Property & Mortgages

UK real estate may grind to a halt amid Covid-19 crisis

UK real estate

Though property prices in the U.K. increased 3.7% annually in April, the pandemic is not fully captured in the figures, according to a report from Nationwide

The signs of recovery that the U.K. real estate market has been witnessing for the last few months are set to grind to a halt amid the coronavirus pandemic, according to a report Friday from Nationwide.

Though property prices in the U.K. increased 3.7% annually in April—the highest pace recorded in three years—the pandemic is not fully captured in the figures, the bank and mortgage provider said.

The index uses mortgage approval data, and there is a lag between mortgage applications being submitted and approved. Roughly 80% of April’s data relates to mortgage applications that “commenced prior to the lockdown,” Robert Gardner, Nationwide’s chief economist, wrote in the report.

The average property price in the U.K. now stands at £222,915.

Mortgage approvals, themselves, dropped to 56,200 in March, their lowest level in seven years, the Bank of England said Friday in a separate report.

The decline in approvals demonstrates “the early effects of the outbreak on mortgage markets that had just a month earlier been at their most active in five years,” Simon Gammon, managing partner at Knight Frank Finance, said in a statement.

The country’s coronavirus lockdown went into effect on March 23.

In the U.K., 177,454 people have tested positive for coronavirus and 27,510 have died as of April 30, according to the country’s Department of Health and Social Care.

At the start of the year “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,” Gardner said. 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.

Indeed, a lack of transactions will make gauging house price trends difficult in the coming months, he added.

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