More price uncertainty likely before market finds ‘post-Covid level’

Leading estate agents are warning that the sharp fall in house prices reported by the Nationwide may be just the first of a series of challenging market snapshots as transactions and prices reach some sort of ‘post-Covid level.’

UK house prices fell by 1.7 per cent in May, after taking account of seasonal effects – this is the largest monthly fall since February 2009. 

As a result, the annual rate of house price growth slowed to 1.8 per cent, down from 3.7 per cent in April.

London estate agent Jeremy Leaf, a former RICS residential chairman, says: “The extent of the car crash that hit the property market in May is laid bare in Nationwide’s report of the largest monthly fall in house prices for over 11 years. However, this nadir seems to have marked the bottom as activity and especially new listings have improved considerably since lockdown restrictions were eased but viewings are understandably taking longer due to infection concerns. 

“Uncertainty remains as to the direction of travel for values in some price ranges and locations until momentum begins to build again. The market feels a bit like returning after the Christmas/New Year break with buyers and sellers waiting to see who will blink first as prices establish their post-Covid level.”

Marc von Grundherr - from another London agency, Benham and Reeves - says the market will eventually stabilise but warns: “As the market tries to find its feet operationally a further decline should be expected over the coming months and would certainly not be out of the question.”

From the regions, James Forrester of Midlands firm Barrows and Forrester, says it’s difficult to tell whether this is a blip or the start of a more significant decline. 

He adds: “The market all but stopped dead overnight when the lockdown was imposed and so a [fall of] 1.7 per cent could arguably be viewed as a positive, all things considered. Since it’s reopened, estate agents and portal sites are reporting high levels of traffic, enquiries, viewings and sales.”