London house prices: property market was powering back from Brexit blues before coronavirus plunged it into deep freeze

London house prices were rising at their fastest rate for two-and-a-half years before the market was brought to an abrupt halt by the coronavirus lockdown, new figures show today.

The average price of a home in the capital was up 2.3 per cent year on year to £477,000 in February, a rate of increase not seen since September 2017 and more than double the pace of the previous month.

Prices in February – the most recent month for which sales figures are available – were only three per cent below the all-time high reached in July 2017 before Brexit uncertainty and economic slowdown started to overshadow the market, according to the data from the Land Registry. Prices fell consecutively every month from March 2018 to September 2019.

But, following the brief post-general election bounceback of early 2020, far greater stagnation has resulted from social distancing measures introduced to fight the Covid-19 pandemic.

Since the Government imposed UK lockdown on March 23, the property market has been brought to a standstill, with online portal Rightmove unable to produce its monthly house price index for the first time ever.

Meanwhile, estate agent Knight Frank estimates there could be more than half a million fewer home sales this year if the lockdown continues until June, putting paid to the optimism that was seen at the start of the year and was reflected in the Land Registry figures for February.

The biggest annual price increases in February were in Islington, where they shot up by 9.5 per cent, Hackney, up 8.5 per cent and Tower Hamlets, where there was an 8.1 per cent rise.

The lockdown has effectively put the capital’s property market into cold storage. However, industry experts believe huge pent-up demand could be released once lockdown restrictions are lifted.

Lucy Pendleton, co-founder of London estate agents James Pendleton, says: “This property market freeze is like nothing experienced by anyone alive but we’re still seeing tremendous numbers of people, who can’t wait to go house hunting, registering for viewings once this is over.

“The property industry is not like the travel industry. Whereas holidaymakers may miss trips and not take an extra holiday later this year to make up for it, buyers and sellers commit in their minds to making one transaction when they can. This all makes an early stampede, followed by a very busy summer during the normally quiet months of July and August, much more likely.

“We already plan to use open house viewings to cope with demand for consultants’ time — and sealed bids could be commonplace.”