House Prices See Biggest Fall In Over A Decade | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 02/06/2020

The full extent of the Coronavirus pandemic on the housing market is starting to become clear, as the latest Nationwide House Price Index shows that during May, house prices had the largest monthly fall since February 2009.

Data released in the latest House Price Index shows that last month annual house price growth slowed to 1.8%, while house prices were down by 1.7% month-on-month. This will be a disappointment to homeowners, as in the first few months of 2020 the housing market had been steadily growing. “But housing market activity has slowed sharply as a result of the measures implemented to control the spread of the virus,” said Robert Gardner, chief economist at Nationwide. “Indeed, data from HMRC showed that residential property transactions were down 53% in April compared with the same month in 2019.”

There is optimism that the housing market will bounce back, however this may not be as quick as some would hope. As Gardener explained: “Behavioural changes and social distancing are likely to impact the flow of housing transactions for some time. Our recent market research survey suggested that c12% of the population had put off moving as a result of the lockdown. Most viewed the current situation as a temporary pause in the market, with would-be buyers now planning to wait six months on average before looking to enter the market.”
Looking ahead to what may happen next in the housing market, Gardner said: “The medium-term outlook for the housing market remains highly uncertain, where much will depend on the performance of the wider economy.

“We have already seen a sharp economic contraction as a result of the necessary measures adopted to suppress the spread of the virus. Indeed, the 5.9% decline in UK economic activity recorded in March was only a little less than the decline recorded over the entire financial crisis.

“However, 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.

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

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