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UK house prices unexpectedly fell by 0.8% in June amid signs of a slowdown in the property sector after the end of the stamp duty holiday. Across the UK, the average house price in June was £271,619.

Robert Gardner, Nationwide’s chief economist, said: “UK house price growth slowed to 2.1% in June, from 3.5% in May. Prices declined by 0.8% month-on-month, after taking account of seasonal effects.

“The softening in price growth may reflect weaker demand following the increase in stamp duty at the start of April. Nevertheless, we still expect activity to pick up as the summer progresses, despite ongoing economic uncertainties in the global economy, since underlying conditions for potential home buyers in the UK remain supportive.”

Read more: Interest rates easing boosts house buying as UK mortgage approvals rise

Regionally, Northern Ireland remained the strongest performer, though it did see a slowing in annual price growth to 9.7%, from 13.5% in Q1. An average house here came in at £208,686.

Scotland recorded a 4.5% annual rise to £189,259, while Wales saw a 2.6% increase to £212,969. Average property prices in England climbed 2.5% to £309,570.

“Across England overall, prices were up 2.5% year-on-year, a slight softening from the 3.3% annual rise seen last quarter. The north-south divide in house price performance narrowed during the quarter. Average prices in Northern England (comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands) were up 3.1% year on year, whilst those in Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) were up 2.2%," Gardner said.

The North was the top performing region in England, with prices up 5.5%. Meanwhile, East Anglia was the weakest performer with annual growth of 1.1%.

Rosie Hooper, chartered financial planner at Quilter Cheviot, said: “Affordability remains a huge hurdle for many buyers. While the effective interest rate on new mortgages edged down slightly to 4.47% in May, repayments are still considerably higher than just a few years ago.

"Many prospective buyers, particularly first-time purchasers, face tough affordability assessments and elevated upfront costs following the changes to stamp duty."

Read more: Lenders drop mortgage rates as regulator pushes rule changes

The stamp duty thresholds reverted to pre-2022 levels on 1 April, increasing costs for many property buyers and triggering volatility in prices and transactions. First-time buyers, for example, started paying the levy for properties worth £300,000 or more, instead of the previous threshold of £425,000.

Interest rate cuts will help house prices regain momentum next year, according to economists.

Paul Dales, chief UK economist at Capital Economics, said: “The first rise in the number of mortgage approvals in five months in May points to the annual growth rate of house prices rising back to around 3.5%.

“That might not happen in time to meet our existing forecast that prices will rise by 3.5% in the year to the fourth quarter of 2025.

“But our new forecast that bank rate will fall from 4.25% now to 3% next year (our previous forecast was for a fall to 3.5%) suggests that housing activity and prices will regain more momentum next year.”

Separate data from the Bank of England on Monday showed mortgage approvals increased by 2,400 to 63,000 in May.