UK House Prices Fall After Eight Years of Growth
House prices in the UK have risen year on year since 2012. Due to the current pandemic crisis this year we will not see the same rise. Nationwide Building Society claims that property value is down by 0.1% compared to the same period in 2019.
It was the first time annual house price growth has been in negative territory since December 2012, with a month-on-month fall of 1.4% taking the average UK house price to £216,403. The monthly fall was less severe than a 1.7% decline recorded in May. Commenting on this fact Robert Gardner from Nationwide claims that this fall is not surprising due to the magnitude of the economic shock.
The economic output of the UK fell by 25% from March to April (this is four times more than it fell during the financial crisis of 2008). Furthermore, housing market activities also dropped because of lockdown measures and movement restrictions.
Mr. Gardner from Nationwide stated:
“… the medium-term outlook for the housing market remains highly uncertain. Much will depend on the performance of the wider economy, which will, in turn, be determined by how the pandemic and restrictions on activity evolve.”
House prices fell in April, May, and June compared to the same period in 2019. However, once we consider the figures, the reduction in prices is not that dramatic. For instance, in London house prices were just 3% below the highest prices that were recorded in 2017. Not only that, but across the UK house prices are still 19% higher than they were during 2007 and the global recession.
This fall in prices is an opportunity for buyers. The COVID-19 crisis caused a drop in mortgage rates which will certainly help potential buyers acquire new properties at a more affordable rate. As the restrictions are lifted and more people start to move around, the sale of properties will increase throughout the country and experts believe that housing prices will stabilize soon after.
It remains to be seen how the global economy will recover after the fall in production, sales, and tourism this year. The pandemic is not over, we should be cautious in decision making, especially where finances are concerned. Until the pandemic subsides, we cannot be certain how the global economy will react and how this will affect house prices in the UK.
Much of the national economy depends on exports to other countries. Even if the UK is quick in stabilizing its economy other countries need to do the same for the growth rates to return. Such issues remain an uncertainty that inevitably influences our ability to predict the change in housing prices.