Average house prices in England and Wales are on course to fall by 3.8 per cent between June and August 2020 based on the values of new deals agreed between March and May, according to Reallymoving.
The figure, which would mean a seasonally adjusted 5.1 per cent fall, is in line with anecdotal evidence reported by brokers to Mortgage Solutions last month.
Reallymoving bases its index on conveyancing quotes. It said the latest edition, was based on mix-adjusted purchase price data from over 8,000 quotes between March and May.
As a result, it expects the average property price to fall from £308,280 in June to £296,485 in August when those deals complete.
It noted that quotes are obtained at the start of the property purchase deal when buyers agree on prices and said the data provides one of the earliest snapshots of the immediate impact of lockdown.
“It’s important to note that the assumption of a typical 12-week time frame between exchange and completion could be less reliable than usual as transactions take longer to conclude – and a proportion of deals already agreed prior to lockdown could have since been renegotiated,” the firm said.
It added that house prices were on track to see the first annual fall in over a year this summer based on new deals agreed when the market reopened in May, with an expectation that prices in August 2020 will be 1.4 per cent lower than August 2019.
Transactions half normal level
CEO Rob Houghton said: “We’ll have to wait several months at least before the true impact of the coronavirus on the housing market becomes evident, but early signs suggest that while prices have fallen and buyers have undoubtedly tightened the purse strings, the initial hit may not be as severe as some analysts feared.
“For sellers now facing a period of great uncertainty and a scarcity of buyers, doing a deal at a reduced price of 3-4 per cent could look considerably more appealing than sitting tight and waiting to see what happens over the next few months.
“Transaction volumes are at half their normal levels and the economy is currently propped up by the government through the furlough scheme alongside mortgage payment holidays, so although the market is open once again, its underlying health has not yet been tested.
“Levels of unemployment and confidence in the jobs market will be key factors in determining whether the housing market recovers in the autumn with a levelling out of prices or continues in a downward trajectory,” he added.