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In stark contrast to the steep declines brought about by the COVID-19 lockdown, house prices have once again skyrocketed to a new record high. According to the latest figures from Nationwide, average house prices for August rose at their fastest monthly rate in more than 16 years.

Despite having experienced heavy losses in May and June, property prices spiked a full 2% in August. This took the average asking price for a home to a new high of £224,123, reported Nationwide Bank chief economist Robert Gardner.

Many economists believe, however, that the knock-on effects of the coronavirus crisis, particularly in relation to employment, may result in a steady slowdown of recent property price hikes.

An unexpectedly rapid spike

Nationwide admitted that while the release of pent-up demand among buyers was predicted to result in property price increases, the sheer speed of the market’s recovery had been “unexpected.”

The latest figures from the lender indicate that average house price growth for August has outpaced every month since February 2004. Year-on-year, average property prices were found to be up an impressive 3.7% compared to the same time last year.

A recent report from Halifax mirrored the findings of Nationwide, suggesting all-time record-high property prices during the summer.

All change in 2022?

Speaking on behalf of Nationwide, chief economist Robert Gardner stated that while the trend is likely to continue for a while, it’s unlikely the market’s huge growth will maintain its current pace long-term.

“This rebound reflects a number of factors. Pent-up demand is coming through, where decisions taken to move before lockdown are progressing,” commented Mr. Gardner.

“These trends look set to continue in the near term, further boosted by the recently announced stamp duty holiday, which will serve to bring some activity forward.”

“However, most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the after-effects of the pandemic and as government support schemes wind down.”

“If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.”

Likewise, the Office for Budget Responsibility, the official forecaster for the government, has also predicted a decline in average house prices next year.

Interviewed by the BBC, a London-based mortgage broker also predicted that, irrespective of the market’s current buoyancy, the situation as it looks today will be temporary at best.

“Two words: a reality check. As strong as the property market is right now, it will not last,” he told the BBC.

“Demand is understandably strong after lockdown and the added bonus of the stamp duty holiday, but unemployment is rising by the day and the economic outlook is highly uncertain as the furlough scheme ends.”

“In the final months of the year, we will start to see a reversal in the current rate of house price growth.”

It was predicted at the height of COVID-19 that when lockdown restrictions were eventually eased, a pent-up wave of demand would be unleashed on the UK housing market. Predictions that appeared to be accurate, as new research from Zoopla suggests the speed of property sales is currently 33% faster than it was a year ago.

Examining the three months leading up to mid-August, Zoopla found that the average time taken for a three-bedroom home to sell was 24 days. In August last year, the same property would have taken an average of 36 days to sell. It is not just three-bedroom homes that are selling faster; Zoopla’s report indicated that all property types across the board are selling at an accelerated pace.

Shifting priorities

Another prediction from the COVID-19 crisis that has proved accurate is the way in which homebuyers across the UK are showing a marked shift in priorities and preferences. Though all property types are selling faster, the slowest properties to sell in most regions are now one-bedroom flats.

This has been credited to the fact that first-time buyers and movers alike have been forced to reconsider their priorities and long-term intentions in the wake of the COVID-19 pandemic.

The fact that the housing market in its entirety was put on hold for several weeks has inevitably impacted overall property sales for the year. Nevertheless, Zoopla has reported an encouraging boom in general housing market activity since the easing of lockdown restrictions, resulting in overall sales more than 75% higher than would be expected for this time of year.

“Buyer appetite has been widely attributed to pent-up demand resulting from lockdown, but it also reflects the impact on the nation as it collectively reassesses what it wants and needs from a home,” reported Zoopla.

“Quarantine has galvanised many homeowners and renters into reconsidering their housing requirements, resulting in demand for more space and changing work and commuting patterns.”

Outdoor interest

Meanwhile, the experts at Rightmove are advising property sellers and landlords to place heavier emphasis on their gardens and outdoor spaces when presenting their properties to potential buyers or tenants. Whereas the kitchen has typically been the deal-breaker for most buyers, more people than ever before are prioritising the quality and availability of outdoor living spaces.

The sudden spike in housing market activity is also having a direct impact on average property prices across the country. A recent report from Halifax suggested that in July, average home prices reached a new record high—a climb of 1.7% from the month before.

Specifically, the average property price (according to the Halifax House Price Index) stood at £241,604 for July, up from the £237,834 average recorded in June. This also indicated a huge 3.8% increase compared to the same period in 2019.

In a landmark hearing that took place earlier this year, a judge ruled for the first time that blanket bans on benefit claimants by private landlords were unlawful. The “No DSS” clause has been a standard feature in countless rental contracts and tenancy agreements for decades, though it was recently declared discriminatory and in direct violation of equality laws.

Unfortunately, a new study conducted by the BBC suggests that most private landlords are in no hurry to alter their policies regarding DSS renters.  Conducting an analysis on more than 9,000 Open Rent listings, the BBC found that around 75% of all private listings excluded prospective tenants on benefits.

Open Rent stated that landlords are advised to assess tenants “on their own merits” and therefore could not be held responsible for the individual policies and practices of the landlords using their website.

A wake-up call going unheard?

In the wake of the landmark ruling last month, housing charity Shelter’s chief executive insisted that the time had come for private landlords across the UK to put an end to unfair discrimination.

“Last month’s ruling should be a wake-up call for landlords and letting agents clean up their act and treat all renters equally,” commented Polly Neate.

“We won’t stop fighting DSS discrimination until it’s banished for good.”

“Open Rent should ban landlords from advertising their properties as ‘DSS not accepted’, and remind them of their legal duty not to discriminate.”

Her sentiments were shared by the Equality and Human Rights Commission (EHRC), which went further to warn landlords that claims may be filed against them if their letting policies remain discriminatory.

“These figures show that there is still some way to go before we can truly end the discrimination against women and disabled people who claim benefits,” said a spokesman on behalf of the EHRC.

“If landlords and estate agents don’t change their policies and practices, they will be at risk of claims of discrimination from would-be tenants.”

A joint responsibility

During its assessment of Open Rent, the BBC discovered that the portal continues to provide landlords with the opportunity to tick or exclude a box with the description “DSS income accepted.” Those who do not tick this box effectively restrict their listings only to those who are not on benefits at the time.

When questioned on this policy by the BBC, Open Rent remained adamant that it “fully supported Shelter’s efforts to eliminate blanket bans.”

Though at the same time added, “based on speaking to our customers, including surveying hundreds of benefit claimants directly, applicants should be made aware upfront of any conditions of renting a property.”

In addition, Open Rent claimed that some of the landlords they work with have terms and conditions in their own mortgage contracts that prohibit them from accepting DSS tenants.

“We’re committed to solving root causes like these; however, in the meantime, our customers are overwhelmingly telling us we should not be pretending the problem doesn’t exist,” said Open Rent founder Adam Hyslop.

“Hiding conditions of renting over which the landlord has no discretion only wastes time for all involved and indeed makes the situation far worse for the very people Shelter is trying to help.”