The average house price fell by 0.6% in April as market activity was held almost at a complete standstill, according to an index.
It was the biggest month-on-month fall in two years – since March 2018, the index from Halifax found.
Across the UK, the average house price stood at £238,511 in April.
Despite prices having fallen month-on-month by 0.6% in April, and by 0.3% in March, the average UK house price in April was still 2.7% higher than a year earlier.
Social distancing measures due to the coronavirus pandemic mean much activity, including physical viewings, valuations and house moves, has had to be put on hold for now. But house hunters can still do “virtual” viewings online and put in offers on properties if they want.
Russell Galley, managing director, Halifax, said: “The impact of measures taken to curtail the spread of coronavirus started to filter through to the housing market in April, with average prices falling by 0.6% compared to March, and the annual growth rate easing to 2.7%.
“With market activity currently almost at a complete standstill, the limited number of transactions available means that calculating average house prices has inevitably become more challenging. This will lead to a great deal of volatility until more data becomes available.
April's #HalifaxHPI shows that the impact of measures taken to tackle the spread of #COVID19 started to filter through to the housing market, with average prices falling by 0.6%. The average UK house price is now Â£238,511.https://t.co/ZuNU5u2wi7 pic.twitter.com/OAtwDZ2BdR— Halifax Bank News (@HalifaxBankNews) May 7, 2020
“It will not be until after lockdown restrictions are eased that we will get a sense of the new temporary normal conditions for the housing market.
“Social distancing raises new challenges for home viewings and valuations and this will require the industry to adapt to build and maintain consumer confidence.
“More immediately, we are likely to see some considerable movement in activity levels as buyers and sellers seek to kick-start previously agreed transactions which are likely to have stalled or been delayed.
“The future remains uncertain and based on our current forecasting we expect short-term headwinds to house prices, although we maintain our underlying confidence in the health of the housing market in the longer term.”
What we are seeing on the ground are previously agreed sales proceeding to exchange and completion without price renegotiation and a buildup of browsing interest as buyers and sellers ready themselves for easing of restrictions.Jeremy Leaf, north London estate agent
Andrew Montlake, managing director at mortgage broker Coreco, said: “Though the property market has been artificially paused, what we do know is that there are many buyers and sellers who remain keen to progress their move.
“We have received a lot more inquiries over the past couple of weeks, with many people now looking to move to more rural areas once this is all over.”
He added: “Increasingly, people want to take advantage of the fact that coming out of this pandemic there will be more home working flexibility and better technology. This means they will be required to commute into main cities less and less.
“We are on the verge of a fundamental shift in our working and social lives and the availability of housing and lending will be key to this.”
Ben Johnston, director of property app Houso, said: “People will still want to move once the crisis passes but the way they interact to find those homes and negotiate on them will be different.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “From the point of view of lenders, they remain open for business.”
He added: “For those who wish to remortgage in particular, there are plenty of attractive deals to tempt them.”
Tomer Aboody, director of property lender MT Finance, said: “With fewer transactions due to valuers being in lockdown and lenders shifting their attention to granting mortgage payment holidays to struggling borrowers, this trend will likely continue into May and possibly June.”
Jeremy Leaf, a north London estate agent and a former residential chairman at the Royal Institution of Chartered Surveyors (Rics), said: “What we are seeing on the ground are previously agreed sales proceeding to exchange and completion without price renegotiation and a buildup of browsing interest as buyers and sellers ready themselves for easing of restrictions.
“Buyers and sellers are also taking advantage of interest rates remaining low for the foreseeable future.
“Overall, we are being told that transactions are stalled and will be revisited as soon as it is safe to do so.”