Although the rate of house price growth will continue to dip during lockdown, this may have positive effects in opening new opportunities for buyers.
Although the rate of house price growth will continue to dip as lockdown measures progress, this may have positive effects in opening new opportunities for buyers, according to Paresh Raja, CEO of Market Financial Solutions (MFS).
Nationwide’s April House Price Index found that, although house price growth had reached the highest point since February 2017, the rate of growth had slowed slightly since March 2020, from 0.7% to 0.8%.
Commenting on this dip in house price growth and its effect on the market, Raja said: “The rate of house prices growth has dipped, and it will continue to do so as long as lockdown measures are in place.
“This will affect property valuations and no doubt play on the minds of sellers and those in the middle of a transaction.”
Nevertheless, Raja added that buyers taking advantage of the situation might in turn help the market recover once the restrictions are lifted.
He said: “A short-term fall in house prices may open new opportunities for buyers.
“Taking advantage of the current circumstances could mean buyers see notable price growth once COVID-19 has passed and the market recovers.
“As was witnessed in the aftermath of the global financial crisis, the property market is able to bounce back quickly.
“The challenge for buyers, however, is finding lenders who are still receiving new loan applications and have the resources to undertake on site valuations.
“I’d expect to see a general increase in the number of buyers looking beyond high street banks to specialist lenders for loans during this pandemic.”
Jamie Johnson CEO of FJP Investment added that despite the dip in the overall rate of growth month-on-month, Nationwide’s figures showed a positive overall picture.
He said: “Nationwide’s House Price Index has delivered the news we were all anticipating – a month-on-month drop in the rate of house price growth.
“However, it is surprising and positive to see the positive rate of annual growth.
"Let’s put things into context. We are in the middle of a health pandemic. As a result, accessing finance has become difficult and lockdown measures have naturally deterred or prevented people from buying a property.
“Of course, house prices will naturally adjust to reflect this new climate.”
Johnson pointed out that the otherwise strong figures shown in the build up to and start of the pandemic reflect the demands of lockdown, rather than a drop in demand.
Therefore, this can be seen as evidence of the point to which the market might return once restrictions are lifted.
He said: “What we should really be asking is why house prices are dropping.
“Is it because there is no longer market demand, or is it a result of the challenges posed by the COVID-19 social isolation measures?
“I think most people who accept that it is the latter; demand at the start of 2020 was soaring, so the medium and long-term outlook needn’t be bleak.
“I believe a price recovery is imminent. After all, the index shows a significant annual increase in house prices.
“What the UK government should consider, however, is whether tax reliefs are needed to reignite transactions in the immediate aftermath of COVID-19.
“A Stamp Duty holiday has been touted as a potential reform – this would be beneficial, and I would be more in favour of reforms to Stamp Duty as part of any 2020 Autumn Budget.”
