Index chief says house prices will moderate soon

Another major industry figure has predicted that house price rises will moderate over the summer as MMR takes effect.

Robert Gardner, chief economist at the Nationwide and one of the compilers of its monthly house price index, says mortgage approvals in April were around 17 per cent below the recent high, seen back in January.

The slowdown may partly be the result of the introduction of Mortgage Market Review measures, which may take a few months to bed down. The underlying pace of activity should become more evident as we move through the summer months and the impact of MMR becomes clearer he says.

The latest Nationwide figures - showing house prices increased by 0.7 per cent in May, making them a hefty 11.1 per cent higher than May 2013 - also reveal a growing role in the market recovery for first time buyers.

FTBs accounted for 48 per cent of house purchases in March, a record high well above the long term average of 38 per cent.

The Nationwide data shows the biggest annual price jump since June 2007, and well above the 10.9 per cent annual increase it reported in April.

However, EAT's view remains firmly that judging the market on only one price index risks seeing a skewed version of what is really happening: the broad trend of indices, a more reliable guide, shows rises already moderating in the light of lending restrictions.