House prices rise with highest single month increase in 16 years

September 11, 2020

The housing market has seemingly shrugged off coronavirus woes and bounced back to new heights with the average cost of a house in the UK increasing by a little over £3,000 in August.

 

Despite uncertainty in the economy and social distancing rules, pent-up demand and the stamp duty holiday appear to have driven the average price up to £224,123, according to data from building society Nationwide.

 

The housing market ground to a halt over lockdown but has made an “unexpectedly rapid recovery” with the £3,188 rise in August wiping out the losses made earlier this year.

 

The 2% increase represents the highest rise in a single month since February 2004, when prices jumped 2.7%.

 

Landlords struggling in the buy-to-let market amid the eviction ban and difficulties with rent arrears, could be tempted to cash in on the mini-boom, experts say.

 

Chris Sykes, at mortgage broker Private Finance, said that as government protections for renters come to an end, more properties could start hitting the market.

 

“The ending of the Government’s eviction ban in September could lead to a surge in landlords trying to remove tenants from properties,” he said.

 

“This may cause a great deal of negative publicity, possibly suppressing appetite for new buy-to-let purchases.

 

“Landlords may even sell some of their properties to avoid potential difficulties moving forward.”

 

And if landlords do decide to throw in the buy-to-let towel, now could be the most lucrative time to sell up.

 

Commenting on Wednesday’s figures, Nationwide chief economist Robert Gardner said: “The bounce-back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions, this rebound reflects a number of factors. Pent-up demand is coming through, where decisions taken to move before lockdown are progressing.

 

Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.

 

Our own research, conducted in May, indicated that around 15% of people surveyed were considering moving as a result of lockdown.”

 

Meanwhile, official figures from the Office for National Statistics (ONS), also released on Wednesday, showed house prices increased by 0.2% in May, compared with the month before.

 

The ONS and the Land Registry said the average price at which a home was sold reached £236,000 during the month, after decreasing 0.2% in April.

 

It is a £7,000 rise on the same month last year.

 

The holiday in stamp duty means that this trend is likely to continue in the near term, but Mr Gardner warned that a massive rise in unemployment, which is forecast by most experts, would probably send the housing market back into a slump.