The average UK house price saw a month-on-month 0.3% fall in January, according to the latest Nationwide House Price Index.

The fall, after taking account of seasonal effects, was the first monthly decline in house prices since June last year.

Nationwide’s data also showed that annual house price growth slowed to 6.4% in January, having been at 7.3% in December.

The figures mean the average UK house price dropped to £229,748 in January, a fall from the £230,920 that Nationwide reported for December.

Nationwide chief economist, Robert Gardner, suggested the housing market’s slowdown “reflects a tapering of demand” ahead of the end of the stamp duty holiday.

Gardner said: “While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months – note that our house price index is based on data at the mortgage approval stage.

“The typical relationship between the housing market and broader economic trends has broken down over the past nine months. This is because many peoples’ housing needs have changed as a direct result of the pandemic, with many opting to move to less densely populated locations or property types, despite the sharp economic slowdown and the uncertain outlook.

“Looking ahead, shifts in housing preferences are likely to continue to provide some support for the market. However, if the stamp duty holiday ends as scheduled, and labour market conditions continue to weaken as most analysts expect, housing market activity is likely to slow, perhaps sharply, in the coming months.”

Commenting on the figures from Nationwide, Trussle head of mortgages, Miles Robinson, added that the “cliff edge” stamp duty holiday deadline also poses a risk to property transactions still underway.

“It’s estimated that as many as 105,000 property transactions currently underway could miss the stamp duty deadline,” Robinson said.

“This is partly because the holiday triggered unprecedented demand in the market which created delays in processing house purchases, and means it currently takes 134 days to complete a property in the UK.

“There has been much speculation about whether the stamp duty deadline should be extended to avert a shock to the market. MPs have also recently suggested whether a gradual tapering of the scheme would be a more effective and fair way of bringing it to a close, which is certainly worth considering if we see growth continue to slow moving forwards.”

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