Nationwide: House prices see largest monthly fall for 11 years

House prices fell 1.7% in May from the previous month, the largest monthly fall for 11 years, according to the Nationwide.

Annual house price growth halved from 3.7% to 1.8%, as the coronavirus crisis hit market activity.

The latest HMRC data showed that residential property transactions fell 53% in April compared with 2019.

“The medium-term outlook for the housing market remains highly uncertain,” the Nationwide warned.

“We have already seen a sharp economic contraction as a result of the necessary measures adopted to suppress the spread of the virus,” said Robert Gardner, Nationwide’s chief economist.

But he pointed out that the raft of policies adopted to support the economy should “set the stage for a rebound once the shock passes” and help limit long-term damage.

“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,” he predicted.

The figures are based on Nationwide’s lending data, do not include cash purchases, and may have a greater volatility owing to the very low levels of activity.

Recent Nationwide research suggested that one in eight people had put off moving because of the lockdown.

But the majority saw the current situation as a temporary pause in the market, with would-be buyers planning to wait six months on average before looking to enter the market.

Separate figures from the Bank of England show how the mortgage market decelerated sharply alongside the house sales shutdown.

Some 15,848 mortgage approvals for house purchases were recorded in April – about 80% below February levels before the coronavirus crisis took hold, the Bank said.

This was around half the number of approvals taking place in the trough during the financial crisis, and the lowest since the figures started in 1993.

 

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