The Covid pandemic hit house prices hard in June driving annual growth into negative territory for the first time in eight years, the Nationwide has reported.
Annual growth is now running at -0.1% after house prices dipped by -1.4% during June following a 1.7% reduction in May.
Described by the lender as the inevitable results of the housing market shutdown, it has lopped £2,500 off the average price of a home in the UK.
These are the first figures for the housing market that report on the entire Covid lockdown period during which economic output fell by 25%, property transactions by 50% and mortgage activity by 86%.
The Nationwide says it has been able to generate its index despite others throwing in the towel for the time being because, it claims, sample sizes have remained sufficiently large and representative to generate robust results.
“The medium-term outlook for the housing market remains highly uncertain,” says Nationwide Chief Economist Robert Gardner.
“Much will depend on the performance of the wider economy, which will in turn be determined by how the pandemic and restrictions on activity evolve (including any behavioural shifts).
“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.”
Marc von Grundherr of Benham & Reeves.
“With such a severe lack of market activity, there was only ever going to be sharp declines across the board, and this is something we know turned 360 degrees overnight once the market did reopen.
“As a result, we expect to see house price growth swing sharply in the opposite direction over the coming months as we move from one end of the scale to the other.
Anthony Codling, Twindig
“Unfortunately, I don’t think we have dodged a bullet: with mortgage approvals down 86% year-on-year in May, there are more downside risks to future house prices than upside risks in my view. London looks particularly frothy, according Nationwide London house prices increased by 2.1% in Q2 2020 and are just 3% below their all-time highs and 55% ahead of 2007 levels.”
Lucy Pendleton, James Pendleton
“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.
“Nationwide’s reading of the situation is totally in line with recent indications that the prices being achieved on the doorstep have slipped to 2% or 3% below asking prices on average.
Jonathan Hopper, Garringtons
“So far this is a hard reset for the market rather than a collapse. The gains of the ‘Boris bounce’ seen at the start of the year have been swept away, and the market is transitioning to the ‘new normal’.
“With estate agents across the UK at last able to conduct viewings, both buyers and sellers are feeling their way on price.”