Nationwide’s house price index was dubbed a ‘surrealist manifesto’ yesterday, given that it reflected the the state of the market before the coronavirus outbreak put the brakes on activity.
In March property prices grew by 0.8% month-on-month and 3.0% year-on-year to bring the average up to £219,583.
Jonathan Samuels, chief executive of the property lender, Octane Capital, said: “To even be talking about bricks and mortar in the current climate feels absurd.
“It’s as if the headline figures from the March house price index were plucked from a surrealist manifesto.
“The Nationwide rightly acknowledge that the figures are largely irrelevant given the impact of Covid-19.
“The hope is that the government’s comprehensive support measures will lessen the impact of the pandemic on both the economy and property market when we pull through the other side.
“For now, the property market, like the economy, has gone into lockdown but a strong rebound is not out of the question when this terrible pandemic is over.”
Robert Gardner, chief economist of Nationwide, said: “It is important to note that, while we use a full month’s worth of data to generate the index, the cut-off point is slightly before the end of the month.
“This means that developments following the UK government’s lockdown will not be reflected in these figures.
“In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum.
“Activity levels and price growth were edging up thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the general election.”
House price growth across northern England (North, North West, Yorkshire & Humberside, East Midlands and West Midlands), remained ahead of that in the south (London, Outer Metropolitan, Outer South East and East Anglia).
Wales was the strongest performing region in the first quarter of 2020, with annual price growth picking up to 6.4%.
Tomer Aboody, director of property lender MT Finance, said: “April’s numbers are likely to show a decline in prices owing to Covid-19. But again, as with any price falls, these usually happen because transaction numbers are down, with only those sales going ahead that really need to.
“Our experience is that buyers are still exchanging at prices agreed. This suggests that there is no lack of funding, unlike 2008, so if transactions are delayed or abandoned it will not be because of liquidity issues.”
Iain McKenzie, chief executive of The Guild of Property Professionals, said: “While transactions will be hit hard during the next few months, it will be temporary. Looking at data from China, although transactions ground to a halt during the early stages of the outbreak, their property market is once again gaining traction and transactions are increasing.
“A similar trend occurred in Hong Kong during the 2003 SARS outbreak; transactions fell by as much as 72% as people avoided each other, however, in the aftermath of the epidemic, transactions quickly recovered.
“As demand is linked to pricing, we will likely see a similar pattern of house prices decreasing over the next few months and then recovering once we have conquered the coronavirus and restrictions have lifted.”