House prices on slide as stamp duty holiday nears end

Dartmoor House

House prices fell last month for the first time this year as the end of the stamp duty holiday approached, a closely watched survey suggests.

Property prices fell by 0.5 per cent month-on-month in June, according to the Halifax house price index. The average cost of a home in Britain is £260,358, which is 8.8 per cent higher than the same month a year ago.

The findings suggest that the property market is starting to cool after a record year in which it defied the broader downturn in the economy. Low borrowing rates and the government’s decision to cut stamp duty fuelled prices, which were already benefiting from a surge in demand as people reassessed their housing needs during lockdowns.

Activity was driven by wealthier households seeking to swap smaller city dwellings for larger homes in more rural areas. Halifax said that the average price of a detached home rose faster than any other property type over the past 12 months, up by more than 10 per cent or almost £47,000 in cash terms.

Buyers have been rushing to complete purchases to benefit from the temporary stamp duty cut, which applied to the first £500,000 of a property’s value. The relief was due to expire at the end of March but the chancellor extended it for three months. However, it was tapered from the end of June, with no stamp duty on the first £250,000.

Russell Galley, managing director of Halifax, said: “It was predicted the market might start to lose some steam entering the latter half of the year, and it’s unlikely that those with mortgages approved in the early months of summer expected to benefit from the maximum tax break, given the time needed to complete transactions.”

A similar survey released by Nationwide last week also pointed to a slowdown in the property market. The mutual said that house prices rose by 0.7 per cent in June, down from a monthly rise of 1.7 per cent in May.

Andrew Wishart, property economist at Capital Economics, said: “Despite Halifax reporting a small decline in prices while others recorded a small increase, there is a consistent message from all the timeliest measures of house prices that inflation moderated in June.

“The pace of month-on-month increases in house prices has slowed across all three measures, suggesting that the winding down of the stamp duty holiday is taking some of the heat out of the market.” The impending end of the stamp duty cut has tempered demand but a dwindling supply of new homes coming to market is helping to support prices.