The mainstream media naturally fell upon the news from Nationwide that property prices took a major hit with the onset of the Covid crisis, and an announcement from the Bank of England yesterday that mortgage lending has plummeted.

Headlines such as ‘House price drop takes economists by surprise.’ ‘House prices see largest monthly fall for 11 years’ were typical, as if somehow the writers thought the market might have been immune to a total lockdown.

In the Twittersphere there were comments aplenty:

“If you really are stupid enough to buy a house this year, make sure you get at least 20% off the asking price, then another 15% off the agreed price”

“Though this may seem a dramatic fall, it is not as steep as many had expected and prices still remain nearly 2% higher than they were this time last year.”

“It’s good news day, unless you’re a BTLetster.”

“RICS surveyors expect a huge fall in prices ahead, although they have been wrong before…”

The cause of all this came from the publication of the Nationwide House Price Index –

“UK house prices fell by 1.7% over the month in May, after taking account of seasonal effects–this is the largest monthly fall since February 2009,” said Robert Gardner, Nationwide’s Chief Economist.

“As a result, the annual rate of house price growth slowed to 1.8%,from 3.7% in April.

“In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum.

“Activity levels and price growth were edging up thanks to continued robust labour market conditions,low borrowing costs and a more stable political backdrop following the general election.

“But housing market activity has slowed sharply as a result of the measures implemented to control the spread of the virus.

“Indeed, data from HMRC showed that residentia lproperty transactions were down 53% in April compared with the same month in 2019.

“Mortgage activity has also declined sharply.

“Nevertheless, our ability to generate the house price index has not been impacted to date, as sample sizes have remained sufficiently large (and representative) to generate robust results.

“Low transaction levels may still make gauging price trends difficult in the coming months–especially for regional indices, which by their nature have lower sample sizes.”

The Nationwide Index added to the downbeat news from the Bank of England that mortgage approvals tumbled to a near 30-year low in April as the Covid-19 pandemic and lockdown measures brought the UK property market to a halt.

According to the Bank, the number of mortgage approvals for house purchase was 15,800 in April, down from March’s figure of 56,100 and some 80% lower than February.

This is the lowest level since the tracking began in 1993, and is about half the number of approvals seen during the lowest point of the 2008/09 financial crisis.

Reacting to the news Ross Counsell, Director at house buyers, Good Move, said:

“These numbers are largely down to the reduction in market activity due to social distancing measures, and is a real tell-tale sign for the future of home buying.

“The bounce back in the housing market is reliant on how the wider economy performs, however, the bigger challenge is how consumer behaviour has changed and how sellers need to adapt to continue to sell their properties.

“For example, they will begin to adjust their expectations on the price they will achieve and may be more inclined to accept a lower offer.

“Buyers are now putting more importance on aspects such as outdoor space which will mean a divide in how properties sell.

“We expect to see house prices bounce back fairly soon, but flats and other similar dwellings may take a much longer time to recover.”

Simon Gammon, Managing Partner, Knight Frank Finance gave his view:

“Mortgage lending fell off a cliff at the onset of the pandemic as surveyors were unable to conduct physical inspections.

“Thankfully, surveyors are now able to return to work safely and are working their way through a backlog of applications built up over the course of the lockdown.

“We expect to see the time it takes for borrowers to get an approval decline steadily in the weeks ahead.

“It’s worth remembering, mortgage markets had been at their most active in five years in February as the Boris bounce took hold.

“We expect a post-lockdown surge in approvals as the backlog is cleared, and those that had wished to move home or remortgage become able to do so.”

Miles Robinson, Head of Mortgages at the online mortgage broker, Trussle, commented:

“It’s certainly not a surprise to see figures out today around tumbling house prices and comparisons to ten years past, it has been a period of time like no other.

“However, we’re starting to see green shoots appearing.

“May has seen a resurgence in interest in the housing market and with lockdown easing, Estate Agents are starting to get back to business with more properties being marketed daily.

“At Trussle, we saw a 48% increase in mortgage customers in May compared to April – this figure includes both first time buyers as well as remortgages.

“It’s positive to see these initial signs of recovery in the housing market..”