UK house prices fell for a third month in a row in May as the coronavirus continued to deter moves and dampen activity in Britain’s property market, new figures show.
The latest Halifax house price index shows a modest monthly drop of 0.2% to an average of £237,800 ($297,984) in May, with the pandemic sending a brief revival in prices after December’s election into reverse. Nationwide’s figures earlier this week had shown a steeper 1.7% drop, the fastest in a decade.
Prices on properties with Halifax mortgages were still up 2.6% last month compared with a year earlier however. They have not dropped recently as much as some estate agents say many buyers had hoped.
Widespread mortgage holidays and the furlough job protection scheme may have prevented a flurry of forced sales and collapse in demand as COVID-19 has hammered the economy. Both payment holidays for struggling homeowners and taxpayer grants for at-risk jobs have recently been extended to the end of October.
“As long as the UK’s transition out of furlough is managed correctly, then the balance of supply and demand will remain in vendors’ favour,” said Lucy Pendleton of London estate agent James Pendleton.
Russell Galley, managing director of Halifax, said the UK government’s easing of curbs on viewings, valuations and non-essential house moves in England in early May would provide a “short-term boost” to the market.
He highlighted a quick increase in buyer and seller interest since the announcement, which is expected to continue as restrictions ease across the whole of the UK.
It comes as Taylor Wimpey (TW.L) also announced it had seen a surge in demand for new homes since restrictions eased. The housebuilding giant said it had seen appointment numbers triple in the final week of May and web traffic up 32% on a year earlier.
The company said in a trading update on Friday the majority of its construction sites, sales centres and showrooms had reopened in England, with social distancing rules in place.
How far activity remains dampened and prices fall in the coming months however will depend on the speed of wider economic recovery, as well as available government support for jobs and households, Galley added.
Economists warn Britain faces the worst recession in decades, and expectations have grown of only a weak, slow recovery. Jonathan Hopper of Garrington Property Finders said the Halifax figures provide “an early hint of the sharp price correction to come.”
Bank of England analysis points to a potential 16% drop this year. Halifax also cautioned that calculating average prices reliably remained “challenging” given the limited number of transactions during lockdown.