House prices took a £4,000 hit during lockdown, the latest figures showed, as estate agents described the situation for sellers as a “car crash”.
The house price index from Nationwide showed that the average house price fell to £218,902 in May, a reduction of 1.7 per cent month-on-month and the biggest drop in 11 years.
The market was reopened last month, although potential buyers face strict social distancing measures around viewings and are asked not to touch anything.
One estate agent said that empty or new homes have proved popular as they are viewed as safer and advised anyone visiting properties to wear gloves if they wanted to touch things or check the plumbing.
Robert Gardner, chief economist at Nationwide, said that before the pandemic the housing market had been gathering momentum, buoyed by a strong job market and low borrowing costs.
“But housing market activity has slowed sharply as a result of the measures implemented to control the spread of (coronavirus),” he added. "Indeed, data from HMRC showed that residential property transactions were down 53 per cent in April compared with the same month in 2019."
He said that the medium-term outlook for the market is uncertain and will be guided by the performance of the economy as it emerges from the pandemic.
He said he hoped that the measures to support jobs and businesses “should set the stage for a rebound”.
Jeremy Leaf, an estate agent based on north London, said a “car crash” hit the property market in May and that the future remains uncertain.
“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,” he added.
He said that the process of buying and renting has slowed given the need to take precautions and the establishment of virtual viewings.
“Some people are making a decision based on a virtual viewing, but those people are few and far between,” he added.
He said a healthy number of renters are looking to let new homes as they emerge from “homes, or relationships, that they are finding unsuitable”.
Samuel Tombs, an economist at Pantheon Macroeconomics, said that unless there is a quick “v-shaped” recovery in the economy, unemployment could exceed the levels seen after the last financial crisis.
However, banks are in a better position to lend, he added, and that the availability of mortgage holidays meant that few people would have to sell their homes.
Meanwhile, the Financial Conduct Authority , the City regulator, confirmed today that people who have taken a three-month mortgage repayment holiday will be granted a further three month extension if necessary.
However, the watchdog urged customers who can afford to restart repayments to do so.