House prices fall for third month in a row
UK house prices have fallen for the third month in a row, according to Nationwide, potentially raising concerns about negative equity for some homeowners.
According to the data, the average cost of a home fell by 0.2% in May, dragging annual house price growth to 2.1%, its lowest level in four years, and making this the longest sustained fall in prices since 2009.
Nationwide’s closely watched monthly house price survey showed that the average house price fell between April and May to £208,711. This follows monthly falls of 0.4% in April and 0.3% in March.
Why are house prices falling?
Nationwide’s chief economist, Robert Gardner, said the fall provides further evidence that the property market is losing momentum and said that pressure on wages due to inflation may be contributing to the slowdown. However, he dismissed suggestions that the upcoming general election was to blame.
He said; “If history is any guide, the slowdown is unlikely to be linked to election-related uncertainty. Housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home.”
He continued; “Given the ongoing uncertainties around the UK’s future trading arrangements and the upcoming election, the economic outlook is unusually uncertain, and housing market trends will depend crucially on developments in the wider economy.”
Russell Quirk, founder and CEO of eMoov.co.uk, disagreed about the impact of the election. He said; “It is unclear as to whether the market is losing momentum or if buyer demand is unseasonably hibernating due to the oncoming election, but Nationwide have been quick to highlight that previous elections have had little impact on traditional house price trends.
“It’s fair to say, however, that previous years were a tad more routine that a snap election called in the middle of negotiations to leave the EU and it is likely that the market is seeing an influence from both sides.”