UK house price growth slowed to 2.1% in June, from 3.5% in May. Prices declined by 0.8% month-on-month, after taking account of seasonal effects, data published by Nationwide on Tuesday (1 July) shows.
The softening in price growth may reflect weaker demand following the increase in stamp duty at the start of April, said Robert Gardner (Nationwide’s Chief Economist).
“Nevertheless, we still expect activity to pick up as the summer progresses, despite ongoing economic uncertainties in the global economy, since underlying conditions for potential homebuyers in the UK remain supportive,” he said.
“The unemployment rate remains low, earnings are rising at a healthy pace in real terms (i.e. after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we and most other analysts expect.”
Most areas see softening growth
Data for Q2 (the three months to June) shows that the majority of regions saw a modest slowdown in annual house price growth.
Northern Ireland remained the strongest performer by a wide margin, though it did see a slowing in annual price growth to 9.7%, from 13.5% in Q1. While significantly ahead of other UK regions in Q2, it was similar to the robust rates of growth seen in the border regions of Ireland in recent quarters. Scotland recorded a 4.5% annual rise, while Wales saw a 2.6% increase.
Across England overall, prices were up 2.5% year-on-year, a slight softening from the 3.3% annual rise seen last quarter. The north-south divide in house price performance narrowed during the quarter.
Average prices in Northern England (comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands) were up 3.1% year on year, whilst those in Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) were up 2.2%.
The North was the top-performing region in England, with prices up 5.5%. Meanwhile, East Anglia was the weakest performer with an annual growth of 1.1%.
Terraced houses have seen the biggest percentage rise in prices over the last 12 months, with average prices up 3.6% year on year. Flats saw a further slowing in annual price growth to 0.3%, from 2.3% last quarter. Semi-detached properties recorded a 3.3% annual increase, while detached properties saw a 3.2% year-on-year rise.
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