This is the first time that the rate has been negative in the last seven months, and the second time that prices have fallen in the last twelve months.
The overall trend in the average house price continues to be that of a gentle increase, with only minor oscillations.
On an annual basis the average house price for England and Wales increased by 3.0% in June.
This is the largest rise in the annual rate since December 2010.
LSL said the announcement of an additional 1% Stamp Duty tax on properties costing £1m and more to take place on 6th April 2011 caused a rush by buyers at the top-end of the market to complete their purchases before the increase.
Despite the relatively small number of transactions, this still had the effect of raising average house prices in March and April 2011.
Land Registry data shows 798 properties valued at £1m or more were sold in March 2011 but only 465 were sold in June 2011.
This lack of top-end market activity explains the fall in the June 2011 average price. In June 2012, this top end activity returned.
Peter Williams, housing market specialist and chairman of Acadametrics, said: “Despite £1m plus housing transactions being fewer than in March and April 2011 it is the return to life of the top of the market, compared to the moribund activity a year ago, that explains why the June 2012 average house price is 3% higher than it was in June 2011.
“Why does the LSL Acad HPI show this whilst the lender house price indices do not? Firstly, a large number of the high-value transactions are for cash, which are included in our price-paid indices but which are not reflected in mortgage-offer indices.
“Secondly, where £1 or £2m plus properties are bought with mortgages, these may not be available from Halifax or Nationwide, given their restrictions in the provision of loans at the top end of the market.”
The continuing strength of demand by foreign investors for properties in the central London areas is a significant contributor to the 8% increase in average prices in London.
Williams said the latest Bank of England Credit Conditions survey suggested that although demand for mortgages had increased lenders were not expecting supply to rise to reflect that over the next three months.
Not only did the survey suggest that supply is likely to remain unchanged, but also lenders indicated that high LTV loans would ‘decline markedly’.
And he added: “With tightening liquidity and rising costs in the funding markets, mortgage interest rates have been moving, both up and down, and this picture of uncertainty is likely to continue for some while.”
LSL estimates the non-seasonally adjusted number of transactions in England and Wales in June 2012 is 57,000.
If this estimate proves correct June will turn out to be the second lowest month for transactions since the Land Registry began computerising its records in 1995.
Williams said it was possible the Olympics will have a negative impact on housing transactions.
“The road and other travel restrictions in London will almost certainly curb the enthusiasm of potential buyers in looking for a property in the capital, especially in the neighbourhood of the Olympic venues,” he explained.
“In addition, the events themselves will absorb leisure time, which might otherwise have been spent in visiting properties for sale. Our short-term prognosis for housing transactions is therefore one of continuing weak activity.”
