Nationwide’s House Price Index for June revealed prices across the UK had declined by 0.1% over the last year – the first time there had been an annual decrease since December 2012.
Meanwhile, average prices in June were 1.4% less than in May and 3.2% lower than in April, highlighting the affect the shutdown of the property market during lockdown has had on houses.
Robert Gardner, Nationwide’s chief economist, said although it was the first time annual house price growth had been in negative territory since December 2012, it should not come as a surprise considering the recent slowdown in housing market activity due to the pandemic.
“It is unsurprising that annual house price growth has stalled, given the magnitude of the shock to the economy as a result of the pandemic,” he said.
“Economic output fell by an unprecedented 25% over the course of March and April – almost four times more than during the entire financial crisis.”
And he also took into account mortgage activity which he said experienced an even more dramatic slowdown with only 9,300 approvals for house purchase in May, down from 73,700 in February and 86% lower than in May 2019.
‘Seismic shift’
While some industry experts were concerned the drop in prices presented an uncertain outlook, many were also pragmatic and thought the situation would improve as lockdown restrictions were lifted.
Craig McKinlay, new business director at Kensington Mortgages, summed up the thoughts of many. He said: “Today’s figures, showing the first decline in house prices since 2012, mark a seismic shift.
“That said, this fall could have been significantly worse. It seems, therefore, that the foundations of the housing market are stable in spite of the economic environment. And with lockdown measures easing, market activity should start to improve.”
And Lucy Pendleton, a property expert at James Pendleton estate agents, thought the market had come off well considering the circumstances.
She said: “Prices are down by a whisker annually but what is remarkable is how soft a landing the market has had given the scale of the disaster that has unfolded in the past few months.
Opportunities
Price slumps, of course, present opportunities to buyers – particularly those getting onto the property ladder.
Miles Robinson, head of mortgages at online broker Trussle, said: “While not ideal for current sellers, this slowdown opens a window for first-time buyers who already have a big enough deposit saved up.
“It’s always important to take into account any personal and future circumstances when securing a mortgage, and seek advice to ensure you’re aware of the options.”
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