Annual house price growth in the UK edged up to 3.7% during April, rising from 3% in March, according to data from the latest Nationwide House Price Index.

The index revealed the latest figure reflected the fastest pace of growth since February 2017, when the annual growth rate was 4.5%.

The rise means the average house price in the UK during April stood at £222,915, up from £219,583 in March.

Nationwide noted the impact of the coronavirus pandemic had not been “fully captured” in April’s figures because the index is constructed using mortgage approval data, and therefore a lag between mortgage applications being submitted and approved.

The building society estimated around 80% of the cases used for the month’s figures related to mortgage applications that commenced before the lockdown, before the full extent of the impact of the pandemic had become clear.

“In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum,” Nationwide chief economist, Robert Gardner, commented. “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.

“Indeed, a lack of transactions will make gauging house price trends difficult in the coming months. Our ability to produce the index in the months ahead will depend on there being sufficient transactions which are representative of the wider housing market.”

FJP Investment CEO, Jamie Johnson, added: “Let’s put things into context. We are in the middle of a health pandemic. As a result, accessing finance has become difficult and lockdown measures have naturally deterred or prevented people from buying a property. Of course, house prices will naturally adjust to reflect this new climate.
 
“What we should really be asking is why house prices are dropping. Is it because there is no longer market demand or is it a result of the challenges posed by the Covid-19 social isolation measures? I think most people who accept that it is the latter; demand at the start of 2020 was soaring, so the medium and long-term outlook needn’t be bleak.
 
“I believe a price recovery is imminent. After all, the index shows a significant annual increase in house prices. What the UK Government should consider, however, is whether tax reliefs are needed to reignite transactions in the immediate aftermath of Covid-19.”

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