UK house prices have fallen year-on-year for the first time since 2012.
New data from Nationwide shows prices continuing to fall month-on-month as the coronavirus ripples through the property sector. Prices in June dropped 1.4% or around £2,500 ($3,100) on the previous month, after sliding 1.7% in May —the biggest monthly drop in 11 years.
The sustained decline has now wiped out all gains over the past year, with prices now lower than a year before for the first time since December 2012. The average home bought on a Nationwide mortgage was sold for £216,403, though the decline was only slight at 0.1% lower than June last year.
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Robert Gardner, Nationwide's chief economist, said the decline was “unsurprising” given the scale of the shock to the economy from the pandemic and now-lifted restrictions on the property market.
He noted that sales and mortgage approvals had slid dramatically in recent months.
Gardner added: “With lockdown measures due to be eased in the weeks ahead, housing market activity is likely to edge higher in the near term, albeit remaining below pre-pandemic levels.
“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.”
The pandemic has had a relatively limited impact on house and flat prices so far, given Britain is facing the steepest economic downturn in decades.
Zoopla’s research director Richard Donnell said in early June the spike in demand since restrictions were eased may prove “short-lived,” with Britain’s economic troubles likely to “feed through” into market sentiment later this year.
Bank of England analysis in May suggested UK property prices may drop 16% this year, as the economic fallout grows and government support is tapered off.