UK House Prices Unexpectedly Rise In July

UK house prices unexpectedly rose in July as activity picked up after the lockdown restrictions to battle the coronavirus pandemic were eased, survey data from the Nationwide Building Society showed on Friday.

The house price index rose 1.5 percent year-on-year after a 0.1 percent fall in June. Economists had forecast a 0.3 percent drop.

House prices rose 1.7 percent from June, when they fell 1.4 percent. Economists had expected a 0.1 percent decline. The monthly increase was the first since April.

The average price of a UK house rose to GBP 216,403 from GBP 220,936 in the previous month.

The stamp duty holiday is likely to provide further support in the near term by bringing some activity forward, Nationwide said.

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

“…Pent up demand is coming through, where decisions taken to move before lockdown are progressing.”

Gardner also said behavioral shifts may be influencing housing activity as research by Nationwide conducted in May showed that around 15 percent of people surveyed were considering moving as a result of life in lockdown.

Meanwhile, social distancing does not appear to be having as much of a chilling effect at least at this stage, he added.

“However, there is a risk this proves to be something of a false dawn,” Gardner said.

Labor market conditions are widely expected to weaken significantly in the quarters ahead due to the aftereffects of the pandemic and as government support schemes wind down. The economist fears this could dampen housing activity again in the coming quarters.

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