House prices see biggest monthly fall for over two years
Robert Gardner, Nationwide's chief economist, said the situation for many potential homebuyers remained "supportive".He noted that the unemployment rate remains low, earnings are still outpacing inflation and borrowing costs could become cheaper if the Bank of England makes further cuts to interest rates.Changes to stamp duty that came into effect in April mean that housebuyers in England and Northern Ireland now pay the tax on properties over £125,000, instead of over £250,000, as was the case previously.First-time buyers also have to pay stamp duty on homes costing more than £300,000, whereas before the April change, there was no charge unless the property was above £425,000.Matt Swannell, chief economic adviser to the EY Item Club, noted that monthly house price changes "can be quite volatile and this has been exaggerated by April's change in stamp duty thresholds".This change distorted the market over the first half of the year, he said, as deals were rushed through at the end of March."[Since April] the housing market has been in a soft patch, but we think this will prove temporary, with the rise in May's mortgage approvals for new home purchases, which lead housing transactions, already indicating it's starting to fade."Nationwide's house price data is based on its own mortgage lending, which does not include buyers who purchase homes with cash, or buy-to-let deals. Cash buyers account for about a third of housing sales.
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