House prices drop for longest time since 2009

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Prices have fallen for three consecutive months, say Nationwide

The monthly Nationwide House Price Index (HPI) marks May as the third month in a row that house prices have declined - the longest time since the financial crisis.

From April to May alone the HPI noted that the average house price fell by 0.2%, to £208,711. Similarly, there were monthly declines in April and March, of 0.4% and 0.3% respectively.

The annual growth rate of 2.1% is the lowest since 2013, which Nationwide’s Chief Economist, Robert Gardner, believe is further evidence that the housing market is losing momentum. 

He said: “This may be indicative of a wider slowdown in the household sector, though data continues to send mixed signals in this regard. While real incomes are again coming under pressure as inflation has overtaken wage growth, the number of people in work has continued to rise at a healthy pace. Indeed, the unemployment rate fell to a 42-year low in the three months to March.”

With the general election looming, it is possible that uncertainty is the cause, however Gardner believes there is no relation after analysing house price movements in the months surrounding previous elections and last year’s EU referendum.

Dismissing the idea, he said: “Housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for more home buyers, elections are not foremost in their minds while buying or selling a home. Past general elections do not seem to have generated volatility in house prices or resulted in a significant change in house price trends. 

“We have indexed average house prices so they equal 100 in the election month, and then compare house price movements in the months leading up to each election and following each vote. On the whole, prevailing trends have been maintained just before, during and after UK general elections.”

Instead, Gardner believes broader economic trends appear to dominate any immediate election-related impacts. Of the future, he said: “It is too early to conclude whether the slowdown is merely a blip, a reflection of the impact of the squeeze on household budgets, or is due to mounting affordability pressures in key areas of the country… [Currently] the economic outlook is unusually uncertain.”

The other major house price index in the UK, produced by Halifax, mirrors the downward trend, showing a 0.1% fall in April, taking the average property price down nearly £3,000 to £219,649. 

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