UK house price rebound from virus seen cooling by year's end

[LONDON] The UK housing market has bounced back from the coronavirus lockdown, but the rising prices aren't set to last.

Resurgent demand and tight supply combined to push the prices of homes up by 2.4 per cent in May from a year earlier, faster than the pace seen at the beginning of the year, according to a report on Wednesday from Zoopla. Agreed sales are higher than before the government imposed restrictions to slow the outbreak, the property portal said.

Prices should continue to grow by as much as 3 per cent through the third quarter before cooling toward the end of the year as the economic impact of the virus intensifies, with unemployment expected to rise and lenders imposing stricter mortgage requirements, according to the report. Lockdown measures have plunged the UK into recession and left the government paying the wages of millions of private sector workers.

"House price growth is set to hold up in the near term, and we expect the downward pressure on prices to come in the final months of the year as demand weakens," Richard Donnell, Zoopla's director of research and insight, said in the statement.

The reduced willingness of lenders to offer mortgages equivalent to 90 per cent of the purchase price will push down demand for homes, particularly among first-time buyers, Zoopla said. Nationwide Building Society, the UK's largest home-loan provider, said last week it will demand higher deposits from home buyers to protect itself from falls in the value of properties.

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