Industry reacts to 1.5% annual house price bump
Nationwide’s House Price Index for July reported a 1.5% uplift year-on-year, compared to a drop of 0.1% in June.
For Ross Counsell, chartered surveyor and director at Good Move, this boost, following poor performance in previous months, is a sign of market recovery.
He said: “Annual house price across the UK grew by 1.7% in July, a much better result than what we saw in both May and June.
“Today’s statistics are a much better indicator of market health and will hopefully help reassure both sellers and buyers across the UK.
“We expect to see a continuous boost in house prices across the UK, increased by measurements the government have put in place to support the market including the stamp duty holiday.
“However, one important thing to note is that the government must employ long-term measures to help the market truly recover.”
Alan Cleary, group managing director at OneSavings Bank, agreed that the market would likely need ongoing government support to remain on a positive trajectory.
Cleary said: “The Chancellor was clear in his statement that the stamp duty holiday is only a temporary measure, with buyers having to act quickly to make the most of this limited window of opportunity.
“With the continued uncertainty around how the UK economy will recover from the pandemic as the furlough scheme winds down and job losses hit later in the year and the possibility of a second wave, all these factors will play a part in how the market shapes up in the coming months.
“The government’s immediate response to coronavirus has proven to be effective in stimulating transactions but the lack of available housing stock cannot be overlooked.
“The government needs to align its short and long-term strategies for the housing market to put an end to the cyclical pattern the market currently finds itself in.”
Tomer Aboody, director of property lender MT Finance, added that this might be an opportunity to deal with the wider issues surrounding stamp duty, to avoid backsliding when the temporary measures are removed.
He said: “Nationwide points to a busy and productive July, which is great for a property market which had been so static for most of the year.
“It’s no coincidence that this uptick has come at the same time as the introduction of a stamp duty holiday on purchases up to £500,000.
“Brexit and COVID-19 aside, stamp duty has been the biggest negative influence on the housing market in recent times since the introduction of higher rates on more expensive properties.
“This has to be resolved and dealt with, or whatever bounce we have seen in the past few months will only be a temporary one.
“The government not only has to look to extending the existing holiday but possibly making it permanent, while also looking at benefiting the higher end also.
“Let’s hope lenders look at more imaginative and flexible ways of providing mortgages going forward, assisting buyers who might have been affected by the furlough schemes and a fall in their business.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, also voiced concerns about the long term strength of the market: “These numbers are not surprising to us as they reflect what we are seeing on the ground as pent-up demand continues to be released and new listings pick up since the housing market re-opened.
“Activity has been given added impetus by the stamp duty holiday and continued low interest rates.
“However, concerns remain as to the longer-term prospects for recovery bearing in mind the risk of further COVID spikes and rising unemployment as furlough support falls away.”
Shaun Church, director at Private Finance, added: “The loosening of lockdown restrictions that are seeing some people return to work may have resulted in a larger proportion of households viewing their short to medium term financial position more favourably, encouraging them to push ahead with property purchases.
“However, many households are still under financial strain due to reductions in working hours and income.
“Although economic activity is slowly recovering, lenders remain cautious.
“Cuts to rates on lower loan-to-value (LTV) products suggest lenders are keen to reduce their risk appetite to offset high uncertainty in the housing market.
“This is likely to create a barrier to entry for first-time buyers, adding to the heavy financial burden the pandemic has placed on many people in this age group.”
Paresh Raja, CEO of Market Financial Solutions said that the rise in house prices, while showing signs of a bullish market, might act as a counterforce to measures such as the stamp duty changes and become a negative in the long term.
He said: “One thing we need to consider is whether this rise in house prices will in fact make property less accessible for more buyers during this pivotal recovery period.
“Lenders are returning to the market, but getting a mortgage is still by no means a simple process.
“With house prices rising, it could make property unaffordable for certain categories of buyers who cannot access the necessary finance.
“That’s why lenders need to ensure homebuyers and investors are in a position to complete on sales.
“Failing this, we could see a subsequent drop in house prices and stagnant market activity.”
For others, the picture was more roundly positive, and showed the underlying strength of the market.
James Forrester, managing director of Barrows and Forrester, said: “The rate at which the property market has rebounded over these last few months has been nothing short of miraculous, and it certainly feels as though this is just the tip of the iceberg.
“While the current pandemic continues to dampen many aspects of life, homeownership isn’t one of them, and we should continue to see some very positive price trends play out over the year.
“Those that were so quick to talk the market down seem to have now entered into an unseasonal hibernation.
“While they will no doubt emerge from their boltholes of negativity to forecast yet further armageddon in the even of a second-wave, it’s quite clear that the market isn’t prepared to lay down and die as they might have hoped.”
Marc von Grundherr, director of Benham and Reeves, added that the uptick could not entirely be attributed to the temporary measures around stamp duty.
He said: “The property market party is in full swing at the moment, and we’re yet to see the benefit of the recently announced stamp duty holiday filter through.
“Once that does, expect further increases in house price growth due to a notable and sustained increase in buyer demand.
“London, in particular, has now turned a corner and will see the vast majority of buyers benefit from a stamp duty reprieve.
“This will help accelerate the capital return to form and see the region regain its seat at the helm of the UK property market, helping to drive house price growth in the right direction.
“As a result, we should finish the year in a much, much better position than anyone could have imagined just a few short months ago.”
Islay Robinson, group CEO of Enness Global Mortgages, added to this positivity: “Buyer demand has been turbocharged via a stamp duty holiday, mortgage rates remain very favourable, and buyers and sellers are returning to the market in their droves.
“We’re also seeing a strong return to form at the top-end of the market and from foreign buyers.
“All things considered, the outlook is a positive one, and we’ve seen the dark clouds of market decline make away for the perfect storm of property price growth over the coming months.”