UK house price growth rebounded in June following falls in the previous three months.
According to the latest Nationwide house price index, house prices rose 1.1% in June, reversing the previous three months’ falls.
Annual house price growth rose 3.1% – taking the average price up to £211,301.
Nationwide said it was unclear whether the increase in house price growth in June reflected strengthening demand on the back of employment gains and continued low mortgage rates, or if the lack of homes on the market was a factor.
Robert Gardner, Nationwide’s chief economist, said that the emerging squeeze on household incomes appeared to be “exerting a drag on housing market activity in recent months”.
He said: “Given the ongoing uncertainties around the UK’s future trading arrangements, the economic outlook remains unusually uncertain, and housing market trends will depend crucially on developments in the wider economy.
“Nevertheless, in our view, household spending is likely to slow in the quarters ahead, along with the wider economy, as rising inflation squeezes household budgets. This, together with ongoing housing affordability pressures in key parts of the country, is likely to exert a drag on housing market activity and house price growth in the quarters ahead.”
Despite the overall rise in prices across the UK, growth in the South East and London continued to slow.
House price growth in London fell to 1.2% – the weakest pace of growth in the capital since 2012.
Gardner said: “There has been a shift in regional house price trends. Price growth in the South of England has moderated, converging with the rates prevailing in the rest of the country.”
He said that in the second quarter the gap between the strongest performing region – East Anglia, which saw 5% annual growth – and the weakest – the North, with 1% growth – was the smallest on record.
Lucy Pendleton, founder director of independent estate agents James Pendleton, said: “The housing market has come up for air, which is incredible in a month that saw one of the least conclusive general elections ever.
“Thanks to its stellar performance stretching back years, we’ve been confidently relying on London to shrug off any slowdown seen nationwide but the tables have turned, if only briefly. If this trend continues in July then that is going to turn some heads.
“For the market to bounce slightly across the country as a whole in such adverse conditions says something about the way solid demand and weak supply are cushioning the market.
“However, it may be short-lived. A gentle slide in prices could continue but it’s got less to do with Brexit and more to do with four factors that can be the Four Horsemen of the Apocalypse for markets – inflation, consumer credit, wage growth and mortgage activity – all of which have been dragging their heels recently.”
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