According to the mortgage lender Nationwide, house prices in the UK saw their biggest monthly decline in more than two years in June.
In the previous month, prices fell by 0.8%, marking the largest monthly decrease since February 2023. This could be due to weaker demand following the changes to stamp duty in April, as reported by the building society.
On an annual basis, prices still saw a 2.1% increase, although this was the slowest growth rate in almost a year.
Despite this, Nationwide anticipates an increase in housing market activity in the coming months.
Robert Gardner, the chief economist at Nationwide, stated that the circumstances for many potential homebuyers are still “supportive”.
He also pointed out that the unemployment rate remains low, earnings are outpacing inflation, and borrowing costs could potentially decrease if the Bank of England decides to cut interest rates further.
Following the changes to stamp duty in April, buyers in England and Northern Ireland are now required to pay the tax on properties over £125,000, rather than over £250,000 as it was previously. Additionally, first-time buyers now have to pay stamp duty on homes over £300,000, whereas before the changes, there was no charge unless the property was above £425,000.
Matt Swannell, the chief economic adviser at the EY Item Club, noted that monthly fluctuations in house prices “can be quite volatile and this has been exaggerated by the change in stamp duty thresholds in April”.
He also mentioned that this change distorted the market in the first half of the year, as deals were rushed through before the end of March.
However, Swannell believes that this soft patch in the housing market will be temporary, with the rise in mortgage approvals for new home purchases in May already indicating a fading trend.
Nationwide’s data on house prices is based on its own mortgage lending and does not include cash buyers or buy-to-let deals. Approximately one-third of housing sales are made by cash buyers.