On a quarterly basis house prices are falling at the sharpest rate since the height of the global financial crisis in 2009, according to the latest Halifax House Price Index: UK Regional Breakdown.
The data revealed that prices slipped by -0.9% compared to the first quarter of the year.
Annual price inflation fell to 2.6% during second quarter of 2020 with prices generally down across the UK.
Halifax: House prices drop but mortgage applications rise
Paul Smith, economics director at IHS Markit, said: “The second quarter of the year was one characterised by opposing forces acting on the housing market.
“On the one hand, transactions put on hold towards the end of March were brought back online, whilst those buyers fortune enough to have seen incomes protected and savings rise over the pandemic were able to move forward with purchasing plans.
“With listings for houses for sale remaining low, the release of residual demand from earlier in the year is currently providing crucial market support.
“However, there are signs of growing uncertainty amongst buyers as worries mount over the effect on incomes and employment from the COVID-19 economic shock.
“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.
“Whilst 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.”