The UK has seen the biggest drop in UK annual house prices since 2009, according to the latest report from Nationwide.

The average price of houses sold in May were 3.4% lower than a year ago, representing the biggest drop seen since July 2009 when the average price fell by 6.2% in the aftermath of the financial crisis.

For the month of May, prices slipped by 0.1% on a seasonally-adjusted basis, partly reversing April’s 0.4% rise.

The average house price was £260,736 in May.

Nationwide chief economist Robert Gardner comments in the latest figures: “Following tentative signs of improvement in April, annual house price growth softened again in May, falling back to -3.4% (from -2.7% in April).

“However, this largely reflects base effects with prices broadly flat over the month after taking account of seasonal effects. Average prices remain 4% below their August 2022 peak.

“Recent Bank of England data had shown some signs of recovery in housing market activity, although the number of mortgages approved for house purchase in March was still around 20% below pre-pandemic levels”.

London estate agent and former RICS residential chairman Jeremy Leaf says that just as with HMRC’s disappointing but hardly surprising transactions numbers, this respected house price index is also a little historic.

‘The figures reflect what was happening not just after the mini-Budget in September when so much activity paused but also the improvements since”.

He adds: “Continuing worries about the cost of living highlighted in the recent core inflation numbers are compromising confidence and having a knock-on effect on mortgage cost and availability, inevitably leading to a softening of property prices.”

MT Finance director Tomer Aboody responds: “As more positive signs were showing in the first few months of the year, this slowdown is a sign of continued uncertainty in the market, with rate rises continuing and possibly hitting a much higher peak than originally indicated.

“As the Bank of England struggles to get inflation under control, many sellers and buyers are holding off to see what the next few months have in store. Should we then see a halt to consecutive rate rises, this will give them more confidence to proceed”.

He concludes: “Some government intervention in the housing market will be expected in the next few months in order to push the economy in a more positive direction, as the general election will come around very quickly.”