House prices have suffered their steepest monthly drop in nearly two years after Rachel Reeves ended the Stamp Duty tax break.

Figures from Nationwide Building Society revealed that the average price of a home slipped by 0.6% in April to £270,752, marking the first decline in eight months and the largest fall since August 2023. Economists had expected a small rise of 0.1%.

The drop came just weeks after Labour's tax shake-up on Stamp Duty Land Tax, which raised the threshold at which the charge kicks in and significantly increased the burden on first-time buyers.

Market jitters were also stoked by Donald Trump's sweeping new US tariffs, which have weighed on global confidence and added to fears over Britain's economic outlook.

Despite the fall, house prices remain 3.4% higher than a year ago - a sign, according to some analysts, of the housing market's underlying strength.

Nationwide's Chief Economist, Robert Gardner, attributed the dip to predictable seasonal effects and the fallout from the stamp duty deadline, which prompted a last-minute surge in sales before the changes came into force on April 1.

"The market is likely to remain a little soft in the coming months, following the pattern typically observed following the end of stamp duty holidays," he said.

"Nevertheless, activity is likely to pick up steadily as summer progresses... Unemployment remains low, earnings are rising at a healthy pace in real terms, household balance sheets are strong and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we and most other analysts expect."

Data from Moneyfacts shows mortgage costs are already edging down, with the average two-year fixed rate now at 5.20%, down from 5.48% at the start of the year. Markets are betting on a more aggressive pace of interest rate cuts from the Bank of England, with a decision expected on May 8.

But many buyers remain under pressure. Speaking to Newspage, several industry insiders offered a mixed picture of the market.

Ranald Mitchell, Director at Charwin Mortgages, said: "House prices dipped slightly in April after the March stamp duty rush, but annual growth remains firmly in positive territory at 3.4% - a clear sign of a healthy, resilient market."

Chris Barry, Director at Thomas Legal, welcomed the cooling, saying: "The house price growth seen by the UK post-Covid is not sustainable so a reduction in growth last month is welcomed."

Justin Moy, of EHF Mortgages, added: "The small drop in April was inevitable... Market conditions overall remain good for buyers still looking for their ideal home."

Daniel Hobbs, CEO at New Leaf Distribution, said the drop "was always on the cards due to the stamp duty cliff edge" but noted that demand remains "resilient".

Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, said: "There is still a lot of demand and that is growing as lenders cut rates."

But some experts warn that underlying affordability pressures are not going away any time soon.

In a detailed assessment, Holly Tomlinson, financial planner at Quilter, said the changes in stamp duty had pushed upfront costs sharply higher - particularly for first-time buyers. She warned the market remains "fragile", adding: "Ongoing affordability pressures and recent tax changes are clearly influencing buyer behaviour negatively... A shortage of properties for sale should see off any significant drops, but any meaningful pick-up in activity is likely to depend on a more material fall in mortgage rates or an improvement in real incomes."

The revised stamp duty regime - cutting the nil-rate band for all buyers from £250,000 to £125,000, and slashing first-time buyer relief thresholds - means that some buyers now face thousands of pounds in extra tax. A first-time buyer purchasing a £500,000 property, for instance, will now pay £10,000 in stamp duty, up from £3,750 before April.