House prices rose at their slowest annual pace in four years last month as demand weakened amid a squeeze on household finances and higher stamp duty.
The average property value was up 2.6 per cent to £218,390, down from a 3.3 per cent increase in May – the smallest rise since May 2013, Halifax data shows.
This is £63,727 or 41 per cent higher than a low point seen in April 2009.
But prices fell on a monthly and quarterly basis, which contrasts with separate figures released last week by Nationwide.
Slowdown: Halifax figures added to concerns that the housing market is flatlining
House prices fell by 0.1 per cent in the last three months, between April and June, compared to the previous three months, according to Halifax – well below forecasts of a 0.2 per cent increase.
They also fell by one per cent between May and June.
This is in contrast with a 1.1 per cent monthly jump in June reported by Nationwide, which like Halifax bases its figures on mortgage data.
Martin Ellis, Halifax housing economist, said: ‘Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages.
‘This, combined the new stamp duty on buy to let and second homes in 2016, appears to have weakened housing demand in recent months.’
The UK’s housing market has slowed sharply since last June’s Brexit referendum, when prices were growing by almost 10 per cent a year.
Price fall: Halifax data showing a 1% fall in June are in contrast with Nationwide’s 1.1% rise
Higher stamp duty for buy-to-let introduced in April 2016 is also said to have affected demand.
The slowdown in the housing market has contributed to a fall in consumer confidence. Moreover, pressure on real incomes has intensified as inflation rose to a peak of 2.9 per cent in May.
However, rock-bottom mortgage rates and a shortage of homes continue to keep prices growing.
Bank of England figures published last week showed the number of mortgages approved and net mortgage lending picked up a bit of speed in May.
The chart shows that Halifax’s measure of house prices often is volatile from month-to-month, but the trend has deteriorated significantly this year
Samuel Tombs, chief UK economist at Pantheon Macroeconomics ruled out that the dip reported by Halifax marks the start of a sustained fall in prices.
However, he said that the underlying trend was ‘probably flat’ and that things won’t improve this year, especially as mortgage rates are more likely to rise than to fall.
He said: ‘The index is volatile even at the best of times, and Nationwide reported a 1.1 per cent month-to-month rise in its similar measure of prices in June.
‘The underlying trend in prices probably is flat, with the impact of weak underlying demand being offset by a sharp contraction in the number of homes for sale.
‘The trend in prices likely won’t improve in the second half of this year, though.
‘The recent pickup in wholesale financing costs, due to speculation that the MPC will raise interest rates soon, will prevent mortgage rates from falling further.’
Brian Murphy, head of lending for Mortgage Advice Bureau, said the Halifax data was not surprising, with annual growth ‘very much in line’ with industry forecasts for the year.