UK house prices saw their biggest monthly fall for more than two years in June, according to mortgage lender Nationwide. Prices fell by 0.8% last month, the biggest monthly decline since February 2023, which the building society said may reflect weaker demand following the changes to stamp duty in April. Over the year, prices were up 2.1%, although that was the slowest annual growth rate for nearly a year. However, Nationwide said it expected activity in the housing market to pick up in the months ahead. Robert Gardner, Nationwide's chief economist, said the situation for many potential homebuyers remained "supportive". He noted that the unemployment rate remains low, earnings are still outpacing inflation and borrowing costs could become cheaper if the Bank of England makes further cuts to interest rates. Changes to stamp duty that came into effect in April mean that housebuyers in England and Northern Ireland now pay the tax on properties over £125,000, instead of over £250,000, as was the case previously. First-time buyers also have to pay stamp duty on homes costing more than £300,000, whereas before the April change, there was no charge unless the property was above £425,000. Matt Swannell, chief economic adviser to the EY Item Club, noted that monthly house price changes "can be quite volatile and this has been exaggerated by April's change in stamp duty thresholds". This change distorted the market over the first half of the year, he said, as deals were rushed through at the end of March. "[Since April] the housing market has been in a soft patch, but we think this will prove temporary, with the rise in May's mortgage approvals for new home purchases, which lead housing transactions, already indicating it's starting to fade." Nationwide's house price data is based on its own mortgage lending, which does not include buyers who purchase homes with cash, or buy-to-let deals. Cash buyers account for about a third of housing sales.
House prices see biggest monthly fall for over two years
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"UK House Prices Experience Largest Monthly Decline in Over Two Years"
Bbc News
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TruthLens AI Summary
In June, UK house prices experienced their largest monthly decline in over two years, with a reported decrease of 0.8%. This downturn marks the most significant drop since February 2023, as noted by the mortgage lender Nationwide. The decline is attributed to weaker demand following changes to stamp duty that came into effect in April. Despite this monthly fall, house prices have risen by 2.1% over the year; however, this annual growth rate is the slowest observed in nearly a year. Nationwide's chief economist, Robert Gardner, expressed optimism about the future of the housing market, indicating that the environment for potential homebuyers remains favorable. He pointed out that the low unemployment rate, coupled with earnings outpacing inflation, could contribute to a more robust housing market if borrowing costs decrease further due to potential interest rate cuts by the Bank of England.
The changes to stamp duty implemented in April have significantly altered the landscape for homebuyers in England and Northern Ireland. Previously, buyers were exempt from stamp duty on properties valued below £250,000; this threshold has now been lowered to £125,000. Additionally, first-time buyers are now liable for stamp duty on homes costing more than £300,000, a decrease from the prior threshold of £425,000. Economic experts, like Matt Swannell from the EY Item Club, have noted that monthly house price fluctuations can be volatile and that this recent decline has been exacerbated by the stamp duty changes. He believes that the market's current soft patch is temporary, as indicated by an increase in mortgage approvals for new home purchases in May, which suggests that housing transactions may soon be on the rise again. It is important to note that Nationwide's data reflects its own mortgage lending activity and does not account for cash buyers, who make up about a third of the housing market.
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