The annual rate at which property prices are rising eased to 2% in June, the lowest level since June 2013.
The slowdown came despite the average cost of a UK home climbing by 0.5% during the month - more than offsetting May’s 0.2% fall - to stand at £215,444.
In London, house prices fell for the fifth consecutive quarter, with values down 1.9% year-on-year between April and June.
But other regions fared better, with annual growth of 4.4% in the East Midlands in the last three months.
Robert Gardner, Nationwide’s chief economist, said: “There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent.”
Why is this happening?
Annual house price inflation has been stuck in a narrow range of 2% to 3% for the past 12 months.
On the one hand, subdued economic activity and ongoing pressure on household budgets is continuing to act as a drag on housing market activity.
But at the same time, high levels of employment, low interest rates and a shortage of homes for sale are all supporting property values.
Unless confidence among potential buyers returns or more properties are put on the market, the current subdued level of transactions is likely to continue.
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Above: three-bedroom flat for sale in Harrogate, North Yorkshire
Who does it affect?
Most regions of the UK saw a slowdown in the annual rate of growth in the last three months.
Scotland was the only place to see a notable pick up, with property values rising by 3.1%, up from 0.2% between January and March.
London continued to be the worst performer, with prices dropping by 1.9%, building on the 1% slide recorded in the first three months of the year.
But other regions continued to enjoy solid gains between April and June, with annual house price inflation of more than 4% in the East Midlands, West Midlands and Wales, although in all cases this was a slowdown compared with the previous three months.
What’s the background?
Going forward, Nationwide said it expected the current subdued levels of activity to continue, with house prices likely to end 2018 just 1% higher than they started it.
Gardner said: “Much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.”
Nationwide also pointed out that despite price falls in London, the north-south divide was still very much in evidence.
In southern regions, property values are well above their 2007 peak, with prices 50% higher in London.
But in most northern regions, they are either close to 2007 levels or below them.
Read more at https://www.zoopla.co.uk/discover/property-news/house-price-growth-falls-to-five-year-low/#XsEjiKQu89rAbLVP.97
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