• House prices rose 2.6% in the year to April
• Price growth slowed compared to March
• Lockdown effect not seen in full yet
Laura Suter, personal finance analyst at investment platform AJ Bell, comments on the latest house price figures from ONS:
“House prices rose in the year to April despite the mass shutdown of the housing market during the month. Prices rose by 2.6% in April, which was a slower pace than the previous month when they rose by 3.5%. The price rise is based on properties that completed in April, so many of the prices would have been agreed before the Covid-19 pandemic hit the UK, meaning we’ll have to wait for May figures to see the real crunch of lockdown on house prices. The figures are the first to be published by the Government after it scrapped the index during the pandemic due to a lack of transactions meaning the data wasn’t reliable enough to be used.
“Initial evidence shows the stamp duty holiday has caused a surge in property prices in the UK since being introduced in July, with the potential £15,000 saving pushing people to move house and offer more for the place they’re buying. However, there can be no doubt that the tax cut will create a bubble in property prices as people rush to move house and seal the deal before the stamp duty holiday comes to an end in March next year. This spike in demand will cause a rise in prices before transaction numbers fall off a cliff in April next year once the tax saving is whipped away. At the same time the UK will be facing a rise in unemployment and the repercussions of one of the worst recessions on record, which paints a fairly bleak picture for house prices in 2021.”
