House prices drop 0.6%

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by Gill Montia

UK house prices fell by 0.6% in June (May: +0.2%), according to Nationwide, leaving the value of the typical home 1.5% lower than a year ago, at £165,738.

The lender attributes the monthly decline to the difficult economic backdrop and the temporary boost to the market seen earlier this year prior to the ending of the stamp duty holiday.

As for the year ahead, Nationwide regards the coming months as “highly uncertain” for house prices because economic conditions are likely to remain challenging.

At best, prices could be “fairly stable” as government attempts to bolster the supply of credit and provide cheaper mortgages support demand, and the supply side of the market remains constrained through lack of new builds.

Regarding the link between the end of the stamp duty holiday in March and June’s price drop, Nationwide’s chief economist, Robert Gardner, notes that the decline in housing market activity in recent months echoes the pattern seen at the end of the last stamp duty holiday in December 2009.

He comments: “This provides some comfort that much of the recent softness in housing market activity will subside in the months ahead.”