UK house prices fell for the fourth month in a row in June for the first time since 2010, according to Halifax data released today.
Unlike rival Nationwide, which found the value of homes shrank for the first time on an annual basis in June, Halifax recorded a 2.5 per cent-year-on-year rise.
But as the housing market continued to emerge from lockdown, UK house prices fell by 0.1 per cent last month to reflect the toll of the pandemic.
“Though only a small decrease, it is notable as the first time since 2010 – when the housing market was struggling to gain traction following the shock of the global financial crisis – that prices have fallen for four months in a row,” Halifax managing director Russell Galley said.
Housing activity bounces back
“Activity levels bounced back strongly in June, which is typically the busiest month for mortgage activity in the UK. New mortgage enquiries were up by 100 per cent compared to May, and with prospective buyers also revisiting purchases previously put on hold, transaction volumes rose sharply compared to previous months. However, whilst encouraging, it remains too early to say if this level of activity will be sustained.”
Ross Counsell, chartered surveyor and director at regulated property buyers, Good Move, said looking beyond the pandemic blow, UK house prices should begin to recover.
“Restrictions across the UK are starting to ease, allowing estate agents and conveyancers to resume activity, which will eventually have a positive impact on the housing market,” he said.
“Whilst today’s statistics showcase a decrease in house prices, we do believe activity has certainly picked up across the UK. The pre-lockdown sales originally put on hold are now resuming. Moreover, buyers and sellers are beginning to adapt to the new normal.”
Market fuelled by ‘nervous energy’
But Andrew Montlake, MD of mortgage broker Coreco, warned that “nervous energy” is currently fuelling UK house prices, and a lot could depend on tomorrow’s Summer Statement.
“The property market is holding up fairly well for now, but nobody can deny the extraordinary economic challenges that lie ahead,” he added.
“The second half of 2020 is likely to be as economically exacting as the first half was surreal.
“The government has an extraordinary task ahead to keep people in jobs, which will clearly be pivotal to the future direction of house prices.”
Stamp duty cut could boost UK house prices
Property experts said chancellor Rishi Sunak’s anticipated announcement of a higher stamp duty threshold tomorrow would lift activity in the housing market.
Sunak is expected to scrap the current threshold of £125,000 in Northern Ireland and England and raise it to between £300,000 or £500,000.
EY Item Club chief economic adviser Howard Archer warned there was a risk a stamp duty cut could weigh on the housing market until it becomes active, reportedly in October.
“If true [the cut] should provide some support to housing market activity and prices later in the year,” he said. “But it would likely hold back activity in the near term and put downward pressure on prices. An immediate rise would likely provide some lift to activity and allow prices to stabilise in the near term.”
Benham and Reeves estate agent director Marc von Grundherr said such a cut would not deter buyers already actively looking.
“While a valid point, it’s unlikely to send a market that is comfortably shifting through the gears into full reverse,” he added. “It is doubtful that the average buyer will jeopardise their bricks and mortar aspirations simply to save a few thousand pounds in stamp duty.
“The flip side to this is that with such demand already returning to the market, postponing a purchase until October could see the price of your chosen property increase in value, exceeding the saving you might have made. So any buyers considering such an idea would be ill-advised to take the risk.”