U.K. house prices posted their first annual decline since 2012 in June as the coronavirus continued to hang over the property market, according to Nationwide Building Society.
Values dropped 0.1% from a year earlier to an average of 216,403 pounds ($267,000), the mortgage lender said Wednesday. On a monthly basis, prices fell 1.4%.
The housing market, which was all but shuttered for weeks thanks to the nation’s lockdown, is now taking a hit from a plunge in economic growth as it slowly reopens. Activity is far from normal, with many estate agents turning to virtual viewings, while actual sales in May were 50% lower than in 2019.
"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," said Robert Gardner, Nationwide’s chief economist. "The medium-term outlook for the housing market remains highly uncertain."
Rising unemployment and the increasing unwillingness of lenders to take on risk mean that prospects are unlikely to improve dramatically.
Nationwide itself last month increased the minimum deposit that first-time buyers must put down to 15% from 5% to guard against the possibility of falling prices, adding tens of thousands of pounds to the up-front costs of buying a home in the most expensive areas.
