Prices in May rose just 0.2 per cent, marginally up on the 0.1 per cent increase in April, but down significantly on Marchs strong 1.1 per cent gain.
Annual house price growth remains below 5 per cent, proving that accelerating house price growth should not be taken for granted, says Nationwide.
The price of a typical house in the UK is now £164,632, almost £7,500 more than at this time last year. This is equivalent to a price increase of just over £20 per day over the last twelve months.
Commenting on the figures, Fionnuala Earley, Nationwides group economist, said that despite the recent sluggish growth, the outlook is still positive.
Housing market data since the start of the year has largely pointed to an acceleration in house price inflation. Trends in most house price measures have risen and the level of house purchase activity has been remarkably strong.
The number of mortgages approved for house purchase has been well above trend for the last eight months and has only recently fallen back from a high of 120,000 in December and January.
Activity this strong was last seen when house price inflation was in double digits two years ago, says Earley. In addition estate agents sales to stock ratios are high, suggesting the potential for further house price growth, while house builders continue to report more interest than last year.
The revival in the London market, after several years of below-average growth, has also added to sentiment that the market is picking up.
Despite these positive indicators, Earley expects some cooling over house price inflation. Apart from well-known concerns about stretched affordability among first-time buyers and the rising transaction costs that movers face to some cooling in the rate of house price inflation in the coming months.
Even arch-hawk Mervyn King cautions that continued strong house price growth should not be taken for granted given the level of house prices relative to incomes.
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