Annual property price gains reached 10.5% this month, a fall from June

The gradual phasing out of the stamp duty holiday at the end of June—the economy-boosting measure introduced in the U.K. during the coronavirus pandemic to encourage property purchases by scrapping the transfer tax on the first £500,000 (US$693,986) of a home sale—has taken some heat out of the market in July.

Property price gains have slowed to 10.5% this month when compared to the same time last year, down from the 17-year high of 13.4% reached in June, according to Nationwide’s monthly index, released Wednesday.

The annual increase left the average home price at £244,229, the U.K. bank and mortgage provider said.

“The modest fallback in July was unsurprising given the significant gains recorded in recent months,” Robert Gardner, Nationwide’s chief economist, said in the report. “Indeed, house prices increased by an average of 1.6% a month over the April to June period—more than six times the average monthly gain recorded in the five years before the pandemic.”

“The tapering of stamp duty relief in England is also likely to have taken some of the heat out of the market,” he said.

The maximum threshold for savings dropped from £500,000 to £250,000 at the end of June and will revert back to the standard £125,000 at the end of September.

The fast-approaching adjustment to the incentive in June proved to be a strong motivation for buyers to complete their purchases, particularly on higher priced properties, Mr. Gardner said.

“For those purchasing a property above £250,000, the maximum stamp duty saving was reduced from £15,000 to £2,500 after the end of June,” he added.