Stamp duty changes hamper UK housing market growth

The UK housing market experienced a slowdown in June, with the average property value decreasing by 0.8% month-on-month. This decline can be attributed to the effects of recent stamp duty changes, which seem to have cooled demand for property. The annual house price inflation also dropped, falling from 3.5% in May to 2.1% in June.

The cost of an average property in the UK now stands at £271,619, down from £273,427 in May. This price drop aligns with a period of economic uncertainty, particularly around the future of interest rates. While the Bank of England has reduced the Bank Rate twice this year, concerns over inflation have led to a pause in further cuts for now.

Despite this cooling of the market, Nationwide remains optimistic about a summer recovery, citing low unemployment, rising real wages, strong household balance sheets, and the possibility of future interest rate cuts as factors that could support housing market activity.

Average property values drop 0.8% month-on-month as annual growth slows to 2.1%, with Northern Ireland leading regional growth.

Regionally, Northern Ireland showed the strongest performance with a 9.7% annual price increase, though this was a slowdown from Q1's 13.5%. The North of England also performed well, with a 5.5% price increase, while areas in the South of England saw more modest growth.

Zoopla's data also highlighted a slowdown in house price growth, showing a 1.4% annual increase in May, down from 1.6% in March and April. Despite these cooling prices, the number of agreed sales has reached a four-year high, and there is a noticeable increase in the volume of properties available on the market, which could be contributing to the price slowdown.

To conclude, while the housing market faces challenges from external economic factors and stamp duty changes, it remains steady in many regions, with some areas continuing to see price growth.

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