UK house prices declined the most since 2009 as the impact of the coronavirus pandemic filtered through the property market in May, data from the Nationwide Building Society showed Tuesday.
Elsewhere, data from the Bank of England showed that households repaid the highest amount of consumer credit on record in April and mortgage approvals plunged to a historic low as government restrictions to curb the spread of coronavirus, or Covid-19, dampened housing activity.
House prices fell 1.7 percent month-on-month in May, in contrast to a 0.9 percent rise in April. This was the biggest decrease since February 2009. Economists had forecast a decline of 1 percent.
Annual growth in house prices eased to 1.8 percent in May from 3.7 percent in April. This was also weaker than the economists’ forecast of 2.8 percent.
Housing market activity has slowed sharply as a result of the measures implemented to control the spread of the virus, Robert Gardner, Nationwide’s chief economist, said.
The economist added that the medium-term outlook for the housing market remains highly uncertain, where much will depend on the performance of the wider economy.
According to BoE, households repaid GBP 7.4 billion of consumer credit in April, the largest net repayment since the series began.
The number of mortgage approvals decreased sharply to 15,848 in April from 56,136 in March. This was the lowest on record. Approvals were forecast to fall to 23,780.
Overall lending to individuals declined GBP 6.9 billion versus GBP 1 billion rise in March. On a yearly basis, lending grew 2.8 percent, weaker than the 3.6 percent rise in March.
Within total lending, secured lending increased GBP 0.3 billion after rising GBP 4.8 billion a month ago. The annual growth came in at 3.3 percent.
Consumer credit declined GBP 7.4 billion versus a fall of GBP 3.8 billion in the previous month, data showed.
Given the weak economy and uncertainty, Hansen Lu, an economist at Capital Economics said the recovery in lending is set to be fairly gradual.
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