporting the highest price growth for two years.

Nationwide reported a 1.5% rise in prices at the end of July. This was followed by a further 2% rise in house prices in August.

All the while, there was speculation about how different factors could effect the housing marketing. These included the end of the Furlough Scheme, schools returning and the potential of a second wave with Coronavirus.

However, as we started October the data seemed to suggest otherwise.

The Halifax House Price Index reported a 7.3% raise in the year to September. The Nationwide House Price Index reported a 5% rise over the same period.

This would suggest some inconsistency with the data. However, some feel that the Halifax had a bias towards the north whereas the Nationwide has a bias towards the south. Either way, if you take an average or even the lowest figure, this is still strong, especially when compared to the sentiment in March / April.

What Next?

Based on the year so far, caution must be exercised when speculating.

Everybody has a different opinion with some conflicting. For example, comparison site reallymoving predict a 14% rise in house prices by the end of 2020. On the other hand, the Centre for Economics and Business Research (CEBR) predict house prices to fall by 14% in 2021.

What we do know is that demand remains strong at the moment. While lenders are still looking to lend and rates remain low, these provide good fundamentals for the market.

There are of course variables which at this point are unknown. What impact will a second wave have, what will unemployment numbers look like and what will the full economic impact be? On the other hand, will the stamp duty holiday be extended? Will the Government help First Time Buyers with 95% mortgages and will there be further money pumped into the economy?

What can be said is that many borrowers appear to be taking the opportunity to buy while it’s there. Nobody knows what the immediate future holds, but it seems that people are willing to accept the short term risk in return for the long term reward that property has historically given.

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