The average UK house price hit a new record high in June, but there are “tentative signs of a slowdown”, according to the latest Nationwide Building Society index.
Prices were up by 10.7% in June, slowing from 11.2% in May, with the average house price in June standing at £271,613 - up by 0.3% month on month.
Nationwide’s chief economist Robert Gardner said: “There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer inquiries.
“Nevertheless, the housing market has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation, which has already driven consumer confidence to a record low.
“Part of the resilience is likely to reflect the current strength of the labour market, where the number of job vacancies has exceeded the number of unemployed people in recent months.”
Gardner said that, at the same time, the stock of homes on the market has remained low, keeping an upward pressure on house prices.
“The market is expected to slow further as pressure on household finances intensifies in the coming quarters, with inflation expected to reach double digits towards the end of the year.
“Moreover, 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.”
In Scotland, the average house price stood at £181,422 - up by 9.5% on an annual basis.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The question is whether we will see prices slow to a crawl, stagnate, or start to drop if we see a recession.
“An awful lot depends on things we don’t yet know – including how high interest rates will go, how deep any recession might be, the impact it could have on jobs, and whether this is serious enough to cause real damage to the property market.”
She added: “The desperate dash for property at a time of rocketing prices may be over.
“Buyers have time to consider whether this is a move they can really afford, and whether they’ll still be happy they made it if prices pull back later in the year.”
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