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House price growth slowed in May

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The impact of Covid-19 was felt in property prices, which saw a sharp fall last month
House price growth slowed in May

Average UK house prices fell by 1.7% in May to £218,902, according to Nationwide, representing the largest monthly fall in prices since 2009.

The lender said that annual house price inflation last month slowed to 1.8%, from 3.7% in April.

Robert Gardner, Nationwide’s chief economist, said: “In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum. Activity levels and price growth were edging up thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the general election.

“But housing market activity has slowed sharply as a result of the measures implemented to control the spread of the virus. Indeed, data from HMRC showed that residential property transactions were down 53% in April compared with the same month in 2019.”

Future outlook

The lender also noted that, while mortgage activity was large enough to generate this month’s house price index, low transaction levels could make it harder to gauge price trends in the coming months.

Gardner added: “The medium-term outlook for the housing market remains highly uncertain, where much will depend on the performance of the wider economy.”

James Forrester, managing director of Birmingham estate agent, Barrows and Forrester, said: “This is the largest monthly fall in over a decade and many will seize on this opportunity to prophesize the end of the market, however, this simply isn’t what we’re seeing on the ground.

“The market all but stopped dead overnight when the lockdown was imposed and so a -1.7% could arguably be viewed as a positive, all things considered. Since it’s reopened, estate agents and portal sites are reporting high levels of traffic, enquiries, viewings and sales.

“Activity that bodes very well for the future.”

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