UK house prices rise 3.4%
The Land Registry has published its House Price Index (HPI) for June 2020, showing that house prices across the UK rose by 3.4% to £237,834.
Many believe the spike in house prices in the year to June highlights the unprecedented times the UK is currently facing due to coronavirus.
Karen Noye, mortgage expert at Quilter, said: “Today’s house price statistics further illustrate the unparalleled times that we are living in and the huge impact they are having on every facet of the UK economy.”
UK house prices rise 3.4%
The June data fails to showcase the increase in demand seen as a result of the stamp duty holiday; however, it still shows that lockdown restrictions easing had a corresponding effect on house prices.
Noye said: “The shocking figures that reveal quite how damaging the lockdown was to house prices are that on a seasonally adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 37.4% lower than a year ago.”
She added: “Yet pent up demand clearly did cause a spike following the easing of lockdown conditions as the UK Property Transactions Statistics for June 2020 showed that between May 2020 and June 2020, transactions increased by 28.4%.”
Looking at the market post the furlough scheme and stamp duty holiday will show the greatest impact of the coronavirus on the market, believes Nove.
She continued: “Many first-time buyers are struggling to find mortgages at the moment due to lenders withdrawing their higher loan to value deals and this could consequently have a detrimental impact on the whole housing market.
“This is because if these buyers fail to find a place in the market it can and will have a knock on impact all the way up the chain. Unless there is a big price correction it is unlikely first-time buyers are not going to see their chances of getting on the housing ladder improve any time soon.”
However, research from the Centre for Economics and Business Research, estimates that house prices could drop by as much as 14% as a result of the coronavirus.
Miles Robinson, head of mortgages at Trussle, said: “With many pushing on with their delayed transactions following the property market suspension, and the announcement of the stamp duty holiday, it is no surprise that house prices are rising.”
However, Robinson believes that the growth will be temporary as the industry is facing a “challenging economic climate that will likely stifle demand and cause a dip in house prices.”
He added: “First-time buyers in particular are facing increased scrutiny from lenders, tighter criteria and a shrinking range of high loan-to-value (LTV) products.”
“While lenders are right to be cautious during times of uncertainty, we would urge the industry to ensure the market remains accessible to all and for lenders to reassess their offering of higher LTV mortgage products.”
Marc von Grundherr, director of Benham and Reeves, said: “We are now starting to see the monumental increase in buyer demand that flooded the market in recent months translate into solid house price growth where sale completions are concerned.”
Von Grundherr believes this is evidence that the UK market has beaten the pandemic decline and “has accelerated back to full health at a quite remarkable speed.”
He said: “London has always been a leading indicator of wider market health and with price growth now gathering momentum, it is clear that confidence is returning to the capital both where domestic appetite and foreign investment is concerned.
“It is likely that we will see an increased level of activity from foreign shores before the 2% increase in stamp duty for foreign buyers is implemented in April.”