Nationwide sees chance for strong rebound for UK housing market and economy
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Nationwide: Strong rebound in housing market possible!?
Whilst the content of Nationwide’s monthly UK House Price Index Report correctly summarises a period of strong growth in the housing market up until the end of March this year, the country’s largest building society also strikes a more positive tone than many in suggesting there is a chance of a ‘strong rebound’ in the housing market and the wider economy looking ahead to post Coronavirus. Whilst it is still also too early to say there will be sunshine peeking out from behind dark clouds soon, there is at least some anecdotal evidence to suggest their view could have some validity.
The Nationwide suggests house prices grew by 3% in the year to March.
This confirms our company’s view that we had seen a very positive and upbeat market in the first two months of the year, with keen buyers and significant growth in sales instructions for us over the previous year. The average cost of a home was up by 3 per cent annually as values rose at the fastest pace since January 2018.
Government actions to support the nation means things could improve.
Whilst the Nationwide's chief economist Robert Gardner said that the medium-term outlook for house prices was highly uncertain, the government's raft of policies, adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a strong rebound once the shock passes, and help limit long-term damage to the economy.”
So what anecdotal evidence is there to support the view of a strong housing market recovery post virus?
Today's coronavirus crisis has occurred in isolation from what otherwise was a very positive UK economic trend and solid growth in the housing market. In other words, this crisis has not been stimulated by overwhelming economic events, like those of the banking/credit crash of 2008 which inevitably meant we would fall into a very damaging recession and a significant downturn in the housing market.
Most agents, but admittedly not all, have found their ‘sale agreed’ stocks remain solid, with few sales falling through. Whilst most sales, unless contracts have been exchanged, are now in stagnation, both buyers and sellers are exhibiting great calm and patience, they are prepared to sit it out determined to complete and move!
There are no signs of sellers wanting to withdraw homes on mass from the market, they are still resolved to finding a buyer, now or post easing of the travel/social restriction of movement. And buyers, with inevitably with more time on their hands at present, are still very busy searching for their next move online. We are still agreeing home sales.
The reaction to new properties coming to the market online has been very positive with buyers registering for more information and a full viewing as soon as possible, and/or where available book a Virtual Viewing. Recessions in the housing market tend to be accompanied by significant falls in demand. This is something we have not seen to date.
Whilst the view ahead of what will be is certainly still far from clear, the Nationwide’s outlook that the housing market and the economy could rebound strongly at least potentially provides us all with a more positive outlook to focus on, ‘if,’ the present restrictions on ‘business movement’, rather than social movement, are eased over the next few weeks.
See the Nationwide report download at the top right-hand side of this page.
The Robert Bell & Company Team.
