UK house price growth stalls

House price growth in the UK stalled during June as the number of homes on the market continued to increase, figures showed today.

The average cost of a property crept ahead by just 0.1% during the month to stand at £170,111 (€209,462), according to Nationwide Building Society.

The average cost of a home is continuing to fall in Northern Ireland, with prices dropping by 5.7% during the three months.

The group said overall UK property values had now risen by 3% since the beginning of the year.

The low level of price growth during June, which followed a rise of 0.5% in May, will further stoke speculation that the housing market recovery is flagging.

Martin Gahbauer, Nationwide's chief economist, said: "Recent indicators point to an increase in the supply of property coming on to the market for sale, perhaps in response to the abolition of HIPs in the opening days of the new coalition government.

"With the level of demand remaining broadly stable, this would in part help to explain the recent slowdown observed in the rate of house price inflation."

The annual rate at which house prices are rising also fell during June for the second consecutive month.

Nationwide said prices were 8.7% higher during the month than they had been a year earlier, down from a year-on-year rise of 9.8% in May.

The group said the drop reflected the fact that house prices were increasing at a faster pace this time last year.

It added that unless there was a significant pick-up in house price growth during the coming few months, the annual rate of house price inflation was likely to continue to drift lower, due to comparisons with the very strong price increases recorded during the summer of 2009.

The figures come the day after Bank of England data showed that the number of mortgages approved for house purchase had remained broadly flat in May, as activity in the housing market had failed to pick up.

Surveys have also shown that increases in the number of homes being put up for sale are failing to be matched by rising demand from potential buyers, easing the mismatch between supply and demand and reducing the upward pressure on prices.

The South West saw the strongest house price growth during the second quarter of the year, with prices rising by 3%, followed by the North West at 2.6% and London at 2.5%.

Growth was slowest in the East Midlands at 1.2%.