Annual House Prices in UK Fall for First Time in 8 Years

The annual growth of average UK house prices came to a stop last month, according to Nationwide building society.

Annual house price growth hasn’t fallen below zero since the end of 2012, with the average UK house price now standing at £216,403 after a 1.4% month-on-month fall. This fall was less steep than the decline of 1.7% in May.

Nationwide’s chief economist, Robert Gardner, 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 [COVID-19] pandemic.

“Economic output fell by an unprecedented 25% over the course of March and April – almost four times more than during the entire financial crisis.

“Housing market activity also slowed sharply as a result of lockdown measures implemented to control the spread of the virus.”

According to Gardner, housing market activity is anticipated to increase as the lockdown eases, however it will still remain lower than the levels experienced prior to the pandemic.

“Nevertheless, the medium-term outlook for the housing market remains highly uncertain. 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,” Gardner added.

Nationwide released quarterly figures alongside the monthly house price data for the entire country. The quarterly figures look at the growth of house prices across the different regions within the UK.

When comparing the months of April, May and June with the same months last year, no region in the UK experienced a price fall.

“The north-west was the strongest performing region, with annual price growth picking up slightly to 4.8%,” Gardner said.

London has average house prices that are only 3% shy of the record levels seen in 2017. Compared to 2007, house prices in London are up 55%, and up 19% across the rest of the UK.

“Scotland was the strongest performing nation in quarter two, with annual price growth picking up to 4.0%,” Gardner said, adding: “Conditions remained subdued in Wales and Northern Ireland, which saw annual price growth of 1.0% and 0.1% respectively.”

Former residential chairman of the Royal Institution of Chartered Surveyors (Rics) Jeremy Leaf, said: “Prices are being kept in check by affordability issues and more supply gradually becoming available.

“But demand is picking up as some buyers emerge from enforced confinement in unsuitable property and/or relationships to take advantage of continuing low interest rates, while sellers are more realistic.”