House prices fell by 0.5% on a quarterly basis between March and May, Halifax’s House Price Index has found.
The typical UK house price now averages at £237,808.
Annual house price growth still stands at 2.6% despite the slowdown.
Russell Galley, managing director of Halifax, said: “Looking ahead, we expect market activity to increase progressively as restrictions are eased further across the whole of the UK and we continue to have confidence in the underlying health of the housing market over the long-term.
“However, the extent of downward pressure on market confidence and prices over the coming months will depend on how quickly the economy is able to recover from the effects of the pandemic and the available government policy support for jobs and households.”
On a monthly basis house prices in May were 0.2% lower than in April.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Unlike the rather gloomy Nationwide figures from few days ago, Halifax demonstrates a more hopeful picture for the market, even though prices have fallen for three successive months while emerging from the eye of the Covid storm.
“On the ground, activity has certainly picked up from its very low base with many of the pre-lockdown sales put on hold resuming, albeit cautiously as buyers and sellers come to terms with the new normal.
“Values are holding fairly firm so far, particularly for smaller houses but demand for flats remains weak, caused by uncertainty over post-furlough employment prospects.”
Property transactions fell by 46.1% between March and April due to the lockdown, HMRC stats show.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “House prices are of limited value when measuring the health of the housing market and this is particularly true when so few transactions are skewing the results.
“What we do know with certainty is that lenders are relaxing restrictions they introduced at the start of lockdown as they shifted focus to payment holidays and dealing with staff working from home.
“Loan-to-values are rising back to pre-Covid levels as surveyors return to physical valuations and mortgage rates are falling ever lower as lenders compete for business. For those who are fed up waiting and want to get on and move, there are some excellent deals available.”
This post has originally been featured in Property Wire.