The TelegraphUK house price growth regains momentum
UK house prices were up 1.1pc in June, the first rise in four months, thanks to strengthening demand on the back of healthy gains in employment and continued low mortgage rates.
According to Nationwide's house price index, the increase brought the annual growth rate up to 3.1pc - from 2.1pc in May.
Despite an uptick in house prices, growth in the south-east of England and London continued to slow compared to the rest of the country.
London saw a particularly marked slowdown, with annual price growth moderating to just 1.2pc - the weakest pace of growth in the capital since 2012.
Robert Gardner, Nationwide's chief economist, said: “The emerging squeeze on household incomes appears to be exerting a drag on housing market activity in recent months. The number of mortgages approved for house purchase has slowed a little in recent months and surveyors report that new buyer enquiries have softened.
“At this point it is unclear whether the increase in house price growth in June reflects strengthening demand conditions on the back of healthy gains in employment and continued low mortgage rates, or whether the lack of homes on the market is the more important factor."
While prices rebounded in June, Nationwide's data show that quarterly price growth slowed significantly. Average prices in the three months to June were 2.8pc higher than the same period last year, compared to 4.1pc growth in the first quarter.
Savills also reported that prices of the most expensive houses in London fell 0.9pc in the second quarter of 2017, leaving them 5.3pc down year-on-year.
"Today’s data do little to alter the picture of a market in which house price pressures are easing," said Hansen Lu at Capital Economics, adding that "it is hard to see the market gaining much momentum over the coming months. There are no signs of a renewed upturn in buyer enquiries, mortgage lending or agreed sales and household incomes are under pressure from higher inflation."
Samuel Tombs at Pantheon Macroeconomics has forecast that house price growth will be just 2pc by the end of the year.
It comes after the National Association of Estate Agents said that just 3pc of homes were being sold above the asking price, the lowest level since October. Savills also reported that prices of the most expensive houses in London fell 0.9pc in the second quarter of 2017, leaving them 5.3pc down year-on-year.
Lucy Pendleton, founder 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.
“London had a bad day in the office in June but it always bounces back.
“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."
By Sophie Christie, 28th June 2017