House prices slipped again for the third straight month, though more modest than in April as England’s property market reopened, said lender Halifax.
In the House Price Index released on June 5, Halifax reported a fall of 0.2 per cent in May from the previous month due to a continued loss of momentum in the housing market after the pandemic reached the United Kingdom. This marks the third consecutive monthly fall, following the monthly decline of 0.6 per cent recorded in April and 0.3 per cent in March 2020. However, house prices in May are still 2.6 per cent higher than in the same month last year.
Managing Director of Halifax Russell Galley stated that the average house prices fell to £237,808 in May, down 0.2 per cent m/m, as the full impact of lockdown measures led the slump in UK’s property market. He, however, added that calculating average house prices remains challenging given the limited number of transactions available.
Halifax’s May Figures Less Dramatic than Rival’s
Halifax’s recorded decline of just 0.2 per cent, however, reflects a huge gap from the dramatic 1.7 per cent fall reported by Nationwide Building Society.
Nationwide reported that annual growth in house prices has fallen to 1.8 per cent in May from 3.7 per cent in April 2020. It reflects the monthly change of negative 1.7 per cent in May, the biggest monthly decline since 2009.
Market experts believe that UK’s house prices could decline 5 per cent by the end of the third quarter as coronavirus continues to damage economy with the huge decline in households’ income and consumer confidence touching decade low.
Galley said that mid-month relaxation of restrictions in the United Kingdom is likely to provide a short-term boost as buyers and homeowners forge ahead to kick-start transactions that were earlier put on hold. With property agents and conveyancers allowed to restart, the buyers and sellers interest have indicated some advanced signs of improvement.
Mortgage Approvals Plunged to Record Low in April
Bank of England revealed that mortgage lending in England has slumped to a record low in April 2020 with the number of mortgages approved to finance house purchases sitting at 15,848 in April 2020. It represents a 76 per cent decline year on year and a 72 per cent month on month fall from March, the lowest since comparable records began in 1993.
The sharp decline in mortgage approval underscores the withdrawal of low deposit mortgages by British lenders. Halifax itself pulled back majority of mortgages near the end of March and said that any mortgage beyond the ‘loan-to-value’ of more than 60 per cent would not be offered by the company. It simply, means that house buyers have to put down a 40 per cent deposit to be eligible for Halifax’ loans.
Future Outlook of Housing Market
Looking ahead, Russell Galley told that Halifax expects a progressive rise in market activities as restrictions are further to be lifted across the United Kingdom and the bank continues to hold confidence in the underlying health of the housing market over the long-term. However, increased volatility is expected by the lender with the level of downward pressure on market confidence and prices depends upon how quickly the economy would be restored from the effects of the pandemic in the coming months.
Let’s have a look at some leading property market stocks listed on the London Stock Exchange.
LSL Property Services Plc (LON: LSL): LSL Properties is one of the largest estate agent chain in the UK that provides residential property services to a diverse group of customers, including the surveying businesses and estate agency. LSL Property is a parent company of Reeds Rains, Your Move and e.surv Chartered Surveyors.
LSL shares made a double digit percentage gain in a day-trading session on Friday as property stocks continued to rally when UK housing market reopened for business on June 2 after a deep seven-week freeze. LSL stock gained 14.80 per cent to close on GBX 216 on Friday, June 5. The 52-week high and low of the company are recorded at GBX 345.00 and GBX 143.50, respectively.
Rightmove Plc (LON: RMV): Rightmove is a famous property portal company in the United Kingdom. The company operates through three segments – New Homes, which provides property advertising services to hosing associations or new home developers on the company’s website, Agency, under this segment Rightmove provides resale and lettings property advertising services, and Others, this segment includes overseas, non-property and commercial property advertising services.
RMV last traded at GBX 597.00, up 0.51 per cent, on June 5. The stock’s 52-week high and low stand at GBX 710.60 and GBX 373.10.
Taylor Wimpey Plc (LON: TW.): Taylor Wimpey is one of the largest UK-based house building companies. The company operates across the United Kingdom and Spain through two business segments that include Housing United Kingdom and Housing Spain. At the time of writing, the market capitalisation of the company is GBP 5.27 billion with total 3.28 billion shares outstanding.
- stock has surged up 1.67 per cent to end the day at GBX 161.40 on June 5. The stock’s 52-week high and low is recorded at GBX 237.70 and GBX 101.00.
Housing market has recorded further dips in new buyer demand as the ongoing lockdown measures continue to stifle activity across the sector. Halifax believes that besides the potential to curb the spread of the virus and early economic revival, the government’s support for jobs and households are likely to drive the positive trend in the property sector.
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