House prices fell by 0.8% in June as demand for homebuying fell following the stamp duty hikes.
The latest Nationwide House Price Index showed, over the last year to June prices have risen by 2.1% compared to 3.5% in May.
Some areas of the UK performed better than others with Northern Ireland seeing the value of a typical home soar by 9.7% in the year to June.
This is compared to East Anglia, the weakest performing region, where prices inched up by 1.1%.
The value of a typical property in the UK is now £271,619.
Robert Gardner, Nationwide’s 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.
“The unemployment rate remains low, earnings are rising at a healthy pace in real terms (i.e. after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we and most other analysts expect.”
Whilst Northern Ireland experienced the biggest price hikes, Scotland recorded a 4.5% annual rise, while Wales saw a 2.6% increase.
The North was the top performing region in England, with prices up 5.5%.
Nationwide also looked at the price performance of different types of property over the April to June period. It said terraced homes had seen the biggest proportional rise – increasing by 3.6% over the last year.
Flats only grew in price by 0.3% on average compared with 2.3% in the previous quarter of the year. Semi-detached properties recorded a 3.3% annual increase, while detached properties saw a 3.2% year-on-year rise.
With prices falling, many buyers might be tempted to wait for further rises. However, Nationwide predicts activity is likely to pick up and experts say waiting may not pay off.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said: “While many sellers are reducing asking prices to attract interest, we’re still agreeing a strong number of sales – and prices are largely holding firm.
“We’re also seeing buyers lose out because they hesitated, expecting further price drops, only for someone else to come in and secure the property.
“My advice to buyers is simple: if you like a property, make an offer. The worst that can happen is it’s rejected. Don’t wait for the bottom of the market – you’ll only know when it was in hindsight, and if the right property isn’t available at that exact moment, you won’t benefit anyway.
“If you find the right home now, go for it. Treat it as a place to live, not just an investment.”
Meanwhile, Rosie Hooper, chartered financial planner at Quilter Cheviot thinks buyers may have a window of opportunity this summer before things pick up in Autumn.
“We are not far away from the summer holidays starting which can be a quieter period for the housing market as many households prioritise holidays over house hunting,” she said.
“With schools off and professionals away, activity often slows across the board, from viewings to mortgage processing, leading to a natural lull in transactions. This may already be weighing on house prices, and we could see further downward pressure in the coming months.
“However, a seasonal dip is nothing new. Prices could fall slightly more over the period, but we may not see any major price movements until the market begins to warm up again in early autumn, when buyers and sellers return with renewed focus.”
