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House prices cool in June

Andrew Oxlade|This Is Money
13 April 2012

HOUSE prices fell by 0.2% in June, according to the UK's largest building society. The rate of annual growth fell from 5.5% to 4.1%, the lowest level since July 1996, taking the average value to £157,791.

Nationwide warned that with demand for property stagnating, price 'adjustments' were inevitable.

'Estate agents continue to report stalemates between buyers and sellers on price and without any economic pressure on sellers to reduce prices at the moment, the stock to sales ratio looks set to rise,' said Fionnuala Earley, group economist at Nationwide.

'This cannot continue indefinitely and price expectations will adjust. There are some early signs of easing but questions remain over timing. When will prices adjust and how far will they have to move?.'

The society admits homes have become less affordable but adds that if interest rates fall in autumn only 'small price adjustments' will be necessary to keep the market steady.

Nationwide has predicted a 2% rise in house prices for 2005. Its study, which included a quarterly review, showed prices rose 1.2% between March and June, up from a rate of 0.8% in the two previous quarters. It put this down to an early Easter giving a kick-start to the house-buying season. The figures mean that house prices have already risen 2% so far this year.

Studies from both the Nationwide and lender Halifax have shown prices fluctuating up and down each month since autumn. The Nationwide survey, for instance, reported a 0.3% in the previous month.

However, data from property website Rightmove, research firm Hometrack and the National Association of Estate Agents all show that prices have been falling consistently since last summer.

Last summer, both Nationwide and Halifax, the UK's largest mortgage lender, were reporting annual gains of more than 20%. Scotland and Northern Ireland are now the only areas in the country where annual house price growth remains in double digits. The biggest annual increases were in North Ayrshire where prices increased by almost 28%.

Prices in London were the most stable in the second quarter with annual growth of 3.5% - only 0.3 percentage points lower than before. London and the South East now have the slowest rates of growth in the UK, with the home counties seeing annual rises of just 2.5%.

Earlier this month, the Government's figures, published by the Office of the Deputy Prime Minister, showed annual house price inflation in April stood at 6.9%, down from 12.6% in March while Halifax put growth at 5.7% in May, the lowest rate for four years. It is expected to publish its June figures in the next few days.

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