The annual price growth for houses in the UK was edging higher before the coronavirus pandemic struck the country, new analysis from Nationwide has revealed.

House prices increased by 0.8% in March, after taking account of seasonal factors, bringing the annual change to 3%. Nationwide’s data showed these figures had risen from the 0.3% monthly change recorded in February, when the annual change was 2.3%. However, the society noted the sample period excluded recent disruption caused by Covid-19.

Nationwide chief economist, Robert Gardner, highlighted that the rise in March was the fastest pace since January 2018 – when annual growth was 3.2% – and that the last six months had all seen month-on-month increases, after taking account of seasonal effects.

“It is important to note that, while we use a full month’s worth of data to generate the index, the cut-off point is slightly before the end of the month,” Gardner commented. “This means that developments following the UK Government’s lockdown will not be reflected in these figures.

“In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum. Activity levels and price growth were edging up thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the General Election.

“But housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus, and where the government has recommended not entering into housing transactions during this period. A lack of transactions will make gauging house price trends difficult in the coming months.”

Gardner also described the medium-term outlook for the housing market as “highly uncertain”, and added that much would depend on the performance of the wider economy.

“Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus,” he added.

“But the 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.

“These same measures should also help ensure the impact on the housing market will ultimately be much less than would normally be associated with an economic shock of this magnitude.”

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