May saw the biggest monthly fall in property values with more than £4,000 wiped off the average house price, according to an index.
In a single month house prices fell by more than £4,000 – the largest fall Nationwide has seen for more than 11 years as the impact of coronavirus hits the property sector.
Mortgage lender Nationwide reports house prices fell by £4,013 between April and May, the largest month-on-month drop since 2009.
Nationwide’s chief economist Robert Gardner said: “This is the largest monthly fall since February 2009.
He added: ” Housing market activity has slowed sharply as a result of the measures implemented to control the spread of the virus.
“Indeed, data from HMRC showed that residential property transactions were down 53% in April compared with the same month in 2019.”
The fall, described as a “car crash” by one estate agent, came after property values had previously hit a record high in April.
It was the biggest month-on-month fall since February 2009 and pushed the average house price in May down to £218,902.
In April, the average UK house price was £4,013 higher, at £222,915. April’s house price index was a record high in cash terms.
Mr Gardner said the medium-term outlook for the housing market remains highly uncertain and much will depend on the performance of the wider economy.
He said: “The raft of policies adopted to support the economy, including to protect businesses and jobs, to support people’s 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.
“These same measures should also help ensure the impact on the housing market will ultimately be less than would normally be associated with an economic shock of this magnitude.”
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: “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.”
He continued: “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.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “As physical valuations return, lenders are able to offer higher loan-to-values once more, returning to larger loans on the high street and in some instances interest-only borrowing.
“With some lenders cutting mortgage rates to ever lower levels, they are sending out a clear message to borrowers that they are open for business.