House pricesin the UK fell the most in more than two years last month as demand weakened after the end of a tax break, but activity is expected to pick up over the summer.
The average price of a home fell by 0.8% to £271,619 in June, after a 0.4% gain in May, according to Nationwide, Britain’s biggest building society. This is the biggest monthly decline since February 2023. The annual rate of house price growth slowed to 2.1% from 3.5% in May.
Northern Ireland recorded the fastest annual house price growth, of 9.7% in the second quarter, but down from 13.5% in the first quarter. Scotland posted a 4.5% annual rise, Wales a 2.6% increase and England a 2.5% rise, down from 3.3% in the first quarter.
East Anglia was the region with the lowest price rises, of 1.1%.
The property portalRightmovealsoreported a monthly price drop, of 0.3% in June, as sellers faced the toughest competition in a decade to find buyers.
Temporary stamp duty cuts in England and Northern Ireland expired in April, adding thousands of pounds to the cost of many transactions.
Robert Gardner, the Nationwide chief economist, said: “The softening in price growth may reflect weaker demand following the increase in stamp duty at the start of April.
“Nevertheless, we still expect activity to pick up as the summer progresses, despite ongoing economic uncertainties in the global economy, since underlying conditions for potential homebuyers in the UK remain supportive.
He noted that the unemployment rate remains low, earnings are rising at a healthy pace in real terms (after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little if the Bank of England lowers interest rates further in the coming quarters as expected.
Sign up toBusiness Today
Get set for the working day – we'll point you to all the business news and analysis you need every morning
after newsletter promotion
Financial markets have priced in a 76% probability of a quarter-point rate cut in August, and expect another reduction before the end of the year, probably in November.
The north-south divide in house price performance narrowed during the second quarter. Average prices in northern England (comprising north, north-west, Yorkshire and the Humber, East Midlands and West Midlands) were up 3.1% year on year, while those in southern England (south-west, outer south-east, outer Metropolitan, London and East Anglia) rose by 2.2%.
Terrace houses showed the biggest rise in prices over the past 12 months of all property types, with values up by 3.6%. For flats, price growth slowed to 0.3% from 2.3%. Semi-detached homes recorded a 3.% annual increase, while detached properties posted a 3.2% year-on-year rise.