House price growth reduced sharply to 7.8 per cent in the year to June, down from 12.8 per cent in May.
Figures from the Office for National Statistics reveal the slow down to single digit growth, which was prompted by the rise in house prices seen in June last year as a result of the tax breaks in place at the time.
The average UK house price was £286,000 in June 2022, which is £20,000 higher than this time last year.
House price growth slowed in the year to June, down from double digit growth in the same period to May
On 3 March 2021, the Government announced an extension to the stamp duty holiday in England and Northern Ireland to 30 June 2021. The relief allowed home buyers to save up to £15,000 in taxes.
The announcement saw a rush in activity as buyers tried to lock in their home purchases to take advance of the tax break.
After that, the threshold on the relief decreased to £250,000 until 30 September 2021, a maximum saving of £2,500.
From 1 October 2021, the Stamp Duty thresholds reverted to their values before 8 July 2020. The tax holiday for Scotland ended on 31 March 2021. The tax holiday for Wales ended on 30 June 2021.
Tom Bill, head of UK residential research at Knight Frank said, ‘The distortions of the stamp duty holiday mean house price growth in June can largely be ignored.
‘The bigger picture is that prices are waiting for gravity to arrive this autumn. Rising rates have driven demand as buyers attempt to move before mortgage offers expire but a more expensive lending environment will eventually see buyers’ budgets cut.
‘Meanwhile, the recovery in supply that began in late spring has been put on hold as more people take a summer holiday for the first time in three years. As supply builds and demand softens, we expect price growth to end the year in single digits.’
The average house price in Scotland increased by 11.6 per cent over the year to June 2022, reaching a record level of £192,000.
Wales also saw a record average house price in June of £213,000, with growth down to 8.6 per cent from 14.1 per cent in May.
While England saw the lowest house price growth in the UK of 7.3 per cent in June, it also saw a new average house price of record of £305,000, the ONS said.
Commenting on the figures, Nathan Emerson, chief executive of estate agent membership body Propertymark, said: ‘As of this month, for the first time since the recent hikes in prices, data has shown that the average is starting to decrease.
‘Despite this slowing in the market, agents continue to report increases in the time taken to exchange, with our latest Housing Market Report showing that 41 per cent of sales took 17 weeks or more to go through, compared to just 10 per cent pre-pandemic.
‘With interest rates rising, homebuyers, having secured a mortgage in principle at lower rates prior to even viewing any available properties, could well be starting to see them expire before exchanging. This could then have knock-on effects on both fall-throughs and affordability ratios.’
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