House price growth ‘turns negative for first time since 2012’

House market

The annual rate of house price growth has turned negative for the first time since 2012, according to a closely-watched measure.

The Nationwide Building Society’s monthly index covering June showed average values falling by 0.1% year on year following a 1.4% decline on the previous month.

That followed a 1.7% fall during May – the largest monthly drop in 11 years as the country remained in hibernation during the second full month of the coronavirus crisis lockdown.

The government eased restrictions on the housing market in England in mid-May but data published by the Bank of England earlier this week showed the lowest number of mortgage approvals on record during that month as activity remained muted.

Nationwide’s chief economist, Robert Gardner, said a further easing of broader lockdown measures in the coming weeks was likely to lead to a slight pick-up in interest but the medium-term outlook remained highly uncertain as affordability is threatened by the surge in virus-linked unemployment and wage woes.

“The raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a rebound once the shock passes, and help limit long-term damage to the economy,” he said.

There remained a mixed picture for prices at a regional level, Nationwide said.

Affordability is likely to be a major drag on the market as earnings remain under severe pressure
In London, house prices rose by an annual 2.1% over the second quarter and average prices in the capital were just 3% below all-time highs struck in early 2017.

He added: “The North West was the strongest performing region, with annual price growth picking up slightly to 4.8%.”

Scotland recorded an annual rate of growth of 4% in the second quarter while Northern Ireland and North East England were the worst performers, registering a flat performance.