Halifax said the average house price across the UK was £240,384 in March, changing little from a record high of £240,461 in February. The news comes after estate agent Knight Frank predicted that nearly 526,000 house sales will be “lost” if the UK remains in lockdown amid the coronavirus outbreak.
Russell Galley, managing director, Halifax, said: “The UK housing market began March with similar trends to previous months, as key market indicators showed a sustained level of buyer and seller activity.
“Overall average house prices in the month were little changed from February’s record high, while annual growth nudged up to 3 percent.
“These factors all underlined a positive trajectory and increased momentum in the early part of the year, with confidence rising as political and economic uncertainty eased.”
House prices are at a standstill
But Mr Galley said it was clear the month ended in “very different territory” as a result of the coronavirus pandemic.
He said: “On a practical level, most market activity has been paused, with the public rightly following advice to stay at home, and estate agencies, surveyors and conveyancers temporarily closing as a result.
“With viewings cancelled and movers being encouraged to put transactions on hold, activity will inevitably fall sharply in the coming months.”
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Property values in March were 3 percent higher on an annual basis.
Howard Archer, the chief economic adviser at EY ITEM Club, said March was the first time in five months that house prices had failed to increase.
He said: “The early 2020 upturn in the housing market is now being brought to an abrupt halt by the impact of coronavirus on the economy, households and people’s movements.
“Indeed, the housing market looks set to be essentially at a standstill for the next few weeks at least.
“Mortgage lenders are now temporarily restricting or even pulling new mortgages.”
Meanwhile, Knight Frank predicted a 38 percent decline in house sales to just 734,000 transactions in 2020.
The UK is lockdown amid the coronavirus pandemic
It comes after Prime Minister Boris Johnson urged home buyers and renters to delay moving to a new house as the UK continues to fight COVID-19.
Liam Bailey, global head of research at Knight Frank, told Financial Reporter: “The underlying economic forecast we have adopted points to a contraction of GDP of 4 percent in 2020 and growth of 4.5 percent in 2021.
“The actual outturn will be determined by the timeframe imposed by the lockdown.
“The housing market was in a strong position in January and February. A sharp uptick in sales and price growth was seen across the UK, with even the prime central London market seeing a reversal of a five-year-long price decline.
“While we expect a revival in activity to continue, with volumes next year expected to be 18 percent above the level seen in 2019, this expansion in sales in 2021 will not fully offset the losses seen this year.
“Meaning that of the nearly 526,000 sales we expect to be lost due to lockdown this year, less than half will be carried into 2021.
“For the government to see a full recovery of the market, with all of these lost sales carried forward, there will be a need for substantial incentives to ease market liquidity – including a reduction in stamp duty.”