Posted by: Simple Conveyancing

Date: Tue Jul 01 2025

UK House Prices Fall Sharply in June

What It Means for Buyers and Sellers

Why Prices Dropped

1.Stamp Duty Changes

A reduction of first-time buyer stamp duty thresholds in April caused demand to weaken. Nationwide’s chief economist, Robert Gardner, highlighted that “the softening in price growth may reflect weaker demand following the increase in stamp duty” .

2.Surge in Supply

The market saw an influx of properties—some re-entered the market after being previously withdrawn, while new summer listings emerged. Estate agents described the increase as “almost biblical”.

3.Lingering Tax Effects

The end of the temporary stamp duty holiday triggered a “tax break hangover,” affecting both asking and actual sale prices .

Regional & Property-Type Variations

• Northern Ireland leads the UK in annual price growth at 9.7%, boosted by strong demand.

• London and East Anglia lag with modest annual growth near 1%.

• Flats underperformed, showing minimal price growth (~0.3%), whereas terraced, semi-detached, and detached houses rose between 3.2% and 3.6% annually.

What This Means for the Market

• Buyers: This isn’t a collapse—prices remain up 2.1% year-on-year. Increasing supply and eased borrowing costs (thanks to rising mortgage approvals) may point to a more balanced buyer’s market.

• Sellers: Realistic pricing and market awareness are key. With buyer sentiment softening, competitive pricing strategies are crucial to attracting interest.

• Lenders & Economists: Mortgage approvals climbed in May—the first increase of 2025—supporting appetite for home loans and hinting at improved affordability .

Outlook: Will Prices Bounce Back?

Nationwide expects a summer rebound, thanks to:

• Low unemployment

• Rising real incomes

• Healthy household finances

• Potential BoE interest rate cuts later in the year

Markets currently price in a mid-point interest rate cut to 3.75% by year-end, down from 4.25%.

Final Thoughts

June’s 0.8% drop in house prices may feel abrupt, but it reflects a temporary shift in the wake of tax changes and rising supply. Buyers should remain alert, but not anxious—especially as mortgage conditions ease. Sellers will benefit from careful pricing alignment with buyer expectations. And as supply balances with demand, the market may see a modest rebound later in the summer.