UK house prices fell for the fourth month in a row in June as the Covid-19 crisis continued to take its toll, but new mortgage enquiries surged, according to a survey released by Halifax on Tuesday.
House prices dipped 0.1% on the month in June as the property market continued to emerge from lockdown, following a 0.2% decline in May. This is the first time since 2010 – when the housing market was still struggling to recover from the global financial crisis – that prices have fallen for four consecutive months.
On the year, house prices rose 2.5% in June, down from a 2.6% increase the month before. On a quarterly basis, prices fell 0.9% compared to a 0.5% drop in May.
Halifax managing director Russell Galley said: “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% compared to May, and with prospective buyers also revisiting purchases previously put on hold, transaction volumes rose sharply compared to previous months.
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“However, whilst encouraging, it remains too early to say if this level of activity will be sustained.”
Galley said the near-term outlook points to a continuation of the recent modest downward trend in prices through the third quarter, with sentiment indicators, based on surveys of both agents and households, currently at or around multi-year lows.
“Of course, come the autumn, the macroeconomic landscape in the UK should be clearer and the scale of the impact of the pandemic on the labour market more apparent. We do expect greater downward pressure on prices in the medium-term, the extent of which will depend on the success of government support measures and the speed at which the economy can recover.”
Chancellor Rishi Sunak is expected to announce a stamp duty holiday on Wednesday, which would temporarily lift the threshold at which people start paying it from £125,000 to £500,000.
Hansen Lu, property economist at Capital Economics, said: “Looking further ahead, fresh virus outbreaks or the end of the furlough scheme still present risks to the housing market recovery. But there are now some upside risks too – from a possible stamp duty cut, or from post-lockdown buyer behaviour, which hints at a quicker than expected recovery. On balance, we expect UK house prices to fall by around 4% this year.”
By Michele Maatouk