COVID HOUSE PRICE BOOM

Buyers escaping lockdown trigger biggest monthly rise in 16 YEARS

HOUSE prices are at record highs after lockdown sparked a rush for more space and a better lifestyle. the average property cost £224,123 last month – £8,000 more than in June. the 2 per cent rise over the past month is the largest in 16 years.

Prices are now back to where they were before the pandemic struck. the strength of the recovery took experts by a surprise, one calling it ‘barnstorming’.

estate agents have reported a huge increase in demand for bigger properties in rural and coastal areas since lockdown was lifted and a fall in demand for smaller city flats. ‘house prices

have now recovered the losses recorded in May and June and are now at an alltime high,’ said robert Gardner, chief economist at nationwide, which produced the figures.

‘the bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.’

He said social distancing was having less impact than expected as pent-up demand returned to a market put into a deep freeze during the lockdown. A stamp duty holiday, in which the levy is waived on values of up to £500,000, has also helped to boost the market.

rupert Sweeting, of estate agent Knight Frank, said: ‘For a change the country property market has seen bigger increases in prices than big cities such as london, Birmingham, Manchester and leeds.

‘Properties out in the country have seen a bigger increase in price due to the fact that many people are looking for more space, bigger gardens. they have seen bigger rises than flats in inner cities.’

the property boom will fuel hopes that the economy will bounce back from the coronavirus crisis. retail spending has almost recovered to pre-lockdown levels, according to official figures. the eat Out to Help Out scheme also sparked a spending splurge in restaurants, pubs and cafes last month with millions of households tempted by cheap meals.

Separate research from property website Zoopla shows there has been a dramatic increase in demand for larger properties in london, while demand for one-bedroom flats has slumped.

lucy Pendleton, of independent estate agents James Pendleton, said: ‘Buyers emboldened by the stamp duty holiday have been engaged in a pitch battle for property, delivering a barnstorming recovery for the market.

‘A stunning proportion of properties are now going for asking price or more, and offers are flooding in. it’s like lockdown was a bad dream.’

Jonathan Hopper, of Garrington Property Finders, said: ‘Prices are rising fastest among coastal and country properties as buyers are planning for a new work life balance built around less commuting and seek more green space, fresh air and better value.’

Property prices are also rising more quickly outside london and the South east, according to rightmove.

the website’s research showed average prices fell 2 per cent in Greater london last month, but rose 1 per cent in the north West, 1.4 per cent in the West Midlands, 1.7 per cent in the north east, 1.4 per cent in Yorkshire and Humber and 2.9 per cent in Wales.

nationwide’s report comes after the Bank of england revealed mortgage approvals soared from 40,000 in June to more than 66,000 in July, just 10 per cent shy of pre-lockdown levels.

But the building society warned that the wheels could quickly fall off the recovery. there are fears of a spike in unemployment when the jobs furlough scheme ends in October.

Howard Archer, chief economic adviser to the eY item club, said the current pickup in activity and firming of prices may ‘prove unsustainable due to challenging fundamentals for consumers’.

He added: ‘Many people have already lost their jobs, despite the supportive Government measures, while others will be concerned that they may still end up losing their job once the furlough scheme ends.’