Average house prices in the UK fell by 0.2 per cent between March and April, according to the latest official UK House Price Index (HPI).
The movement marks a contrast to the rise of 0.7 per cent during the same period last year.
On an annual basis, house prices increased 2.6 per cent in April 2020, with the average value at £234,612. However, the change was down from 3.5 per cent in the year to March.
Laura Suter, personal finance analyst at AJ Bell, said: “The price rise is based on properties that completed in April, so many of the prices would have been agreed before the Covid-19 pandemic hit the UK, meaning we’ll have to wait for May figures to see the real crunch of lockdown on house prices”.
The index, published yesterday (August 19), was the first release since May, after it was suspended due to the effect of the coronavirus on data reporting.
The Office for National Statistics at the time said the impact of the coronavirus was expected to “greatly reduce the amount of housing transactions that took place in April 2020, making it very difficult to produce a measure of UK house prices that would be representative of any true transaction activity within the housing market”.
Statistics from HMRC estimate the seasonally adjusted number of residential property transactions of at least £40,000 at 41,960 for April, fewer than half those seen in the previous month (94,230).
Commenting on the HPI, Islay Robinson, group CEO of brokerage Enness Global, said: “[By] the time any decline does reveal itself, the swift market turnaround spurred by pent up demand and further stoked by a stamp duty holiday, will have ensured that any decline in prices is short-lived and quickly resigned to the history books”.
Residential property buyers can save up to £15,000 on stamp duty until March as a result of the increased tax threshold from £125,000 to £500,000.
However, AJ Bell’s Ms Suter also warned of a negative outlook: “[There] can be no doubt that the tax cut will create a bubble in property prices as people rush to move house and seal the deal before the stamp duty holiday comes to an end in March next year.
"This spike in demand will cause a rise in prices before transaction numbers fall off a cliff in April next year once the tax saving is whipped away.
“At the same time the UK will be facing a rise in unemployment and the repercussions of one of the worst recessions on record, which paints a fairly bleak picture for house prices in 2021.”
chloe.cheung@ft.com
