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UK home costs fell unexpectedly in June, in keeping with Nationwide, undershooting forecasts and recording their largest month-to-month fall since January 2023.

The common value of a property dropped by 0.8 per cent between Might and June to £271,619, following a revised 0.4 per cent enhance within the earlier month, in keeping with the lender’s knowledge printed on Tuesday.

The annual progress fee fell to 2.1 per cent, down from 3.5 per cent within the earlier month, the slowest since July 2024.

Each figures have been beneath expectations as economists polled by Reuters had forecast a 0.2 per cent month on month enhance and a 3.1 per cent annual growth.

Line chart of £000's showing UK house prices dropped in June

Robert Gardner, Nationwide’s chief economist, stated: “The softening in worth progress might replicate weaker demand following the rise in stamp responsibility in the beginning of April.”

Nonetheless, he expects “exercise to select up” from the summer season as “the unemployment fee stays low, earnings are rising at a wholesome tempo in actual phrases, family stability sheets are robust and borrowing prices are more likely to average slightly”.

The stamp responsibility thresholds reverted to pre-2022 ranges on April 1, rising prices for a lot of property patrons and triggering volatility in costs and transactions.

First-time patrons, for instance, began paying the levy for properties value £300,000 or extra, as an alternative of the earlier threshold of £425,000.

For some specialists, rising provide is contributing to the slowdown in costs. Jonathan Hopper, chief government at Garrington Property Finders, stated in some areas the flood of provide was “virtually biblical”.

“The post-stamp responsibility lull in demand has collided with a deluge of provide,” he stated. “Property brokers are seeing a wave of recent directions that features properties re-entering the market that have been withdrawn from sale throughout final yr’s uncertainty, in addition to the normal summer season surge.”

Markets are pricing a couple of 75 per cent chance that the Financial institution of England will lower rates of interest by 1 / 4 level from the present 4.25 per cent subsequent month. That will mark the fifth discount in borrowing prices since final summer season, regardless that rates of interest stay nicely above the 2009-2025 common.

On Monday, knowledge printed by the central financial institution confirmed that mortgage approvals rose in Might for the primary time this yr as the common mortgage fee on new loans dropped to the bottom charges since April 2023.

Amy Reynolds, head of gross sales at property company Antony Roberts, stated: “Whereas many sellers are decreasing asking costs to draw curiosity, we’re nonetheless agreeing a robust variety of gross sales.”

Nationwide, which tracks costs primarily based on the mortgages it approves, confirmed that Northern Eire remained the top-performing space, with annual home worth progress of 9.7 per cent within the second quarter, in contrast with 2.9 per cent throughout the UK. East Anglia and London registered the slowest progress charges at about 1 per cent.

The lender additionally revealed that flats underperformed the remainder of the market, registering annual worth progress of solely 0.3 per cent prior to now 12 months. This compares with a 3.6 per cent growth for terraced homes, a 3.3 per cent rise for semi-detached properties and a 3.2 per cent enhance for indifferent properties.

Costs of flats have underperformed the remainder of the market since 2019, in keeping with a Monetary Instances evaluation of official knowledge.