House prices fell by 1.7 per cent from April to May, marking the largest monthly drop for 11 years, according to figures from Nationwide Building Society.

The average house price dropped from £222,915 to £218,902 month on month, while annual growth slowed from 3.7 per cent to 1.8 per cent as lockdown weighed heavily on transaction volumes.

Nationwide chief economist Robert Gardner says that housing market activity had been gathering momentum in early 2020 before the pandemic hit, but slowed sharply when measures to control the spread of the virus came into force, with HM Revenue & Customs data showing a 53 per cent drop in residential property sales in April compared to the same month in 2019.

Some indices including the Office for National Statistics and Rightmove have been suspended as statisticians said that transaction volumes were too low to provide meaningful insight. 

However, Nationwide insists its data has remained robust up to this point.

Gardner says: “Our ability to generate the house price index has not been impacted to date, as sample sizes have remained sufficiently large (and representative) to generate robust results.

“Low transaction levels may still make gauging price trends difficult in the coming months – especially for regional indices, which by their nature have lower sample sizes.”

Gardner warns that the medium-term outlook for the housing market remains highly uncertain, as much will depend on the performance of the wider economy, as activity has already declined by almost as much as it did throughout the entire previous crisis.

But he says: “The raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a rebound once the shock passes, and help limit long-term damage to the economy.

“These same measures should also help ensure the impact on the housing market will ultimately be less than would normally be associated with an economic shock of this magnitude.”

MT Finance director Tomer Aboody says: “With the full impact of lockdown measures being felt during the period covered by this report, it is not surprising to see these artificial numbers. 

“It is not a fair reflection of the market and sentiment but purely a result of necessary measures taken by the government to deal with the pandemic.”

With restrictions easing, Aboody believes would-be buyers will regain their confidence and start to move.

However, he is calling for a stimulus from the government such as a stamp duty holiday to help the market bounce back.

Birmingham estate agent Barrows and Forrester’s managing director James Forrester says: “From what is likely to be very scant transactional data it is impossible to know if this is the beginning of a market decline or a lockdown inspired blip, but many market indicators point to the latter.  

“Yes, this is the largest monthly fall in over a decade and many will seize on this opportunity to prophesize the end of the market, however, this simply is not what we are seeing on the ground.  

“The market all but stopped dead overnight when the lockdown was imposed and so a 1.7 per cent fall could arguably be viewed as a positive, all things considered. 

“Since iit has reopened, estate agents and portal sites are reporting high levels of traffic, enquiries, viewings and sales – activity that bodes very well for the future.”

London agent Benham and Reeves’s director Marc von Grundherr adds: “You may well smell blood and believe that the sharks are now circling. 

“But before you jump in and join them, remember that these numbers are taken from a paralyzed property market and anything other than a reduction would have been somewhat miraculous.

“As the market tries to find its feet operationally a further decline should be expected over the coming months and would certainly not be out of the question.

“However, as estate agents and other industry professionals adapt the the new norm of selling homes after lockdown, the market will begin stretch its legs and any predictions on the demise of the UK property market will turn out to be greatly exaggerated

“Much like we saw during the Brexit process, those looking to talk both the market and house prices down are, more often than not, doing so for their own gain.”