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Government measures have set the stage for ‘a strong rebound’ in the housing market once the shock of the current crisis has passed, says Nationwide.
Its latest House Price Index – completed before the current lockdown came into effect – paints a picture of ‘growing momentum’ in the market. Average house prices went up by 0.8 per cent in March; up from 0.3 per cent in February. The annual rate of increase went up from 2.3 per cent to 3 per cent – the highest annual rate of increase since January 2018.
But these figures are hardly cause for immediate optimism now that the housing market has largely ground to a halt.
The medium-term outlook for housing is highly uncertain, said Nationwide chief economist Robert Gardner.
‘Much will depend on the performance on 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. 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 less than would normally be associated with an economic shock of this magnitude’.