UK house prices slip in June, says Nationwide

UK’s largest building society said prices were 0.2% lower in June than in May, but 3.3% higher than in June 2014

An estate agent’s window in Manchester city centre. UK house prices dipped in June, according to Nationwide. Photograph: Christopher Thomond for The Guardian./Christopher Thomond

House prices dipped by 0.2% in June, bringing the annual rate of growth to its lowest level in two years, figures from Nationwide show.

The UK’s largest building society said prices were up by 3.3% on June 2014’s figure, a drop from the 4.6% recorded in May and well below the recent high of 11.8% hit 12 months ago. The average price of a UK home is now £195,055, the society said.

Activity and price growth have been slowing since late last summer following a frenetic start to 2014. Nationwide said the slowdown in prices was not confined to London, where affordability has become most stretched for would-be buyers.

Quarterly figures for the regions show a slowdown in the annual rate of growth in 11 of 13 areas and that London still has the second highest annual growth rate in the country.

Nationwide’s chief economist, Robert Gardner, said: “House price growth continues to outpace earnings, but the gap is closing, helped by a pickup in annual wage growth, which moved up to 2.7% in the three months to April from 1.9% at the start of the year.”

He added: “The slowdown in house price growth is not confined to, nor does it appear to be driven primarily by, developments in London. In quarter on quarter terms, London has continued to see price growth at or above the rate in the UK overall over the past three quarters.”

The society’s figures, which are based on mortgages it has approved during the month adjusted to reflect a typical property, showed that Northern Ireland has overtaken London and the area around the capital to record the highest annual price growth.

Figures comparing the three months to the end of June with the same period in 2014 showed prices there had increased by 8% to an average of £126,525. In London, prices grew by 7.3% over the period, to an average of £429,711, while in the area around London they were up by 6.8% to £315,620.

In the period under the spotlight prices fell by 0.8% in Wales and by 1% in Scotland.

Advertisement

Despite the strong growth in Northern Ireland, Nationwide said house prices there were still around 45% below their 2007 peak; in contrast, in London prices are now 39% higher than during the last housing boom. In parts of London, price growth remained in double digits - in Barking & Dagenham in the east, Nationwide said prices had risen by 19% year-on-year.
Howard Archer, chief UK economist at IHS Global Insight, said he was “slightly surprised” by the figures, but pointed to quarterly growth figures which showed a 1% rise in prices against a 0.6% increase in the first three months of the year.
June’s price dip, he said “does not fundamentally change our view that house prices are likely to be firmer over the second half of the year amid improving activity.
“A current shortage of properties on the market is also likely to provide support to house prices.”
Nationwide said that from July it would be changing the methodology it used for its house prices series as a result of changes in its mortgage application process. Details like the size of a property and the number of bathrooms it has will no longer be factored in to calculations, but new information will be available, including figures for newbuild homes and different types of property.