Property market’s first annual price fall in eight years as coronavirus bites

Linda J. Dodson

Coronavirus and lockdown meant house prices in June fell year-on-year for the first time since December 2012, new data show.

House prices were 0.1pc lower in June compared to the same month in 2019. The average house price last month was £216,403. 

On a monthly basis, values fell by 1.4pc from May to June, shaving £2,499 off the average house price, according to lender Nationwide’s latest index.

This represents a 3.2pc drop – or a total loss of £6,512 – since April, the month before the effects of Britain’s housing market freeze began to filter into the price data. 

Back then, annual growth was at a three-year high of 3.7pc as the market boomed in the wake of the “Boris bounce”. 

Robert Gardner, Nationwide’s chief economist, said the stall was “unsurprising” given the economic shock from the pandemic and the lockdown measures which shut the housing market.

Activity will pick up as lockdown eases, predicted Mr Gardner. “Nevertheless, the medium-term outlook for the housing market remains highly uncertain.”

Recovery will be dependent on the performance of the wider economy and the extent of the pandemic, he said.

Estate agents, however, are bullish. Pent-up demand and a new desire to move have flooded the English, Welsh and Scottish markets as they have reopened. 

Sales agreed have since surged to above pre-lockdown levels, according to property website Zoopla.

Marc von Grundherr, of London estate agents Benham and Reeves, said the drop was an “artificially negative” trend. “We expect to see house price growth swing sharply in the opposite direction over the coming months.” 

But the state of the summer property market could quickly become irrelevant. 

All eyes are on what will happen in the autumn, when the Government’s furlough scheme stops supporting the wages of nine million workers, and the two million households on mortgage holidays have to start paying up.

Andrew Montlake, of mortgage broker Coreco, said: “The second half of 2020 is going to be the real test for the property market, as Government support for workers is slowly removed and we see a rise in unemployment.”

Keeping people in jobs “will clearly be pivotal to the future direction of house prices,” he added.

The Nationwide index is based on lending for properties at the post-survey approval stage.

Source Article

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