House prices in the UK have suffered the largest monthly fall since February 2009 and dropped by 1.7% during May, according to new data published by Nationwide.

The society’s latest House Price Index revealed that as a result, the annual rate of house price growth slowed to 1.8%, from 3.7% in April.

Nationwide suggested that before the coronavirus pandemic struck the UK, the housing market had been steadily gathering momentum with activity levels and price growth edging upwards thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the General Election in December.

“But housing market activity has slowed sharply as a result of the measures implemented to control the spread of the virus,” commented Nationwide chief economist, Robert Gardner. “Data from HMRC showed that residential property transactions were down 53% in April compared with the same month in 2019.

“Mortgage activity has also declined sharply. Nevertheless, 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.”

Nationwide also suggested the medium-term outlook for the housing market remains “highly uncertain”, with much depending on the performance of the wider economy.

The society’s index reported a “sharp economic contraction” as a result of the measures implemented to suppress the spread of COVID-19.

“The 5.9% decline in UK economic activity recorded in March was only a little less than the decline recorded over the entire financial crisis,” Gardner added.

“However, 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.”

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