This morning's data released by Nationwide has revealed that UK annual house price growth has recovered to 1.5% in July.
According to the July report, the fall in house prices seen last month has been wiped out with average prices up 1.7% month on month after taking account of seasonal factors.
Nationwide believe that suppressed demand and the stamp duty holiday are likely behind the unexpected and rapid recovery.
Robert Gardner, Nationwide's Chief Economist, comments:“UK house prices rose by 1.7% in July, after taking account of seasonal effects, offsetting the 1.6% fall in June. As a result, annual house price growth recovered to 1.5%, from -0.1% last month. On a seasonally adjusted basis, house prices in July were 1.6% lower than in April.
“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions. The rebound in activity reflects a number of factors. Pent up demand is coming through, where decisions are taken to move before lockdown are progressing.
“Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown. Our own research, conducted in May (link), indicated that around 15% of people surveyed were considering moving as a result of life in lockdown.
“Moreover, social distancing does not appear to be having as much of a chilling effect as we might have feared, at least at this stage. These trends look set to continue in the near term, further boosted by the recently announced stamp duty holiday, which will serve to bring some activity forward.
“However, there is a risk this proves to be something of a false dawn. Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead."
Anna Clare Harper, author of Strategic Property Investing, says: "Recent and proposed policy changes combined with a release of pent-up demand (and supply) show up in this month’s house-price data.
"The Stamp Duty Land Tax change, combined with pre-lockdown demand, has unsurprisingly produced an increase in buyers. On the supply side, proposed changes to Capital Gains Tax are encouraging those who had considered selling and were waiting for ‘the right time’.
"These combined forces are increasing the rate of transactions among ordinary property owners and potential owners. It shows up in the data: annual house price growth recovered to 1.5% in July, with house prices up 1.7% month-on-month.
"What no one can forecast is what happens next, with some nerves among homeowners, investors and economists as to what the future may hold."