The Nationwide Building Society has revealed that UK house prices fell by 0.2% in June.
The average price of a UK home (not seasonally adjusted) was £195,055.
The mutual’s house price index reported that the annual pace of house price growth continued to slow in June, moderating to 3.3% from 4.6% in May.
Robert Gardner, Nationwide’s chief economist, said: “This maintains the gradual downward trend that has been in evidence since mid-2014, though this is the smallest annual rate of increase for two years. House price growth continues to outpace earnings, but the gap is closing, helped by a pickup in annual wage growth, which moved up to 2.7% in the three months to April from 1.9% at the start of the year.
“The slowdown in house price growth is not confined to, nor does it appear to be driven primarily by, developments in London. In quarter on quarter terms, London has continued to see price growth at or above the rate in the UK overall over the past three quarters, while the annual rate of price growth in the capital remains the second highest in the country.
“11 of the 13 UK regions saw a slowdown in the annual rate of growth in Q2. Most parts of the country continued to see annual house price gains – the exceptions were Wales and Scotland, which recorded small declines.
“Given the gap between population growth and rates of housebuilding (which has been evident for some time) the housing stock is likely to be used increasingly intensively until building activity catches up. There are signs that this has been occurring, with the number of vacant properties trending down since 2008, though council tax changes in 2013 impacted reporting and probably overstate the decline in the last two years.”
Paul Smith, CEO of Haart estate agents, added: “Today’s report of national house price growth slowing is a step in the right direction for affordability but we are still finding that demand for homes is outpacing supply. Our data shows there are now 11 prospective buyers chasing each new property instruction across the UK, compared to eight at the same time three years ago. The formation of property chains is still proving difficult – while many are keen to move, and would do so if the opportunity presented itself, the difficulty is in securing an onward purchase.
“This is having a stagnating effect and there is a desperate need for a more liquid market, through an injection of supply. We are in desperate need of government driven supply side initiatives which should include attractive incentives for housebuilders to get building. We are also hearing reports from branches that downsizing has become a dirty word and is seen as carrying negative connotations – that the seller has somehow lost their zest for life. Changing this attitude to release more family homes for second-steppers, would ensure our limited housing stock is used in the most efficient way. Without this healthy churn in the market, first-time buyers will continue to be priced out.”
