House prices in June have seen their smallest annual rise in two years, of only 3.3 per cent, the latest data from Nationwide shows.
On a monthly basis, prices fell by 0.2 per cent, to a national average of £195,055.
Prices have been on a downward path since the middle of last year, Nationwide’s chief economist Robert Gardner said.
“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 per cent in the three months to April from 1.9 per cent at the start of the year, ” he noted.
Demand and Supply
Supply of new housing is still scarce. Until supply increases, housing stock is likely to be used more intensively, Nationwide projects.
Gardner explains:
“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.
“The strong relationship between supply constraints and vacancy rates is clearly visible at the regional level. As you might expect, regions where affordability is more stretched see far fewer vacancies (see chart below). For example, in London, the UK region where affordability is most stretched, only 1.7 per cent of the housing stock was vacant in 2014, around half the 3.5 per cent rate prevailing in the North of England.”
Quarterly Figures
House prices in the second quarter of this year were 4.1 per cent higher than in the same period of 2014 and 1 per cent higher than in the first quarter of 2015.
The average house price for the three months to June 2015 was £194,258.
The annual house price growth slowed in 11 of the 13 regions, Nationwide’s data shows.
While London still remains the most expensive region in the country (average price £429,711), house price growth in the capital for the last three months has nearly halved to 7.3 per cent from 12.7 per cent in the preceding quarter.
The least expensive region was the North with prices averaging £125,189.
“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, ” Gardner commented.
