The Nationwide Building Society has reported that annual house price growth remained below 1% for the sixth month in a row in May, at 0.6%.
Prices fell 0.2% month-on-month, after taking account of seasonal factors.
Robert Gardner, Nationwide’s chief economist, said: “Survey data suggests that new buyer enquiries and consumer confidence have remained subdued in recent months. Nevertheless, indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable.
“Housing market trends are likely to continue to mirror developments in the broader economy. While healthy labour market conditions and low borrowing costs will provide underlying support, uncertainty is likely to continue to act as a drag on sentiment and activity, with price growth and transaction levels remaining close to current levels over the coming months.
“First time buyer numbers have continued their steady recovery in recent quarters, reaching 359,000 in the 12 months to March, just 10% below 2006 peaks. The trend is partly due to robust labour market conditions, with employment rising at a healthy rate, and earnings growth slowly gathering momentum.
“Low borrowing costs have also provided important ongoing support. Even though house prices remain high relative to average incomes, the cost of servicing the typical mortgage
as a share of take home pay has remained close to or below long run averages in most parts of the country.
“The main exception is in London, where a period of rapid house price growth in the three years to 2015 means that monthly mortgage payments would also be unaffordable for a large proportion of the local population.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “With property transactions and mortgages approved for house purchases remaining broadly stable, it is encouraging that buyers and sellers are shaking off some of their prevailing lethargy and getting on with their lives. The political shenanigans over Brexit have gone on for far too long, with no signs of resolution, and there is so only so long people can put decisions on hold, particularly significant ones such as buying a home.
“First-time buyer numbers are recovering, which is encouraging, with cheap mortgage rates helping. Family are increasingly important when it comes tho helping raise the deposit, making life difficult for those who don’t have family money they can call upon.”