personal finance

UK house prices fall at fastest rate since 2009 amid coronavirus crisis


House prices across the UK fell at the fastest rate since the financial crisis last month, as would-be buyers said they would wait six months before returning to the housing market.

The average price of a home dropped 1.7% in May from the previous month to £218,902, according to Nationwide Building Society, one of the UK’s largest mortgage lenders. This comes after April’s 0.9% gain and is the the biggest monthly fall since February 2009.

The annual growth rate slowed to 1.8%, down from 3.7% in April and the slowest since December.

In early 2020, before the coronavirus pandemic struck the UK, the housing market had been gathering momentum following the general election as confidence returned to the market. But the “Boris bounce” was expected to be short-lived because of uncertainty around the Brexit process.

The nationwide lockdown imposed by the government on 23 March to contain the Covid-19 pandemic brought the housing market, and the wider economy, to an abrupt standstill. House moves were banned apart from those that were “reasonably necessary,” estate agents were banned from listing new properties and house hunters were only able to do virtual viewings. After seven weeks of lockdown the housing market reopened in mid-May.

Data from HMRC showed residential property transactions were down 53% in April compared with the same month in 2019, and mortgage activity has also declined sharply.

Nationwide said potential buyers were now planning to wait six months on average before looking to enter the market, and 12% of the population had put off moving because of the lockdown.

The lender said about 15% of people were considering moving as a result of life in lockdown, with a third stating they thought differently about their home, especially the importance of a garden and the need for more indoor space. But 22% of people were considering improving their home instead.

Robert Gardner, Nationwide’s chief economist, said: “The raft of policies adopted to support the economy, including to protect businesses and jobs, to support people’s 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.”

Gardner said Nationwide’s ability to generate the house price index was unaffected so far as sample sizes remained sufficiently large to generate robust results, but admitted that low transaction levels might make gauging price trends difficult in the coming months, especially for regional indices. The Office for National Statistics has suspended its official house price index because it said there was not enough data.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.