House prices fell by 0.5% between June and July, demonstrating the first signs of the property market cooling in months.
The slight dip recorded by the Nationwide House Price Index comes after a month when prices soared by a 17-year high of 13.4% annually.
In July the average house price still increased annually by a very significant 10.5% according to today’s data. It means the average UK house price is now £244,229.
Robert Gardner, Nationwide’s chief economist, explained the ‘modest fallback’ in July was unsurprising given the significant gains experienced in recent months.
“Indeed, house prices increased by an average of 1.6% a month over the April to June period,” he said, “more than six times the average monthly gain recorded in the five years before the pandemic.”
He thought the tapering of the stamp duty holiday in England – where the nil rate on the tax was decreased from £500,000 to £250,000 – would have ‘taken some heat out of the market’.
He said: “This provided a strong incentive to complete house purchases before the end of June, especially for higher priced properties. For those purchasing a property above £250,000, the maximum stamp duty saving reduced from £15,000 to £2,500 after the end of June.”
According to Land Registry data this has had the effect of driving up the number of sales of homes purchased for £500,000 or more.
Will the cool-down continue?
The general consensus amongst those in the property industry was the monthly drop in house prices was an inevitable blip, and a response to the fact prices has soared to so high in the run-up to the stamp duty holiday deadline.
George Franks, co-founder of estate agents, Radstock Property said: “A cool-down was always on the cards given the unsustainable rate of house price growth over the past year.
“That said, don’t expect activity levels to drop off significantly during the second half of the year.
“The transformation in housing preferences due to the pandemic has been less a shift than an aftershock.
“The pandemic has changed the rules of the game and made people rethink what they want out of a property, and this will continue to drive transactions for some time yet.”
