House prices fell for third month in a row in May, says index

The average house price fell for the third month in a row in May, according to an index.

Across the UK, a 0.2% month-on-month decline in property values in May took the average house price to £237,808, Halifax said.

It followed monthly falls of 0.6% in April and 0.3% in March.

House prices were 2.6% higher compared with a year earlier.

Russell Galley, managing director at Halifax, said: “With the full impact of lockdown measures taking a firm grip on the UK property market by May, the average house price fell by 0.2% to £237,808.

“This is the third successive monthly fall, though more modest than in April, and reflects a continued loss of momentum following what was a strong start to the year.

“Though it should still be noted that with a limited number of transactions available, calculating average house prices remains challenging and increased volatility is to be expected.”

Halifax’s research paints a less severe picture of the extent to which house prices fell month-on-month in May when compared with another house price index released by Nationwide Building Society earlier this week.

The Nationwide index said property values fell by 1.7% month-on-month – or more than £4,000 – in May.

Nationwide said it was the biggest monthly fall in property values in 11 years.

But according to Halifax’s index, the average month-on-month price fall in May was £506.

Mr Galley continued: “The mid-month relaxation of restrictions in England, allowing estate agents and conveyancers to restart operations, brought much-needed positive news, with some advance indicators of buyer and seller interest quickly showing signs of improvement.

“This is likely to provide a short-term boost as buyers and homeowners attempt to kickstart transactions that had previously been put on hold.

“Looking ahead, we expect market activity to increase progressively as restrictions are eased further across the whole of the UK and we continue to have confidence in the underlying health of the housing market over the long term.

“However, the extent of downward pressure on market confidence and prices over the coming months will depend on how quickly the economy is able to recover from the effects of the pandemic and the available Government policy support for jobs and households.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “House prices are of limited value when measuring the health of the housing market and this is particularly true when so few transactions are skewing the results.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: “Unlike the rather gloomy Nationwide figures from a few days ago, Halifax demonstrates a more hopeful picture for the market, even though prices have fallen for three successive months while emerging from the eye of the Covid storm.

“On the ground, activity has certainly picked up from its very low base, with many of the pre-lockdown sales put on hold resuming, albeit cautiously as buyers and sellers come to terms with the new normal.

“Values are holding fairly firm so far, particularly for smaller houses but demand for flats remains weak, caused by uncertainty over post-furlough employment prospects.”

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