The latest house price index from Halifax has revealed a strong first quarter from January to March, with prices up as much as 3% year on year, before measures taken to control the spread of Covid-19 came into force in the run up to April.
The positive trajectory and increased momentum at the start of the year, helped by consumer confidence in the wake of the General Election, show a continuing demand for property and has prompted some commentators to suggest pent up demand may be released once the Covid-19 lockdown measures are eased.
Jamie Johnson, CEO of FJP Investment, said: “Despite much speculation about how the current climate would impact the property market, it is interesting to see that house prices have in fact risen once again – although this is likely a reflection of the momentum initially triggered by Boris Johnson’s 2019 General Election victory, which sparked a flurry of activity at the start of the year. However, while today’s index for March does not take into account the impact of the Government’s COVID-19 lockdown measures on the property market, we should not overlook the significance of the findings.
“For one, it provides a clear indication of the continuing demand for property before COVID-19 took hold. And while buyer activity has naturally slowed down over the last week, this is not due to diminishing demand for real estate but rather people pausing on major decisions or struggling to get deals over the line.
“Based on the rate of house price growth in the opening months of 2020, there is clear appetite for property investment – many expect that lockdown measures will only result in pent-up demand that will be released once the pandemic is contained. For now, we will have to wait and see what next month’s house price index reveals about the immediate impact COVID-19 is having on house prices.”
Paresh Raja, CEO of Market Financial Solutions, commented: “Today’s House Price Index comes at an interesting time. March was, after all, an extremely eventful month – we had the 2020 Spring Budget, interest rate cuts and government-backed relief to support businesses, borrowers and consumers. These various announcements have no doubt played on the minds of UK homebuyers, and this would have contributed to the house price growth recorded by Halifax.
“The question now is whether the rate of house price growth will drop significantly in April. Current forecasts suggest this is likely to be the case, though this is to be expected given how lockdown measures have prevented valuations from being completed and lenders taking on new loan applications. I am optimistic that any decline will be momentary and should not overshadow the long-terms projections for positive house price growth over the coming years.”
