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UK house prices experienced a significant drop in June, marking the largest monthly decline in over two years, as reported by mortgage lender Nationwide. The prices fell by 0.8% last month, the most considerable decrease since February 2023, potentially due to weaker demand following the adjustments to stamp duty in April. Despite this, prices still saw a 2.1% increase over the year, the slowest annual growth rate in nearly a year, with Nationwide anticipating a revival in housing market activity in the upcoming months.
Robert Gardner, the chief economist at Nationwide, pointed out that the prevailing conditions remain favorable for many prospective homebuyers. He highlighted the low unemployment rate, the continuous growth of earnings surpassing inflation, and the possible reduction in borrowing costs if the Bank of England proceeds with further interest rate cuts. The alterations to stamp duty in April revised the tax threshold for house buyers in England and Northern Ireland to properties priced above £125,000, down from the previous threshold of £250,000.
Matt Swannell, the chief economic adviser at the EY Item Club, acknowledged that monthly fluctuations in house prices can be quite erratic, particularly influenced by the recent changes in stamp duty thresholds. The abrupt increase in deals preceding the April deadline skewed the market in the first half of the year, resulting in a subsequent soft period for the housing market. However, signs of recovery are already emerging, with the surge in mortgage approvals for new home purchases in May indicating a potential rebound. Nationwide’s house price data is based solely on its mortgage lending, excluding cash buyers or buy-to-let transactions, which account for approximately one-third of housing sales
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