UK property prices at 10-year low

Andy Jalil

A gauge of UK house prices hit its lowest level in a decade in May, but signalled confidence ahead as the country emerges from months of lockdown. A survey from the Royal Institution of Chartered Surveyors (Rics) showed that 32 per cent of estate agents reported a plunge in property prices in May. That marked the lowest gauge of UK house prices since 2010.

This deepened April’s low of minus 22 per cent, as the housing market froze following the closure of estate agents and the banning of house viewings. As Britain entered lockdown in March, buyers and sellers were told to delay any sales and cancel viewings.

But there are signs of recovery for UK house prices on the horizon as estate agents begin to reopen. Rics forecast house prices to gain momentum over the next 12 months, as new buyer enquiries recovered from a record low of minus 94 per cent in April to minus five per cent last month.

Ross Counsell, director at Good Move said: “The results point to a slight improvement in the outlook for sales over the coming 12 months. We must not forget the impact that the current pandemic has had. Today, people are a lot more cautious with their finances due to a decrease in home income caused by loss of work and other factors.”

Rics chief economist Simon Rubinsohn said house sales that had been put on hold during the lockdown were now largely going through. “But it remains to be seen how sustained this improvement will prove,” he added. He noted caution about a potential jump in unemployment when the government’s jobs retention programme expires at the end of October.

Property website Zoopla said that house sales in England had recovered since the government allowed estate agents to reopen last month. However, London lags behind the rest of the country and markets in Scotland and Wales remain closed.

“May’s Rics survey provides more evidence that housing market activity recovered quickly after the government permitted home-seekers to view properties in person and surveyors to inspect properties again,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

However, Tombs added he “remained concerned” that housing demand will “peter out later this year, once some of the pent-up demand has faded”. UK house prices data released last week by Halifax showed that the average price dropped 0.2 per cent in May to £237,808.

The lockdown showed signs of permanent change for UK house prices. It showed 81 per cent of people surveyed expressing an increased desire for a garden or balcony. Three quarters of people surveyed said they now valued property near green space more.

Meanwhile, 78 per cent of respondents predicted there will be a fall in appeal for tower blocks. More than half said they were less likely to seek property in urban spaces, showing signs that property outside of metropolitan areas might tick up.