House price growth slowed to 2.1% in June, according to the latest house price index from Nationwide.
The latest figures from the building society show that house prices have fallen 0.8% month-on-month, with growth standing at 3.5% in May.
Robert Gardner, chief economist of Nationwide, 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.”
On a regional level, Northern Ireland remained the best performing area, reporting an annual house price growth of 9.7%. East Anglia was the worst performing area with an annual rise of just 1.1%.
Gardner commented: “Northern Ireland remained the strongest performer by a wide margin, though it did see a slowing in annual price growth to 9.7%, from 13.5% in Q1.”
“While significantly ahead of other UK regions in Q2, it was similar to the robust rates of growth seen in border regions of Ireland in recent quarters. Scotland recorded a 4.5% annual rise, while Wales saw a 2.6% increase.”
Matt Thompson, head of sales at estate agency Chestertons, said: “Property buyers were hoping for another interest rate cut this month but higher-than-expected inflation diminished those odds. On a national level, some house hunters are opting to pause their search or change their search criteria to find a home within their budget. In London, however, buyer demand stays relatively strong with a particular uplift in domestic buyers across central London where property prices have recently seen a price adjustment.”
Jonathan Hopper, CEO of Garrington Property Finders, commented: “The post-Stamp Duty lull in demand has collided with a deluge of supply.”
“In some areas, the flood of supply seems almost biblical. Estate agents are seeing a wave of new instructions that includes properties re-entering the market that were withdrawn from sale during last year’s uncertainty, as well as the traditional summer surge.”
“This is not primarily a market correction prompted by falling demand, but one triggered by an inescapable imbalance: too many sellers, not enough serious buyers.”
“On the ground, we are witnessing a clear behavioural shift. Many sellers are not financially distressed, but they are fatigued – tired of waiting for perfect conditions, and now motivated to act.”
“However, they are doing so in a landscape where buyers remain cautious amid sticky interest rates and lingering political and economic questions.”
“June’s 0.8% fall in average prices is not surprising, and the quarterly fall of 0.5% says it all about the direction of travel. As recently as March, prices were rising by 1.1% on a quarterly basis.”
“If this trajectory continues, as we expect it will, the summer months may bring a series of increasingly visible price softening moments, driven not by panic, but by pragmatism.”
“Sellers are being forced to adapt to a new normal, and the market data is beginning to reflect this sharp recalibration.”
