UK house prices fall for third month in a row as Covid-19 stifles market

House prices fell for a third month running in May as lockdown measures to tackle the coronavirus stifled homebuying activity, according to figures from the mortgage lender Halifax.

The bank said the average price of a home in the UK dropped by 0.2% over the month and stands at £237,808. Over the last three months, the period during which the pandemic was declared, prices were down by 0.5%.

However, the lender said the relaxation of lockdown measures in England in mid-May had led to an uptick in interest from buyers.

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That was underlined by Taylor Wimpey on Friday, with the housebuilder reporting strong interest since reopening its sales centres.

It said it had seen a threefold increase in appointments in the week to 31 May and a 32% rise in website traffic compared with the same period last year.

Cancellations remained low throughout the lockdown, Taylor Wimpey said, with 306 purchases falling through, or just 5% of the private order book. This is slightly down on the figure for the same period in 2019.

As the UK went into lockdown in March, buyers and sellers were told to delay their moves if possible and to suspend all new viewings.

With valuers unable to visit properties, and lenders diverting resources to dealing with requests for payment holidays, many deals were put on hold until the market was unlocked on 12 May.

Russell Galley, the managing director of Halifax, said calculating house prices “remains challenging” as a result of the fall in sales during lockdown, with increased volatility expected.

“Looking ahead, we expect market activity to increase progressively as restrictions are eased further across the whole of the UK and we continue to have confidence in the underlying health of the housing market over the long term,” he said.

“However, the extent of downward pressure on market confidence and prices over the coming months will depend on how quickly the economy is able to recover from the effects of the pandemic and the available government policy support for jobs and households.”

Earlier this week, Nationwide building society said its index showed prices had fallen in May at the fastest rate since the 2009 financial crisis. Both reports are based on mortgages that each lender has approved during the month.