Annual house price growth has remained in double digits during July but slipped back to 10.5%, according to the latest Nationwide House Price Index.

This was a fall from the 17-year high of 13.4% annual growth that Nationwide reported for June.

On monthly basis, the index showed that house prices fell by 0.5% in comparison to June, to take the average UK house price to £244,229.

Nationwide suggested that changes to the stamp duty holiday drove the number of housing market transactions to a record high of almost 200,000 in June, as home buyers rushed to beat the deadline of the nil rate band threshold decreasing from £500,000 to £250,000 at the end of the month.

This was around twice the number of transactions recorded in a “typical month” before the pandemic, the index stated, and 8% above the previous peak seen in March.

“The modest fallback in July was unsurprising given the significant gains recorded in recent months,” commented Nationwide chief economist, Robert Gardner.

“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 Nationwide index also suggested that stamp duty changes might not have been the only factor to explain the figures for July.

Amongst homeowners surveyed by Nationwide at the end of April that were either moving home or considering a move, three-quarters said this would have been the case even if the stamp duty holiday had not been extended beyond the original March 2021 deadline.

“Shifting housing preferences appear to have been the more important factor in driving the increase in housing market activity, with people reassessing their housing needs in the wake of the pandemic,” Gardner said.

“At the end of April, 25% of homeowners surveyed said they were either in the process of moving or considering a move as a result of the pandemic. Given that only circa 5% of the housing stock typically changes hands in a given year, it only requires a relatively small proportion of people to follow through on this to have a material impact.”

Gardner added: “Underlying demand is likely to remain solid in the near-term. Consumer confidence has rebounded in recent months while borrowing costs remain low. This, combined with a lack of supply on the market, suggests continued support for house prices. But, as we look toward the end of the year, the outlook is harder to foresee.

“Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September, given the incentive for people to bring forward their purchases to avoid the additional tax.

“Nevertheless, underlying demand is likely to soften around the turn of the year if unemployment rises, as most analysts expect, as government support schemes wind down.”

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