House prices rise £4,500 after months in the doldrums

The cost of buying a house shot up by £4,500 in July as the property market recovered quicker than expected since the end of lockdown.

Prices were up 1.7% compared to last month, and 1.5% higher than the same period the year before, according to a closely watched survey.

The Nationwide Building Society said that the average price of a home sold in the last month was £220,936, up from £216,403 in June.

Nationwide’s chief economist said that pent-up demand was likely coming through in July as lockdown eased.

“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions,” Robert Gardner said.

But the pandemic itself might also be affecting people’s behaviour, he added.

In May, a survey by the building society showed that around 15% of people were contemplating a move because of their new locked down lives.

But he warned homeowners not to assume the market has recovered just because of one good set of results.

“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 after-effects of the pandemic and as Government support schemes wind down,” Mr Gardner said.

“If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.”

The bounce back back after 1.6% and 1.7% month-on-month falls in June and July, the largest since 2009, according to Howard Archer, chief economic adviser to the EY ITEM Club.

Guy Harrington, the chief executive of property lender Glenhawk, said: “The UK housing market is in a honeymoon phase: post lockdown, with sentiment boosted as both banks remain desperate to lend and by Government stamp duty and Help to Buy proposals.

“The reality is very different. The UK is staring down the barrel of a period of unprecedented pain, underpinned by mass unemployment as the furlough scheme ends and a likely second spike, which will hit consumer confidence in unimaginable ways and undo all the gains seen in recent months.

“If you think we’ve seen the worst, 2021 may just top it.”