The housing market continued to show signs of improvement in February, but coronavirus could dent the nascent recovery, Halifax said today.
House prices rose 2.8 per cent in the year to February, with the average property gaining £6,443 annually to reach a new record high of £240,677, according to Britain’s biggest mortgage lender.
That marks a slower rate of inflation than the 4.1 per cent seen in January – a two-year high – but February was still the fourth consecutive month when house prices rose.
But Halifax’s Russell Galley cautioned: ‘Looking ahead, there are a number of risks, including the potential impact of coronavirus, which continue to exert pressure on the economy and we wait to see how these will affect housing market sentiment later in the year.’
February’s pace of growth eased from the almost two-year high seen in January
The Halifax report follows the rival mortgage lending-based house price index by Nationwide, which showed house price inflation reaching 2.3 per cent last month.
The Halifax index has repeatedly outstripped rival reports over the past year, leading some to question its figures, which are based on its own mortgage lending.
On a monthly basis, prices rose 0.3 per cent, adding a further £750 to the average house price.
Estate agents and property listing sites Rightmove and Zoopla have reported a brisk start to the New Year, with an uptick that began before the election gathering momentum.
There are now concerns that sellers putting homes on the market with more ambitious asking prices and the coronavirus outbreak will dent that recovery in activity.
Lucy Pendleton, founder director of independent estate agents James Pendleton said they lost a sale due to coronavirus.
‘Coronavirus impacted our business for the first time on Wednesday, stealing away a sale that was just days from exchanging,’ she said.
‘The buyer worked in the events industry which is being rocked by large numbers of cancellations. He was unfortunately one of the employees told his job was at risk, forcing him to pull out of the purchase completely.
‘The hope is this will remain an isolated case but the impact of the virus will become clearer in March.’
House prices have now risen for four consecutive months, but the coronavirus could have an impact on the market later in the year
Russell Galley, managing director of Halifax, said the increases seen in February reflected the continued improvement of key market indicators, with sales and mortgage approvals all on the rise in recent months.
‘The sustained level of buyer and seller activity is strong compared to recent years, with positive employment conditions and a competitive mortgage market continuing to support demand,’ he said.
Homes have got slightly cheaper but remain near historically highs when compared to wages, Nationwide’s chart shows
Recent reports from property listing portals, Rightmove, Zoopla and OnTheMarket, Rics estate agents and mortgage lenders brokers suggest a pick-up in the property market over recent months.
Looking ahead, there are a number of risks, including the potential impact of coronavirus
The latest monthly property transaction figures by HMRC for January show the fastest rise in home sales since July 2017, while mortgage approvals also rose in December, according to Bank of England data.
Meanwhile, January’s RICS Residential Market Survey also showed improvement, with demand, sales and new instructions moving further into positive territory.
However, agents have cautioned potential sellers not to be over-ambitious and expect higher prices, as affordability is still stretched and many locations remain a buyer’s market.
January’s RICS Residential Market Survey showed improvement, with demand, sales and new instructions moving further into positive territory, although still at a low level
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: ‘If anything, these figures show that house price growth is slowing slightly as the previous month’s increase has been reined in by concerns about affordability, the wider economic picture and how the Budget is likely to impact on these.
‘Of course, it is too early to say if the recent improvement in activity will be compromised by a fall in confidence caused by the virus.
‘On the ground, the market remains price sensitive with still too few listings but we are not finding properties being withdrawn with most buyers and sellers taking the view that the worst effects will pass sooner rather than later.’
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