UK residential property prices slid for the fourth consecutive month in June as the coronavirus pandemic dampened the housing market.
Halifax’s monthly house price index showed the price of an average home edged 0.1% lower between May and June to £237,616 ($296,599). It marked the first four straight months of decline in a decade.
But the data released on Tuesday showed prices remain 2.5% higher than a year ago. Halifax said activity levels began to “bounce back strongly” in June, with new mortgage enquiries doubling month-on-month as lockdown restrictions eased.
Separate data on Tuesday showed the highest jump in housebuilding activity in five years last month after collapsing in recent months. Firms said supply chains disrupted by the pandemic were reopening, though new order numbers remained flat.
Russell Galley, managing director of Halifax, said it was “too early to say” if the rebound would be sustained. He predicted prices would continue to fall in the third quarter, but said it rested on government support measures and the speed of wider economic recovery.
The figures come amid growing expectations that UK chancellor Rishi Sunak will announce a temporary stamp duty holiday to revive activity in his summer statement on Wednesday. The reports lifted housebuilders’ shares for a second day running on Tuesday morning, with Persimmon (PSN.L) and Barratt Developments (BDEV.L) among the biggest risers on Britain’s FTSE 100 (^FTSE).
Sunak is said to be weighing up raising the threshold for the levy on purchases from £125,000 ($156,000) to between £300,000 and £500,000, leaving the average property exempt from the tax.
But reports that the measures may only take effect this autumn sparked warnings it risked crippling the market if it meant buyers held off summer purchases. Helen Miller, deputy director of the Institute for Fiscal Studies, welcomed the proposal, but warned pre-announcing a cut was “a very bad idea.”
The pandemic has had only a relatively limited impact on house and flat prices so far, given Britain is facing the steepest economic downturn in decades. Estate agents say would-be buyers have been left disappointed not to secure bigger bargains in recent months. Rightmove reported asking prices were £6,000 higher in June than in March.
Pent-up demand and new interest in moving during the lockdown is boosting buyer numbers. Crisis policies may also be buttressing demand and limiting forced sales, with interest rates slashed, one in six mortgages given a payment holiday, almost one in three workers furloughed on state-subsidised pay.
Zoopla’s research director Richard Donnell said in early June the spike in demand since restrictions were eased may prove “short-lived.” He predicted Britain’s economic troubles would “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.