Nationwide reports first annual house price fall in 8 years
With the property market coming to a virtual standstill during lockdown, it’s not surprising to see the negative impact this had on values. Nationwide reports that average property prices were 0.1 per cent lower in June than the same month a year ago – the first annual fall since December 2012.
Nationwide also reveals that fewer purchases and mortgages were approved, with only 9,300 approvals for house purchase in May, down from 73,700 in February and a massive 86 per cent lower than May 2019.
This all chimes with HMRC’s data which showed that May’s transactions were 50 per cent lower than the same month last year. With viewings banned during lockdown as the government tried to get to grips with the pandemic and surveyors unable to visit properties to carry out valuations on behalf of lenders, sales dropped off a cliff and the housing market effectively entered a deep freeze.
Now that lockdown is easing and viewings have been allowed to resume, the property market is slowly getting back to ‘normal’. We expect July’s data to reflect a pick-up in purchases and mortgages approved, even as we enter the traditionally quieter summer months.
While the Nationwide figures make for gloomy reading, it is worth noting that London property prices are still well above 2007’s peak (55 per cent higher, compared with 19 per cent higher for UK property prices as a whole), underlining the stability that a prime location provides. Let’s face it, first-time buyers are still struggling to buy in London unless they have significant financial help from the Bank of Mum and Dad, despite recent falls in prices.
June’s dip in prices is likely to be more of a blip than a sustained decline. There is still not enough supply to meet demand, which will support prices and they will gain traction again with the London market hopefully bouncing back before too long, along with the rest of the country. Boris Johnson’s commitment to ‘build, build, build’ to boost economic growth and to ‘end the chronic failure of the British state… to build enough homes’ should give a boost to the economy, and we eagerly await the detail on that. With Bank of England economist Andy Haldane suggesting that the UK economy is on track for a quick or V-shaped recovery, there is cause for some optimism.
Estate agents report plenty of activity and interest from buyers although lack of stock is impacting the number of sales. Zoopla research reveals a 66 per cent jump in demand for new homes in the six weeks since the property market reopened on 13 May, with demand levels outstripping those recorded before lockdown at the start of March. What is required is further stimulus to the economy, allowing home movers to feel more confident in their ability to afford their next home. With borrowing so cheap and interest rates unlikely to rise anytime soon, plus lenders competing for business, there is an opportunity for borrowers as long as they have the confidence to take the plunge and can find the property they want to buy.
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