House prices rose to a record high in July following the gentle reopening of the property market after being put on hold whilst coronavirus took its unruly grip on the country.
According to Halifax’s most recent house price index published last week, a sharp increase in July has pushed house prices to the highest they have ever been since the index began. This so-called mini-boom has driven houses prices up in July to 1.6% higher than the previous month, on a monthly basis, and 3.8% higher than his time last year.
However, quarterly, houses prices were down by 0.2%, with Halifax reporting that ‘uncertainty remains with likely greater downward pressure on prices in the medium term’ with other significant lenders and industry experts like Nationwide Building Society and Rightmove reporting similar.
Halifax’s Managing Director, Russell Galley commented that the data adds to the emerging view that the market is experiencing a surprising spike post lockdown. He further cited that pent-up demand from the period of lockdown, and a low supply of available homes was likely the reason behind this bounce back in prices.
Mr Galley further recognised that the government’s recently announced stamp duty cut was likely to provide support in the shorter term, with evidence from agents and households that confidence continues to build, with ‘the immediate future for the housing market looking brighter than many might have expected three months ago’.
However, he warned that ‘looking ahead, there is still a great deal of uncertainty around the lasting impact of the pandemic’ and made it clear that as the ‘government measures wind down, the resulting impact on the macroeconomic environment, and in turn, the housing market, will start to become more apparent.’ Referencing the labour market conditions, Mr Galley expressed a ‘weakening’ in this area, would lead us to expect greater downward pressure on prices in the medium-term.
Other key indicators of interest highlighted in the report include:
- HMRC Monthly property transactions data shows an increase in UK home sales in June– up by 31.7% from May following the lifting of COVID-19 lockdown measures. Quarter-on-quarter transactions were approximately 47% lower than quarter one 2020.
- Mortgage approvals rose in June, 40,010, compared to 9,273 in May, representing a 331% month on month rise. The June figure brings the quarter two total to 65,139 – down 68% from the previous quarter and also down 67% from the same period the previous year.
- Results from the latest (June 2020) RICS Residential Market Survey point to a recovery emerging across the market, with indicators on buyer demand, sales and new listings rallying following the lockdown related falls. New buyer demand has moved to a net balance of +61% (compared to -7% and -94% in April and May respectively). New instructions also rose firmly to a net balance of +42% (compared with -22% in May). Newly agreed sales net balance has moved into positive territory for the first time since February, with a net balance of +43% (from -34% in May).