Nationwide has reported that housing prices are recovering post-lockdown, resulting their highest monthly rise in more than 16 years.
Nationwide’s chief economist, Robert Gardner, told the BBC that the prices have risen so much, that the losses recorded in May and June have been reversed.
The average price for housing rose to £224,123 thanks to an increase of 2% last month.
Nationwide said the increase in August was the highest since February 2004, when house prices rose by 2.7%. As a result, annual house price growth accelerated to 3.7%, from 1.5% in July. Halifax has also reported a similar rise in prices over the summer.
There is growing concern among forecasters that the prices will drop again as the virus’s impact on the economy and jobs is felt.
The housing demand is also predicted to ease up, as the current demand is a result of pent-up mortgage applications and buying interest from lockdown.
The stamp duty holiday affected many people’s decision to move, or get onto the housing market. This holiday encouraged people to move from their current locations.
There are also thoughts surrounding the behavioral shift in people’s living preferences. Many have decided that living close to their place of work is no longer necessary, having experienced working from home during lockdown. People are now prioritising their quality of living and moving to more rural areas. Gardner suggested that these shifts may also be a reason for the boost in activity.
Gardner also commented, "However, most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the after-effects of the pandemic and as government support schemes wind down.”
He went on to say, "if this comes to pass, it would likely dampen housing activity once again in the quarters ahead."
Director of James Pedleton Estate Agents, Lucy Pedleton told BBC, "demand is understandably strong after lockdown and the added bonus of the stamp duty holiday, but unemployment is rising by the day and the economic outlook is highly uncertain as the furlough scheme ends.”
These concerns are matched by Barratt’s reported figures. It reported that its pre-tax profit fell 46% to £491.8m in the year to the end of June.
It completed 5,252 fewer homes than the previous year, a drop of 29%, as building sites were forced to close for weeks during the pandemic. However, it said forward sales were more positive. The overall opinion is that the housing market will not continue in this manner. Consumer confidence has also taken a hit as government support schemes end.