UK house prices rose at the fastest monthly rate in almost three years before the coronavirus paralysed the property market, new figures show.
With the coronavirus now causing unprecedented economic disruption and many estate agents fighting to stay afloat, several industry insiders said house price data was now “irrelevant.”
Data from Nationwide on Thursday showed the average mortgage offer jumped 0.8% between February and March to almost £220,000. It marks the joint fastest monthly rise since June 2017.
But most of the period covered by the figures was prior to the UK government lockdown and warning against house moves to contain COVID-19, with estate agents reporting activity has since plummeted.
Nationwide’s chief economist Robert Gardner said the market was now “grinding to a halt,” abruptly ending the recovery in activity seen since December’s election.
Zoopla has predicted a 60% slide in transactions in the months ahead, with even buyers and sellers who have already exchanged urged to delay completion.
Experts are divided on the likely impact on prices. Economic shocks often knock prices but some predict they will barely budge as many homeowners stay put, with mortgage holidays and government wage support limiting the number of forced moves.
“To even be talking about bricks and mortar in the current climate feels absurd,” said Jonathan Samuels, CEO of property lender Octane Capital.
Marc von Grundherr, director of estate agent Benham and Reeves, said prices could fall, but his bigger concern was whether Britain would have “any agents left” to sell homes as they battle to survive.
“House prices have become irrelevant. That’s something no agent would ever expect to say,” said Lucy Pendleton, director of estate agent James Pendleton.
“Even before an outright housing market freeze was declared, we had been forced to furlough more than half of our staff.”
Pendleton said the growing crisis had “ripped staff and customers from our hands.” The London-based estate agent saw its agreed sales plummet 84% last week on a year earlier, with offers down 70% and viewings ceasing altogether.
Jeremy Leaf, a north London estate agent and former residential chair of the Royal Institute of Chartered Surveyors (RICS), agreed the latest data was now “academic.”
He said he had seen workers in travel, hospitality and entertainment forced to pull out of transactions.
The market may not collapse altogether, however. Leaf said the majority of his company’s exchanges had still gone ahead in the past week.
Many lenders remain keen to lend, despite some tightening loan-to-value ratios.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said re-mortgaging enquiries had risen. Homeowners “sat at home with time on their hands” were getting in touch amid heightened economic uncertainty and the Bank of England’s emergency rate cuts.