Nationwide Building Society has reported that UK annual house price growth slowed to 10.7% in June, from 11.2% in May.
Prices rose by 0.3% month-on-month, the 11th consecutive monthly increase.
Meanwhile, the price of a typical UK home climbed to a new record high of £271,613, with average prices increasing by over £26,000 in the past year.
The South West overtook Wales as the strongest performing region, while London remained the weakest. The South West was also the strongest performing region through the pandemic
Robert Gardner, Nationwide’s chief economist, said: “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.
“Part of the resilience is likely to reflect the current strength of the labour market, where the number of job vacancies has exceeded the number of unemployed people in recent months. Furthermore, the unemployment rate remains close to 50-year lows. At the same time, the stock of homes on the market has remained low, which has helped to keep upward pressure on house prices.
“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.”
Mark Harris, chief executive of SPF Private Clients, added: “While some of the heat has come out of the market as we approach the traditionally quieter summer months, there are still plenty of people keen to move although rising interest rates may temper the ambitions of some as to what they can afford.
“What has changed for all borrowers is the rate environment – gone are the sub-1% deals available nine months ago. Now, mortgage products are in the 3% to 4% range depending on their length and loan-to-value.
“These rates available today reflect not only the increase in cost of funds but also lenders’ desire to moderate volumes, with many of the high street banks still sitting on large balances or even cheap Bank of England funds. Specialist lenders are repricing upwards and/or streamlining their product ranges, meaning borrowers need to move quickly to secure rates.”