UK house price inflation eased more than expected to a six-month low in June, but remained strong overall reflecting the improvement in the labor market, survey results from the Nationwide Building Society showed on Thursday. <\/p>\n
The house price index logged a double-digit growth of 10.7 percent year-over-year in June, slightly slower than an 11.2 percent rise in May. That was just below the 10.8 percent increase expected by economists.<\/p>\n
Moreover, this was the weakest house price inflation since December last year, when prices had climbed 10.4 percent.<\/p>\n
On a monthly basis, house prices moved up 0.3 percent in June, following a 0.9 percent rise in the previous month. Nonetheless, this was the eleventh successive monthly increase.<\/p>\n
The average price for a UK home rose to a new record high of GBP 271,613 in June, with average prices increasing by over GBP 26,000 in the past year.<\/p>\n
Most regions indicated a slight slowing trend in the June quarter. The South West overtook Wales as the strongest performing region, while London remained the weakest.<\/p>\n
The housing market is expected to slow further as pressure on household finances intensifies in the coming quarters, Robert Gardner, Nationwide’s chief economist said. <\/p>\n
Inflation is set to reach double digits and the Bank of England is widely expected to raise interest rates further which will also exert a cooling impact on the market if this feeds through to mortgage rates, Gardner noted.<\/p>\n
The BoE had raised its benchmark rate over the last five consecutive meetings to curb inflation amid the labor market tightness. <\/p>\n
With the BoE poised to hike rates to 3 percent next year, mortgage rates will continue to rise and that will further stretch affordability, Capital Economics economist Andrew Burrell said. <\/p>\n
After an 8 percent annual rise this year, modest house price falls will follow in 2023 and 2024, reducing price levels by around 5 percent from the peak, the economist added. <\/p>\n