House prices slow slightly but still in double digits

As we enter the traditionally quieter summer months, are  Nationwide's June numbers signalling the start of the long anticipated slowdown in house price rises?

House price growth slowed a little in June but remains over 10%, with the average price of a home having risen over £26,000 in the last year. However, industry commentators suggest that the market is now losing momentum.

Nationwides's figures for June

Modest slowdown in annual house price growth to 10.7% in June from 11.2% in May

The average price of a home now stands at £271,613

All regions continue to see house price growth

.

June 22

May 22

Monthly Change

+0.3%

+0.9%

Annual Change

+10.7%

+11.2%

Average Price

£271.613

£269,914

Robert Gardner, Nationwide's Chief Economist -

"There are tentative signs of a slowdown,  with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer enquiries. Nevertheless, the housing market has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation, which has already driven consumer confidence to a record low.

"The market is expected to slow further as pressure on household finances intensifies in the coming quarters, with inflation expected to reach double digits towards the end of the year. Moreover,  the Bank of England is widely expected to raise interest rates further,  which will also exert a cooling impact on the market if this feeds through to mortgage rates."

Outlook

Summer slowdowns in the property market are nothing new. Every year promises one and they usually deliver. However, this is the third consecutive year where the old norms do not apply. The last two have been distorted by lockdowns and tax breaks.  Pre-pandemic days were a wholly different market.

The last three monthly price rises have been 0.3%, 0.9% and 0.3%, a total of 1.5%. The total for the previous 3 months was 4.6% and mortgage approvals have fallen. It certainly appears that the slowdown is already underway.

Industry analysts warn that the market will not cool overnight. JLL believe that the annual rise in house prices for 2022 will reach 10%. Knight Frank's forecast is 8%. Both suggest that there is sufficient momentum to avoid any significant correction.