UK Annual House Prices Pushing on in 2020!

Following a very busy start to the year, we take a minute to reflect on some of the big home price reports of February which indicate strong UK annual house prices so far in Q1.  In the Nationwide House Price Index of February 2020, UK annual house prices are reported as the strongest since July 2018.

According to the Nationwide, UK annual house prices edged up by 2.3% which is the strongest rate for around 18 months. This is a 0.3% month on month rise having taken account of seasonal factors.  Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “While overall economic growth ground to a halt in the final three months of 2019, labour market conditions remained buoyant and borrowing costs low.  The decisive election outcome may have provided a boost to buyer sentiment. “

“Looking ahead, economic developments will remain the key driver of housing market trends and house prices.  Business surveys suggest that activity recovered in the New Year, but there are still significant uncertainties that threaten to exert a drag on the economy in the coming quarters.”

“The global economic backdrop remains challenging, with the coronavirus outbreak expected to weigh on global activity in the coming quarters. Investment is likely to remain subdued until the UK’s future global trading relationships become clearer, which is unlikely until early next year.”

Momentum for Growth in UK Annual House Prices

The Rightmove House Price Report released in February had a similar message about annual house prices. Rightmove report that “the price of property coming to market rose by 0.8% (+£2,589) last month, just £40 short of a new all-time high.”

There is some strong momentum ahead of the spring market with Rightmove saying that buyer activity outstrips rise in number of new sellers. Rightmove say that their monthly traffic was up by 7.2% on prior year to new record of over 152 million visits in January, indicating strong pent-up housing demand. Demand was already feeding through into number of sales agreed, up by 12.3% year-on-year nationally and 26.4% in London. Furthermore, new seller numbers fail to keep pace though finally starting to recover, up by 2.1% last month compared to the same period last year, which is the first year-on-year rise for 13 months.

This upward pressure on annual house prices is supported with further commentary from Zoopla on 26 February reporting that “Zoopla’s data shows that demand for homes is continuing to outstrip active sales listings, putting further upward pressure on prices. The number of homes on the market increased by just 2.6% in January 2020, compared to January 2019. But demand from potential buyers has soared by 26% during the same period. Despite the upsurge in supply at a national level, the stock of homes for sale has actually fallen in nine cities in the index, dropping by as much as 6% than a year ago.

All the indications for the UK annual house prices seem upward bound according to the big reports in February. However, at the time of writing this the UK has experienced the first death from the Covid19, Coronavirus. The quickly growing impact of this virus is likely to take affect on the UK economy and may yet steady such growth. We watch and wait…

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