House prices in the UK increased by 3.7 per cent annually in April 2020, the strongest since February 2017, according to the latest House Price Index from Nationwide.

The house price growth was gaining momentum before Covid-19 struck the UK. The impact of the pandemic has not been fully captured in April’s data by Nationwide because the index is constructed using mortgage approval data, and there is a lag between mortgage applications being submitted and approved.

“In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum. 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,” said Robert Gardner, Nationwide's Chief Economist.

The UK housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus. 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 rebound once the shock passes, and help limit long-term damage to the economy,” Nationwide said in its report.

These same measures should also help ensure the impact on the housing market will ultimately be much less than would normally be associated with an economic shock of this magnitude.