British house prices fall 0.8 per cent in June, defy growth forecasts

British house prices fell by 0.8 per cent in June, a sharper fall than forecast and the biggest monthly decline in more than two years, as a discount on property transactions ended, data from mortgage lender Nationwide showed this week.

Economists polled by Reuters had forecast a 0.2 per cent monthly increase.

For the year, house prices were 2.1 per cent higher than a year ago, below a 3.5 per cent rise in May and lagging a consensus for a 3.1 per cent annual increase.

“The softening in price growth may reflect weaker demand following the increase in stamp duty at the start of April,” Robert Gardner, chief economist at Nationwide, said.

“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.”

Other measures of Britain’s housing market have shown a mixed picture after the expiry of a temporary tax discount scheme for first-time homebuyers ended.

Bank of England data on Monday showed lenders approved more mortgages than expected in May, helped by lower borrowing costs.

The BoE held interest rates at 4.25 per cent last month, and investors expect the central bank to reduce borrowing costs in two further quarter-point moves to 3.75 per cent by the end of the year.