Britain’s house prices fell by the most in more than 11 years in May as the coronavirus crisis hammered the market, mortgage lender Nationwide said on Tuesday.
Nationwide said prices fell by 1.7% last month from April, the biggest monthly decline since February 2009.
In annual terms, prices rose by 1.8%, slowing from 3.7% in April.
A Reuters poll of economists had pointed to a monthly fall of 1.0% and an annual rise of 2.8%.
Britain’s government relaxed some of its restrictions on the housing market in England in May. Property website Rightmove said on Saturday it had its busiest day on record last week, suggesting activity was picking up.
But Nationwide said the medium-term outlook remained highly uncertain.
Samuel Tombs, economist with Pantheon Macroeconomics, said the May fall was probably just the start of a slide in house prices over the rest of this year.
“The huge size of the blow from COVID-19 to households’ incomes and the deterioration in consumers’ confidence suggests that house prices must drop,” he said. “We look for a 5% decline in prices by the end of the third quarter.”
Nationwide said the impact of the pandemic on the mindset of homebuyers was likely to weigh on the market.
A survey it conducted suggested people had put off moving as a result of the lockdown and would-be buyers were planning to wait six months on average.
Nationwide said official tax data showed residential property transactions were down by an annual 53% in April.
“Nevertheless, our ability to generate the house price index has not been impacted to date,” it said.