Annual house price growth was negative for the first time in eight years last month, according to the latest Nationwide House Price Index.
The building society’s figures showed annual price growth ground "to a halt” in June as prices dropped 0.1 per cent, marking negative annual growth for the first time since 2012.
On a monthly measure, house prices dropped by 1.4 per cent in June, after seasonal adjustment. This comes after a 1.7 per cent decrease in May.
Robert Gardner, chief economist at Nationwide, said: “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”.
Mr Gardner added that the medium-term outlook for the housing market remained “highly uncertain”.
He said: “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.
“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.”
|Monthly Index (seasonally adjusted)||428.3||434.6|
|Monthly Change (seasonally adjusted)||-1.40%||-1.70%|
|Average Price (not seasonally adjusted)||£216,403||£218,902|
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “It will be a shock for homeowners to hear that average prices fell for the first time since December 2012 but it is indicative of how devastating an impact the pandemic has had on the housing market and wider economy more generally.
“Housing market activity was forced to grind to a halt during lockdown and June has seen the doors re-open and things start to get back to normal.
“Surveyors have been dealing with the backlog of valuations and lenders are dealing with requests for mortgage payment deferrals, staff getting back to the office and demand, in particular for high loan-to-values.
“While lenders are keen to lend we are going through a period where they are jockeying for position and pulling back from the market where they feel they can’t cope with service levels.
“As lockdown measures ease further, we expect the market to pick up further. Various government schemes to support the economy and incomes should help ease the pain of the next few months.”