House prices rose at their slowest annual rate in five years in June according to the latest indicator of this summer’s challenging housing market.
The latest Nationwide index says annual prices increased by 2.0 per cent in the year to June, down from the 2.4 per cent reported in May.
For June alone prices were up 0.5 per cent - more than the 0.2 per cent of a month earlier - but London was the weakest performing region in the second quarter of this year and the only region to see a decline.
The capital’s prices are down 1.9 per cent on the year. But despite the recent underperformance, prices in the capital are still more than 50 per cent above their 2007 peak, while prices in the UK overall are only 15 per cent higher, says the Nationwide.
For the fifth successive quarter, price growth in northern England was ahead of the south,: Northern England had a 3.3 per cent year-on-year increase, while in the south prices were up 0.5 per cent.
"Annual house price growth has been confined to a fairly narrow range of circa 2.0 to 3.0 per cent over the past 12 months, suggesting little change in the balance between demand and supply over that period” explains Nationwide chief economist, Robert Gardner.
"There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent. Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates."
A leading agent responded to the figures by saying it was now key to recognise “new market realities”.
Jeremy Leaf, the former RICS residential chairman who runs his own agency in north London, says the squeeze on incomes and unrealistic asking prices is reducing activity and confidence to move, particularly in price-sensitive areas such as London.
“[But] on the other hand, the market continues to be supported by low interest rates and overall supply shortages, although we have found recently that listings and viewings are on the rise. This will translate into more sales if buyers and sellers recognise the new market realities.”