Latest data released by UK Nationwide Building Society - 1 July 2020
- Prior -1.7%
- House prices -0.1% vs +0.9% y/y expected
- Prior +1.8%
The data is released a few minutes earlier than expected. Annual house price growth basically grinds to a halt in June, falling to negative for the first time since 2012. That's not a good sign as this adds to signs that the UK economy is not exactly coping with the virus pandemic all too well over the past few months. Nationwide notes that:
"It is unsurprising that annual house price growth has stalled, given the magnitude of the shock to the economy as a result of the pandemic. Economic output fell by an unprecedented 25% over the course of March and April - almost four times more than during the entire financial crisis.
"Housing market activity also slowed sharply as a result of lockdown measures implemented to control the spread of the virus. While latest data from HMRC showed a slight pickup in residential property transactions from April's low, in May they were still 50% lower than the same month in 2019."With lockdown measures due to be eased in the weeks ahead, housing market activity is likely to edge higher in the near term, albeit remaining below pre-pandemic levels. Nevertheless, the medium-term outlook for the housing market remains highly uncertain. Much will depend on the performance of the wider economy, which will in turn be determined by how the pandemic and restrictions on activity evolve (including any behavioural shifts).
"The raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples' incomes and keep borrowing costs down, should set the stage for a rebound once the shock passes, and help limit long-term damage to the economy.
"These same measures should also help ensure the impact on the housing market will ultimately be less than would normally be associated with an economic shock of this magnitude.
