Long, ‘bumpy’ road to recovery predicted for UK p...

The latest data from the Office for National Statistics (ONS) suggests that the housing market continued to recover at the tail end of the so-called 'Boris Bounce' in April, but it fails to offer a clear picture of the subsequent impact the Covid-19 pandemic.

The first UK House Price index published by the ONS since it was suspended back in May as a result of the Covid-19 pandemic shows that property prices grew at a rate of 2.6% over the year to April, down from 3.5% in the year to March.

The average property in the UK was valued at £234,612, up £6,000 on the corresponding month last year, but this tells us very little about today’s market, and the impact the coronavirus crisis has had.

Mark Harris, chief executive of broker SPF Private Clients, said: “There was evidence of plenty of pent-up demand in the market as Brexit seemed to be on its way to a conclusion and those who had put their decision to move on hold were finally getting on with it.

“Of course we know what happened next and how Covid changed everything but as we emerge from lockdown and life starts to get back to something resembling normal, the market is thriving once more.”

But Jamie Durham, economist at PwC, believes that the outlook for the housing market is bumpy.

Durham commented: “It is important to note that these figures represent transactions that completed in April, and so sale prices will have been agreed prior to the UK lockdown and the housing market shutdown. House price growth at the beginning of 2020 was relatively strong compared to recent times, as the market benefitted from a more certain political environment following the general election result.

“Looking forward, the market’s recovery is likely to be bumpy. Estate agents have reported a significant increase in interest and listings since the market reopened, as pent up demand and now the stamp duty holiday help support the market.

“However, the housing market may stall later this year as the furlough scheme unwinds and unemployment creeps up. These factors could cause people to delay making major financial decisions until the outlook is clearer and may also limit banks’ willingness to lend. The end of the Brexit transition period is also on the horizon, which could introduce further uncertainty depending on the outcome and dampen activity in the market.”

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