The growth in house prices slowed to 2.1% during June, down from 3.5% in May and 4.1% at the start of the year, according to the latest Nationwide HPI.

The 0.8% fall in June means the average price is now £271,619, although there remain wide regional variations. Northern Ireland was the strongest performer with annual price growth of 9.7%, Scotland recorded a 4.5% rise and there was a 2.6% increase in Wales.

Regional variations

On a regional basis, the North/South house prices divide continues. In Northern England (North, North West, Yorkshire & The Humber, East Midlands and West Midlands), house prices were up 3.1% year on year, but in Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia), prices were up 2.2%.

Of the property types, it is flats that are struggling most, with just 0.3% growth, whereas terraced house prices grew by 3.6%.

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.”

Robert Gardner, Nationwide’s Chief Economist, says: “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.”

Industry reaction

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts

“While many sellers are reducing asking prices to attract interest, we’re still agreeing a strong number of sales and house 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.”

It remains encouraging that consumers are still approaching the buying and selling process with a firm degree of confidence.”

Nathan Emerson, CEO at Propertymark

“Despite the fact that we have witnessed much economic turmoil in the first half of the year, it is highly encouraging to see stability within the housing market as house price growth softened in June.

“We still sit in a phase of inflation not quite being where the Bank of England ideally want it to be, and we still have elevated base rates. Nonetheless, it remains encouraging that consumers are still approaching the buying and selling process with a firm degree of confidence.

“Across the year to date, we have seen the average number of properties per member branch hold absolutely steady, and this year’s number represents a figure that is almost 20 per cent higher than the same period twelve months earlier.”

Jonathan Handford, Managing Director at national estate agent group Fine & Country

“The Stamp Duty changes, which saw demand being pulled forward in the rush to beat the revised threshold, are a possible contributor to this softening in the market last month. After months of frantic activity in the lead up to April, the market has arguably been slightly out of breath since.

mortgage approvals up

“On a positive note, Bank of England figures released yesterday showed mortgage approvals rose for the first time since December last year, which suggests demand is getting back on track and that a degree of normality is starting to return.

A cut in August could stimulate the market.”

“Though the economy, jobs market and under-pressure households desperately need an interest rate cut, the Bank of England remains laser-focused on inflation, and where that goes next will be key. A cut in August could stimulate the market, but Threadneedle Street may well err on the side of caution if inflation remains sticky.

Affordability key

“Affordability remains a key challenge, especially for first-time buyers. Rising house prices, higher deposits and tougher lending conditions continue to keep many people on the sidelines. Lenders are definitely trying to support borrowers in new ways, but for many first-time buyers, the first step onto the ladder is still too high.

Iain McKenzie, CEO of The Guild of Property Professionals

“This softening of house prices is the natural and welcome consequence of the 13% year-on-year increase in available properties. For the first time in years, buyers have a real choice, which is tempering the frantic price growth we saw previously and creating a more stable environment for everyone.

Firing on all cylinders

“This isn’t a market running out of steam; it’s a market firing on all cylinders. Demand is being actively fuelled by more accessible mortgage lending and the recent interest rate cut, which have unlocked a new wave of purchasing power. Mortgage approvals have risen for the first time in four months, which again points to a desire to move.

What we are witnessing is the perfect recipe for a strong and stable market.”

“What we are witnessing is the perfect recipe for a strong and stable market: confident, empowered buyers are being met with a greater supply of homes. This shift from a supply-starved, frantic market to a balanced, active one is fantastic news for anyone looking to make a move in the second half of the year.”

Interest-rate reductions are more important than ever in order to boost activity.”

Jason Tebb, President of OnTheMarket

“There is still plenty of evidence of steady activity in the housing market, despite a considerable number of buyers bringing forward transactions in order to take advantage of the Stamp Duty holiday before it ended in March. Average house prices are being kept in check by the increase in stock, which exceeds supply in some areas.

Affordability improving

“Interest-rate reductions are more important than ever in order to boost activity and momentum in the market now that the Stamp Duty holiday is no longer available. Four quarter-point base-rate cuts since last August have made all the difference to affordability and the ability to plan ahead with confidence. Further reductions will give the market added impetus as we head into the latter half of the year.

“Mortgage lenders continue to gently trim rates and ease criteria, which is further assisting borrowers dealing with stubborn inflation and the elevated cost of living.”

Moderating house price growth is good news for the wider health of the housing market.”

Mark Harris, chief executive of mortgage broker SPF Private Clients

“Moderating house price growth is good news for the wider health of the housing market, making homeownership more realistic for first-time buyers, many of whom are already relying on the Bank of Mum and Dad.

borrowing environment easing

“Lenders have been reducing mortgage rates and enhancing loan-to-incomes, increasing the size of loan that some borrowers can access. However, while the borrowing environment may be easing, higher inflation and the wider economic picture remain a concern, which could mean the pace and size of further base rate reductions is more gradual than markets thought only a short while ago.”