Scotland was the only area of the UK to see a house price fall over the last year and the nation also saw prices drop on a quarterly basis by more than four per cent.
According to the national data, prices slipped by 0.9 per cent in the second quarter compared to the previous three months – the sharpest fall recorded since the first quarter of 2009 at the height of the global financial crisis.
Despite the fall on the quarterly measure, prices were still up by 2.6 per cent compared to the same period a year earlier.
Regional gains
At the regional level, all English regions and Wales registered higher prices compared to a year ago. The strongest inflation was seen in the North West, where prices were reported to have risen by five per cent on the year, followed by Wales and then the East and West Midlands.
Relatively subdued gains were seen in southern England, but Greater London recorded an increase of 2.8 per cent, its best gain in over three years.
However, prices were little changed since the first quarter peak in London and were noticeably lower in Eastern England and the South East.
But the performance in Scotland was in stark contrast to England and Wales.
Further falls most likely
Paul Smith, economics director at IHS Markit warned it was tough not to expect a further fall in prices.
He noted the second quarter had seen opposing forces acting on the housing market, with the return of on hold transactions and listings for houses for sale remaining low, the release of residual demand from earlier in the year was currently providing crucial market support.
“However, there are signs of growing uncertainty among buyers as worries mount over the effect on incomes and employment from the Covid-19 economic shock,” he said.
“As the macroeconomic landscape in the UK becomes clearer in the coming months, especially with regards the impact of the pandemic on the labour market, it’s hard to look past the downward risks to prices over the medium-term.
“While low mortgage costs, quantitative easing by the Bank of England, and government measures to lessen the impact of Covid-19 should soften the blow, on balance further price falls seem most likely in the second half of the year,” he added.
