The housing market registered its strongest start for four years, according to our monthly Zoopla Cities House Price Index Report.
The report reveals that house prices increased by an average of 1.6% year-on-year across the 20 cities in February, up from average growth of 1.2% 12 months previously.
The strong start to the year was partly a result of the certainty generated by the General Election result in December 2019 and Brexit in January 2020.
The market has since witnessed a dynamic shift, with consumer confidence and market activity hit by the impact of the coronavirus pandemic from early March onwards.
Where is price growth fastest and slowest?
Nottingham continues to be one of the fastest-growing cities in the UK, recording average home values 3.8% higher than the same period in 2019.
It is followed by Leicester with a 3.6% growth, Edinburgh with 3.4% and Manchester with 3.3%.
But house prices have fallen by 2.2% compared to last year in Aberdeen and by 1% in Oxford.
London saw a slight increase of 0.5% year-on-year between February 2019 and February 2020.
What’s the outlook?
The coronavirus pandemic is expected to significantly impact the housing market over the coming months.
Demand has already fallen by 40% in one week as buyers pause making major financial decisions.
Commenting on our latest report, Richard Donnell, Director of Research and Insight at Zoopla, said: "Coronavirus presents a major new challenge - not just for the housing market but for the UK and global economies.
"Fifty years of history shows that external shocks have impacted the housing market to differing degrees, largely down to the scale of direct impact on the UK economy.
"The initial impact of external shocks is to reduce consumer confidence and put a brake on housing demand and the number of people moving home, which we can see in our latest figures. Levels of property transactions are typically more volatile than changes in house prices.
"We do not expect any immediate impact on prices. Beyond this, the outlook for house prices largely depends upon how the government’s major package of support for business and households reduces the scale of the economic impact.
"Low mortgage rates mean forbearance will remain the preferred choice for lenders, but further government support in these unique times cannot be ruled out.
"The timing of any rebound in housing market activity depends upon when new restrictions are lifted, and the extent to which households and businesses are able to return to a normal way of life. Browsing for homes online is set to continue and, while demand for property may rebound quickly, it will take several months for agents to rebuild new business pipelines.”
Top 3 takeaways
1. Prior to the outbreak of coronavirus, the UK housing market got off to its strongest start for four years.
2.Average annual house price growth was up by 1.6% across UK cities in February as market momentum gathered pace in the wake of the General Election and an end to Brexit uncertainty.
3. The market has since witnessed a dynamic shift, with consumer confidence and market activity hit hard by the coronavirus pandemic since early March.